Energy refurbishment of social housing using energy performance contract

Panel: 5. Saving energy in buildings: The time to act is now

This is a peer-reviewed paper.

Authors:
Christophe Milin, ADEME, France
Adrien Bullier, Direction de l'immobilier, groupe Immobilière des Chemins de Fer, France

Abstract

Lack of adapted funding is a major barrier to the energy retrofitting of social housing in Europe. Funding could be found through the Energy Performance Contracts (EPC), in which an Energy Service Company (ESCO) invests in a comprehensive refurbishment (building insulation and renovation of the heating systems), and repays itself through the generated savings.

In the IEE supported FRESH project, social housing operators (SHO) and ESCO from France, United Kingdom, Italy and Bulgaria propose to work out the legal, financial and technical framework for EPC's in social housing. The main results will be the tested implementation of EPC for comprehensive refurbishment at four pilot sites, as well as concrete tools and recommendations to public authorities for possible replication at national and European level.

The major problem SHO’s are facing in energy retrofitting is that in most countries they are not allowed to recoup energy savings from tenants. Even though it raises many political questions, this limit should not be ignored as it is the major obstacle to use energy savings as a financial resource for Factor 4 in social housing. Also, it should be noted that if implemented in accordance with current market practices, EPC’s may focus only on the “low hanging fruits” and once those have been picked, building owners may never be able to finance the required interventions on the building envelope, which represent very high costs with very long payback periods, and may lose the possibility to reach a factor 4 on their greenhouse gases emissions at an acceptable cost. It seems therefore necessary for public authorities to intervene and help structure Third Party Financing Operators, in order to create schemes capable to serve the collective target of Factor 4. The challenge of a 75% reduction of greenhouse gas emissions cannot be met without a deep reorganization of regulations and governance which currently prevent investments in energy efficiency.