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MODULE 5.4: Buildings


“People”, “Policy” and “Financing”

People: Involving the right people at the right time

Does the allocation of staff resources towards better energy performance in public buildings pay off?

  • According to an analysis of the German Association of Cities, the investment of municipal staff resources into energy management of public buildings is financially beneficial.The introduction of an energy management system requires a qualified and motivated municipal staff that has comprehensive knowledge about constructional, technical and socio-economic aspects of buildings. Depending on the size of the LG, architects, urban planners, technicians and engineers need to be hired or externally consulted for their expert opinions. It is highly recommended that energy management is exercised by municipal staff itself. Usually the outsourcing of tasks has less impact, since assignments and directives in particular regarding energy controlling, lack of direct and timely influence of operational processes and investment decisions. Nevertheless the use of external experts to support selective task is advisable.
  • The energy savings due to the introduction of an energy management in public buildings (and beyond) has a close connection to the allocation of staff resources. The aforementioned study found out that additional staff costs dedicated to energy management in German LGs on average are in its sum equivalent to about 3% to their annual energy and water expenses. The installation of energy controlling devices adds another 1% - 2% on top of that. However, the financial benefits of the installation of a basic energy management system sum up to about 16% of the annual energy costs. Hence, the cost-benefit analysis clearly shows that each Euro invested into municipal energy management saves up to three Euros in the end. http://www.youtube.com/watch?v=-q4OY9Q0pzc
  • Watch a video from the Warwickshire County Council (UK) about Energy External Wall Insulation Case Study


Why communicate both internally and to the public?

  • In order to succesfully accomplish the development and implementation of building related (and any other) energy measures, it is very important that municipal departments communicate and coordinate between each other. Besides the public construction authority and the environment department where energy policies and its tasks are usually allocated to within the municipal administration, the task force on energy management should also closely involve the municipal planning, economy, finance, health and educational offices. The later is an important driver for internal and external behaviour change.
  • The awareness-raising effects towards relevant stakeholders (e.g. local construction companies, other LGs, citizens etc.) of energy efficient buildings should also not be underestimated. LGs function as role models and shaper of public opinion and acceptance. The most prominent and award winning activities of Koprivnica in Croatia, for instance, focus within its SECAP on the development of energy efficient residential areas and a zero emission university campus. By now just a few passive houses have set off an avalanche of local demand and further construction of blocks of passive houses. The City of Erfurt, Germany, seeks to raise and enhance public attention towards energy efficient buildings, respective management and refurbishment efforts, by awarding public and private houses with a special house number, if they meet high energy standards. 


                                                     Source: Jøra


Policy: Finding the best measures

What are the main policies to reduce energy demand in the buildings sector?

Based on a categorisation done by the Sustainable Building Centre, there are three types of policies that address energy use in buildings:

  • Regulatory instruments: The main regulatory instrument is the building energy code, which is a set of minimum energy performance requirements. The purpose of the energy code is to ensure that the energy performance of buildings is considered during the design stage of a building project. Building energy codes are mandatory in the European Union. Respective national legislations can in many EU countries be refined by local regulations. The chance to influence the energy requirements should more deliberately be used by LGs to steer the local building stock towards efficiency, consequently contributing to the achievement of emission targets within municipal SECAPs.
  • Information instruments: Labels are the best known information policy tool used for both appliances and buildings. There are two main types of labels, endorsement labels (voluntary, easy to understand but limited information and no enforcement mechanism) and information labels (detailed information, regular update needed due to technology developments, enforcement mechanism required). LGs should in particular demand labels in their procurement procedure in order to make the existing and new building stock highly energy efficient.
  • Incentive schemes: They are complementary policies to regulatory and information instruments used to help increase interest in energy efficiency investments. They include all policy instruments that relate to fiscal, financial and other economic incentives and disincentives to deliver energy efficiency improvements. For instance, the City of Bucharest, Romania, is able to fix the level of property tax in relation to energy efficiency conditions (Source: Construction21.eu). Generally, the objective is to motivate consumers to pursue investments they would not have ordinarily considered.

