LITHUANIA: MODERNIZATION OF LITHUANIA: MODERNIZATION OF MULTIFAMILY BUILDINGS USING THE MULTIFAMILY BUILDINGS USING THE

JESSICA FINANCIAL INSTRUMENT JESSICA FINANCIAL INSTRUMENT

ARŪNAS REMIGIJUS ZABULĖNASARŪNAS REMIGIJUS ZABULĖNAS

VICE-MINISTER OF ENVIRONMENT, LITHUANIAVICE-MINISTER OF ENVIRONMENT, LITHUANIA

THE LITHUANIAN HOUSING STRATEGY THE LITHUANIAN HOUSING STRATEGY

Main goals:

1.Expand housing options for all social groups

2.Strengthen the capacity of the housing sector in the housing market

3.Ensure effective use of existing housing, maintenance, upgrading and modernization, including the rational use of energy resources

approved at January 21, 2004 by theLithuanian Government English version available on the internet site www.am.lt

- Program for refurbishment of multifamily buildings (new version approved at 20 September, 2009)

- Program for social housing development (approved at 5 July, 2008)

BASIC FACTS ABOUT LITHUANIAN HOUSING (I)BASIC FACTS ABOUT LITHUANIAN HOUSING (I)

•population - 3,37 million• more than 38,000 multi

family buildings•more than 800,000 apartments•66 % of population lives in multi family buildings built before 1993

The age structure of buildings 26 % built before 1960 65 % - 1960 – 1990 9 % - after 1990

• most in poor condition, lack of proper management

• inefficient heating systems and engineering equipment, bad quality windows, roofs, seals between panels

• more than 57 % of households are not satisfied with their houses

• During privatization, only apartments were privatized, but not the buildings as such

• 97% private, only 3 % municipal rental stock

BASIC FACTS ABOUT BASIC FACTS ABOUT LITHUANIAN HOUSING (II)LITHUANIAN HOUSING (II)

ENERGY LOSSENERGY LOSSESES

ZZZZZ

VentiliationInfiltration

23 %

Roof 9 %

Multi family buildings consume ~9,5 TWh energy per year

Refurbished multi family buildings can save ~ 4,75 TWh

Windows 18 %

Walls 45 %

Basement 5 % Average energy consumption ~ 130 kWh/m² per year

Average energy consumption ~ 130 kWh/m² per year

ENERGY SUPPLYENERGY SUPPLY

65 % of multifamily buildings are served by district heating systems

Current energy consumption ~ 160 kWh/m2

PREVIOUS EFFORTS TO CHANGE THE SITUATION

World Bank Energy Efficiency & Housing Project 1996-2004

Government sponsored assistance scheme for renovation of apartment buildings 2006-2008 (“The Old Program”)

RATIONALE TO USE JESSICA INSTRUMENT (I)

Need to continue renovation effortNeed to revive the construction sector during

the crisisReduce the dependancy on imported fossil

fuel supplies

DECISION TO USE JESSICA INSTRUMENT (II)

Concept of a new support scheme developed by Government – February 2009

A number of laws were amended or newly adopted during the year by Parliament

Holding Fund created to finance the ProgramEIB contacted to assume the management of

Holding Fund – March 2009

DECISION TO USE JESSICA INSTRUMENT (III)

Contract with EIB signed on June 11, 2009EIB launched selection of financial

intermediaries – October, 2009Financial intermediaries selected – February

8, 2010First contract with financial intermediary

signed – June 1, 2010

Fast track process – more than a year

CHALLENGES

Housing stock management is poorly organized

People are afraid to borrowRole for housing and urban development

agency:Public awareness campaign Preparation of boilerplate blueprints for

renovationEndorsement of renovation designs in loan

application process

JESSICA Holding Fund amounts to € 227 million:

- € 127 million European Regional Development Fund

- € 100 million National co-financing

- Expected at later stage– some funds will be contributed by commercial banks

JESSICA HOLDING FUND JESSICA HOLDING FUND

JESSICA

ELIGIBILITY

Multi family houses built before 1993

Under consideration:University dormitories;The “Old Program” (for Applicants who

were not granted support due to lack of funds)

Public buildings (schools, kindergartens) are renovated under different schemes

• long term (20 years) fixed interest rate (3%) loan for implementation all modernization measures

50% reimbursement of technical documentation preparation costs

Additional incentives

• 15% of loan principal covered, provided 85-110 kWh/m2 energy efficiency achieved

• • 100 % support to low income families

THE JESSICA PRODUCT THE JESSICA PRODUCT

JESSICA

Modernization of heating and hot water systems

Replacement of windows and external doors

Roof insulation

Insulation of external walls

Glazing of balconies

Installation of alternative energy sources (solar, wind, etc.)

Additionally, these measures are eligible:

Replacement of elevators, renovation of electric wiring, and other works in shared areas of the multifamily building

ENERGY EFFICIENCY MEASURES SUPPORTED ENERGY EFFICIENCY MEASURES SUPPORTED BY JESSICA BY JESSICA

JESSICA

READINESS TO PROCEED

Approximately 20 houseowner associations have expressed firm readiness to use JESSICA product as soon as EIB signs contracts with commercial banks

POSIBILITIES (I)POSIBILITIES (I)ENERGY SAVINGS ENERGY SAVINGS

EXPECTED OUTCOMEIt is planned to modernize 24.000

houses, by the year 2020

After the modernization, one house would halve energy consumption and save 125 MWh a year

This translates into ~€290 million

45 apartment multi family building Insulated external walls and roofWindows replaced

Glazing of balconiesModernization of the heating substation

and the heating systems

Energy efficiency improvement – 60 %

POSIBILITIES (II)POSIBILITIES (II)SUCCESFULLY IMPLEMENTED PROJECTS (SUCCESFULLY IMPLEMENTED PROJECTS (TELŠIAI) TELŠIAI)

Before After

Before After

120 apartment multi family building Insulation of external walls and roofWindows replacement

Glazing of balconies

Energy efficiency improvement – 40 %

POSIBILITIES (III)POSIBILITIES (III)SUCCESFULLY IMPLEMENTED PROJECTS (VILNIUSSUCCESFULLY IMPLEMENTED PROJECTS (VILNIUS) )

Reasons for modernization Modernization results

Impact on loan repayment for family budget

POSIBILITIES (IV)POSIBILITIES (IV)MONITORING RESULTSMONITORING RESULTS