«Final Publishable Report - December 2009 Prepared for: European Commission EACI Prepared by: Cauberg-Huygen Consulting Engineers Peter Op 't Veld, ...»
Energy Exploitation and Performance Contracting for Low Income
and Social Housing
Final Publishable Report - December 2009
Cauberg-Huygen Consulting Engineers
Peter Op 't Veld, coordinator
The sole responsibility for the contents of this report lies with the authors. It does not necessarily
reflect the opinion of the European Communities. The European Commission is not responsible to any use that may be made of the information contained therein Page 1 of 133
EXECUTIVE SUMMARYThe objective of the ECOLISH project is to investigate the possibilities for energy efficient retrofitting for low incomes and social housing by using the possibilities of energy performance contracting (EPC) and energy exploitation by ESCO’s. The project is especially focussing on individual house owners with very low incomes. Four pilot locations (Pécsvárad in Hungary, Pieria in Greece, Ogre in Latvia and Heerlen in the Netherlands) were examined on their social, legal, technical and financial possibilities for EPC by universities and specialists. External factors like the economic crises and ancient social structures are import to EPC and should be recognised.
Fuel poverty is becoming a serious problem for social housing due to current trends in energy cost and income development. In social housing, energy costs do often not relate to the poor thermal comfort and low indoor air quality. Saving potential and benefits in this building stock are high, but need to be allocated to investments. The low-income target group wants to lower costs but isn’t financially able to invest themselves and lacks a long term view on its real estate property. Many residential buildings are at the end of their technical and economical lifespan and will soon need extensive renovation. On the other hand, most of the occupants want to stay in their familiar surroundings and they trust on existing social structures. Energy performance contracting is a multiple solution to these issues.
A specific problem in the building stock is individual and spread ownership. This can be solved by organising occupants and forming legal entities. Occupants welcome support as soon as it is well- intentioned and recognized, but may be reluctant to externals. Energy service companies (ESCO’s) therefore have to gain the trust of the occupants. Highly mixed occupancy (young and old, different level of education) demands a personal approach to get everybody satisfied with a standard package of measures. The ECOLISH project provides occupants info guides on this topic.
A unique approach for collecting data of the neighbourhood by occupants resulted for several pilot locations in a lot of detailed data on the building stock en actual energy use. It is important to provide a balanced set of energy saving measures, which have a robust saving potential. Sensitivity studies in the ECOLISH project show that energy savings by improving the building envelope are more robust than upgrading the building services. Architectural improvements therefore prefer, but are not common business for ESCO’s. An improvement of the building envelope often requires large, partly delinquent investments. The long pay-back time should match the extended lifespan of the building.
The technical measures themselves are quite common building practice, but risk allocation in energy savings and financial exploitation is still a big challenge. In practice, the savings strongly depend on the occupant’s behaviour and may not meet the expectations. This sharing of this risk needs expert attention and clear instructions to the occupants.
Most financial constructions require co-financing of the occupants. Because of their low income (or even unemployment) the occupants lack these financial means and may have difficulties in getting a credit. An offer from an ESCO to a well organised group of house-owners for EPC should include a balanced set of technical measures (that fit the target group) and a clear plan how to finance this.
The role of municipalities can be important, for example for establishing revolving funds and organising occupants. ESCO’s could play a new and important role. The residential sector can be a new and interesting business area, also individual house owners. Several financing constructions are possible but constructions with mortgage and revolving funds are favourable.
The ECOLISH project showed that the proof of the pudding is in the eating. Energy performance contracting for social housing requires close cooperation between social, legal, technical, financial and real estate experts. The organisation of the occupants and the validation of the energy saving forecasts turned out to be the most challenging parts.
Key marks with their key actors are:
- a solid organisation of the house owners (social and legal experts);
- an ESCO with a balanced set of energy saving measures and corresponding financial scheme (technical and financial experts);
- a clear long term view on the real estate and its neighbourhood (social and real estate experts).
Page 2 of 133 Energy performance contracting reduces fuel poverty, improves quality of life and prevents climate change in one solution. We recommend that government and administration (from local to EU level) provide good conditions for this concept that potentially solves multiple problems. Clear legislation, harmonisation of energy saving measures and financial incentives for the application of the concept are these main preconditions. Furthermore, easy accessible data on the individual energy use on neighbourhood scale simplifies feasibility studies for EPC.
The main achievements of the ECOLISH project are that in each pilot location, despite the bad local starting situation, it was managed to establish
- a new or improved organisation of house owners;
- cost-effective packages of energy-saving measures;
- model contracts within the valid legal and financial constraints;
- interest from commercial ESCO’s for further implementation.
The pilot locations are typical for the national building stock and thus can lead to large replication.
Page 5 of 133
1. INTRODUCTIONEnergy use in buildings is about 40% of the total energy use in Europe. The energy use of residential buildings is at ca. 9500 PJ the largest proportion (23% of total energy use in Europe). Energy saving and CO2 reduction in the existing residential buildings stock will make a major contribution to the European 20/20/20 targets. Although the potential is high and a wide variety of technologies is available, promotion of energy efficiency in the existing residential building stock faces a number of barriers, especially for social housing and housing stock owned by people with low incomes. This group has to deal with financial limitations and barriers. At the same time this part of the European residential building stock is characterised by high (often extremely high) energy use, due to inefficient heating installations and little or no thermal insulation. Also the application of renewables in the sector is very rare.