Financing: Money, money…

National finance for energy efficient buildings


Private finance for energy efficient buildings

  • In addition to explore options for national finance, you may as well look for private funding through Energy Performance Contracting (EPC). In this financing model an external organisation, typically an Energy Service Company (ESCO), invests into energy efficiency and / or renewable energy measures in public buildings or other facilities (e.g. street lighting, traffic lights etc.). The private, up-front investment is paid by the energy cost savings or renewable energy produced. The contractual agreement between the ESCO and LG commonly outlines that the later continues to pay the same amount for its energy consumption for a fixed period of time, usually 4 – 5 years, as if the implementation of energy saving measures wouldn’t have happened. The ESCO takes profit and refinances its investment from the difference between what the LG pays and the real energy expenses. It is important to note that the ESCO takes on the financial and technical risk, as it won’t receive its payment unless the project performs and reduces energy costs as expected.
  • The EPC is an interesting instrument to provide LGs with infrastructure improvements, while they might lack capital funding, energy engineering skills, manpower or management time, understanding of risk, or technology information. Many EPC’s that target buildings are profitable and have a reasonably fast return of investment. LGs should use this potential and private interest wisely by bundling packages for bid invitations that contain measures with short-, medium and long-term amortisation times. Hence the low and high hanging fruits are picked at the same time.
  • Follow the links to read in more detail about Energy Service Companies and their range of different models of Energy Performance Contracting.
  • Finally note that through the new Energy Efficiency Directive energy distributors or retail energy sales companies are obliged to save annually 1.5% of their energy sales (by volume) through the implementation of energy efficiency measures such as improving the efficiency of the heating system in buildings, installing double glazed windows or insulating roofs etc., among final energy customers. LGs are now in the position to exploit this fact, negotiate more favorable EPCs and be able to achieve even higher energy targets in their SECAPs. 


European finance for energy efficient buildings

In the following three current and one up-coming European programme for financing energy efficient buildings on a local and regional level are described. The summary is based on the paper Financial Support for Energy Efficiency in Buildings by DG ENER:

  • Cohesion policy
    Opportunities for EU Cohesion policy funding. Under the Joint European Support for Sustainable Investment in City Areas (JESSICA) initiative, Member States are offered the possibility to invest some of their Structural Funds allocations in financial engineering instruments (revolving funds) supporting urban development of LGs.
  • Intelligent Energy – Europe
    The Intelligent Energy – Europe Programme II (IEE) focused on removal of non-technological barriers to energy efficiency and renewable energy. This also includes project financing of energy efficiency in public buildings. Under the IEE, the so-called ELENA Technical Assistance Facility was launched in 2009, aimed at providing co-financing (of up to 90% of eligible costs) to local and regional authorities for the development and launch of sustainable energy investments in their territories. So far, around 27 million € has been assigned to projects which should trigger investments approaching 1.5 billion €. About a third of these investments are addressing the buildings sector and energy performance contracting.
  • European Energy Efficiency Facility
    On 1 July 2011, the European Commission launched the 265 million € European Energy Efficiency Fund (EEE F), providing different types of loans, guarantees and/or equity to local and regional public authorities. EEE F aims at financing energy efficiency (70%), renewable energy (20%) and clean urban transport (10%) projects through innovative instruments, in particular promoting the application of energy performance contracting.
  • Horizon 2020 Programme
    Under the Horizon 2020 Programme 6.5 billion € are going to be allocated to research and innovation in "Secure, clean and efficient energy" in 2014-2020. A relevant share of this budget will be allocated to the "Market uptake of energy innovation" for projects including the building sector to facilitate respective energy policy implementation, preparing the ground for rollout of investments, supporting local capacity building and acting on public acceptance.





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