The poor thermal performance and physical quality of these buildings has consequences for the quality of life. Indoor air quality and thermal comfort is often very poor with negative influence on human health. In many locations in EU fuel poverty is a problem and can lead to intolerable situations regarding the quality of life and health.
At the same time, in general, better indoor thermal and moisture conditions imply higher levels of comfort as well as lower rates of degradation and longer cycles of refurbishment and repair. Reduced exposure to the fluctuation of outdoor conditions due to thermal insulation prevents dampness, rusting and mould formation. In winter, internal walls remain warm and the cold-radiation effect is eliminated;
in summer, thermal insulation prevents walls from becoming heated and thus has a cooling effect.
Distributive electricity networks also experience less load intensity due to improved energy efficiency in housing and their life is extended.
Positive side-effects from energy retrofitting projects can also improve the aesthetic qualities of buildings, give better noise isolation and, if combined with more comprehensive measures, add other technical improvements to buildings. On district level, comprehensive retrofitting and upgrading the architectural quality of the building envelope van also improve the social structure and safety in neighbourhoods.
Such factors, taken together, can also have beneficial impacts on property values. With the introduction of energy certifications as imposed by the EPBD and raised awareness, the influence of energy efficiency and green standards on the appraisal process has increased, even though it is still far from being daily practice in most EU countries until now.
Although energy saving and CO2 reduction in residential buildings in EU has the highest potential of all sectors and a wide variety of technologies is available, promotion of energy efficiency faces a number of barriers. A major barrier in the housing sector for low incomes and social housing is the lack of financial means as well as with owners as housing corporations. Especially for social housing and housing stock owned by people with low incomes have to deal with financial limitations and barriers.
But also housing corporations are often not willing to invest in energy efficiency measures, as these organisations don’t have the revenues to repay these investments.
At the same time, this part of the European residential building stock is characterised by high energy use, due to poor energy efficiency of heating installations, poor thermal insulation and poor building physical quality with negative consequences for quality of life. On many locations in EU fuel poverty enlarge this problem. From the other hand, the possible energy saving potential can also offer the key to a solution for these problems. Improving energy efficiency means saving on costs for energy. These savings can be allocated to investments for energy efficiency measures.
Energy Performance Contracting and Energy Exploitation by Energy Service Companies are promising instruments for this.
Within the IEE ECOLISH project the possibilities of these instruments have been investigated in four different pilots in Europe, carried out in the Netherlands, Latvia, Greece and Hungary.
Objectives and scope The objective of the ECOLISH project is to investigate the possibilities for energy efficient retrofitting for low incomes and social housing. The scope of the ECOLISH project is targeted to individual owners with very low incomes in general, for all housing types. The project contains pilots with multiresidential buildings as well as single family dwellings. Especially owners of single family dwellings are extremely difficult to organize, as well as housing complexes with spread ownership.
One of the main features of the project is that it focuses on four cases, where, until now, it was not possible at all to do take any measures to decrease energy use and, above all, energy costs to prevent fuel poverty.
Energy performance contracting and energy exploitation is a potential solution for this problem, especially now the energy market in Europe is liberalised. Within the IEE ECOLISH project a pilot for Energy Exploitation and Performance Contracting is organised, elaborated and evaluated. The pilot is organised on four locations in Europe, each location representing a specific situation in terms of building type, ownership, social and cultural background and climate. For each location Energy Service Companies will be involved for energy exploitation. One of the aims is to investigate if there are possibilities to involve parties including occupants, for example as shareholder. For the necessary investments tailor-made energy performance contracts and finance schemes are elaborated, signed and evaluated including energy and building technical boundary conditions, juridical, financial and social aspects. As overall result general guidelines and conditions will be given how to come to energy performance contracting including a template for a contract. Special attention is paid to the communication with occupants and their role in the contracting.
The pilot is organised on four locations in Europe: Heerlen, the Netherlands, Ogre Latvia, Pieria, Greece and Pécsvárad, Hungary, each representing a specific situation. To support the locations a
number of general research activities were carried out:
- Technical and social analyses of the pilot locations and determination of measures for building envelope and building services improvement: Objective is to get a detailed overview of the characteristics in terms of building technical issues, energy profiles, and social profiles of the occupants and the potential of energy efficiency measures. A special questionnaire was developed (annex 2);
- Energy Exploitation and Performance Contracting: Objective is to elaborate the actual energy performance contracts for the pilot locations. This includes an inventory of financial and legal aspects, the elaboration of financing structures and the final elaboration of a draft of a specific tailor-made Energy Performance Contracts for the pilot locations;
- Occupant’s organisation: Objective is to raise order to raise awareness, create interest and get an optimal involvement of the occupants. This achieved by giving guidance, information and education for the occupants on the implementation of the contracts;
- Evaluation of benefits: Objective of this task is to evaluate the energy benefits from the implementation of the selected retrofitting measures from the inventories on locations, as well as to examine the financial and other characteristics of the proposed investments in order to find the best possible approach for implementation;