Report of national roundtables on stakeholder involvement · Local Authorities of South-East Europe...

Empower public authorities to establish a long-term strategy for mobilizing investment in the energy efficient renovation of the building stock

Report of national roundtables on stakeholder involvement

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Network of Associations of Local Authorities of South-East Europe

Project Title: EmBuild - Empower public authorities to establish a long-term strategy for mobilizing investment in the energy efficient renovation of the building stock

Grant Agreement N° 695169 - Deliverable N° 5.3Work Package 5 Lead Partner: NALASThis document was last updated on: 20.03.2018

Ref. Ares(2018)3380844 - 26/06/2018



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IMPRINTThis document is issued by the consortium formed for the implementation of the EmBuild project under Grant Agreement N° 695169 by the following partners:GIZ - Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (Germany)KSSENA - Energy Agency of Savinjska, Šaleška and Koroška Region (Slovenia)Eza - Energie- und Umweltzentrum Allgäu gemeinnützige GmbH (Germany)BPIE - Buildings Performance Institute Europe ASBL (Belgium)NALAS - Network of Association of Local Authorities of South East Europe (Macedonia) TUM - Technische Universität München (Germany)AE3R – Agentia pentru eficienta energeticasi energii regenerabile Ploiesti-Prahova asociatie (Romania) UoB – University of Belgrade (Serbia)REGEA – North-West Croatia Regional Energy Agency (Croatia) EnEffect – DZZD EnEffect group (Bulgaria)

Lead Partner for the compilation of this document

Network of Associations of Local Authorities of South-East Europe

Project Lead Partner contact:Frank MischlerDeutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbHMax-Joseph Straße 5 80333 Munich, [email protected]

Authors of this report Milena Garthley (NALAS), Frank Mischler (GIZ), Felix Geyer (eza!), Jurko Nejc (KSSENA), Marko Vlainić (REGEA), Catalin Csaczar (AE3R); Kamen Simeonov (EnEffect), Milica Jovanovic Popovic (University of Belgrade)

DisclaimerNeither GIZ nor any other consortium member nor the authors will accept any liability at any time for any kind of damage or loss that might occur to anybody from referring to this document. In addition neither the European Commission nor the Agencies (or any person acting on their behalf) can be held responsible for the use made of the information provided in this document.

This project receives funding from the

German Federal Ministry for Economic Cooperation and Development

This project receives funding from the Horizon 2020

European Union Research and Innovation Programmeunder Grant Agreement No 695169

This document is a sum up from regional and national roundtables exploring models for coordination of the different levels and type of stakeholders participating in the renovation process for energy efficiency in public buildings. The aim was to trigger discussions and draw conclusions in the direction of:

r transparent and sustainable stakeholder involvement

r better coordination of the national and LEEAPs in the frame of the implementation of the EU Directives

r exploration of the link between thorough sustainable energy and cross-sector planning (mobility, transport, private housing building stock, etc.) and attraction of investment, and mid- and long-term measures to improve the investment climate

A series of roundtables took place on models for coordination of the different levels and type of stakeholders had taken place, one at regional level and five at national level within the wider South-Eastern European region. Each national roundtable was held in the frame of a regular national event, in each EmBuild partner’s country (EnEffect in Bulgaria; REGEA in Croatia, eza! With the support of TUM and GIZ in Germany, KSSENA in Slovenia, University of Belgrade in Serbia, and Ae3R in Romania). NALAS provided regional support and summed up the conclusions with the assistance of BPIE for issues and competencies at EU level.

A joint regional roundtable for all the EmBuild partners was held during the CROENERGY 2017 conference, with public officers from all EmBuild implementing countries, where some good practices and recommendations were presented by the participating representatives of local authorities.

Each national roundtable event is described in detail in reports which are annexed to this document. All events were held in the presence of public authorities (national and local), local government associations, international and local institutions, investors’ associations, banks, SMEs and energy agencies including KSSENA and their representatives in EmBuild and other projects. The event was combined with individual presentations followed by roundtables.

Introduction 1



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Project BriefEmBuild - Empower public authorities to establish a long-term strategy for mobilizing investment in the energy efficient renovation of the building stock - is a project financed under the Horizon2020 Programme of the European Union and explores the modalities of investment in energy efficiency in public buildings with special emphasis on local level. Its main objective is to empower public authorities at local, regional and national level, to formulate renovation strategies for the building sector that foster deep renovation and facilitate the acceleration of the renovation rate. The project involves 10 partners, two of which are with regional or international mandate (NALAS and BPIE), and 8 national partners from 6 countries: EnEffect (Bulgaria), REGEA (Croatia), GIZ, eza!, Technical University of Munich (Germany), AE3R (Romania), University of Belgrade (Serbia) and KSSENA (Slovenia).

The project results will contribute to increase capacities at municipal level to formulate policies and measures to stimulate dialogue between local authorities and other stakeholders to guide public investment decisions, inclusive of capital investment and facilitation of private sector involvement.

Interaction between stakeholders in energy efficiency renovation in public buildings is of fundamental importance, as they participate and can influence the process in legislative, financial, political etc. sense. It is assumed that in formulating and implementing its renovation policies in public buildings the local authority has taken into account the stakeholder balance with view to maximise the effect and achieve relevance between investment and effect.

Figure 2. Challenges in stakeholder involvement at local level.

During the process of energy efficient renovation in public buildings the local government faces challenges in balancing between:

X public interest;

X investment appetites or lack of them in private sector versus capital investment policies of the local au-thority;

X legislative requirements in usually very strict regulatory environment, with often uncertain long-term finan-cial guarantees/perspectives or sudden changes in policies.

X disbalance between investment intentions and available funds for their implementation. Very often central government delegates implementation of policies on energy efficiency in public buildings to local govern-ments without providing relevant technical assistance and/or financial means for implementation;

X the owner of the public property subject to renovation – the local authority - often compromises on quality or volume of intervention, depending on interaction with other stakeholders.

X poor coordination of investment policies at national level and between different levels of government (local, regional, national)

X cross-sector influences, as well as inter-governmental interactions.


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Figure 2 Type of stakeholders involved in national roundtables

Stakeholder b Local

AuthoritiesCentral

Government

Local Government Associations

Investors, Business Associations,

SMEs

Financing Institutions/

Banks

Energy Agencies OtherEmBuild

Partner d

EmBuild Regional Roundtable

Municipalities from Bulgaria,Croatia, Slovenia, Serbia and Romania

The discussion was held with active participation of the audience which represented all the important stakeholders, to name a few, energy agencies, central government and ministries, regional authorities, local authorities, international energy agencies.

KSSENAGorenjska, Savinjska, Šaleška and Koroška Region

Ministry of Infrastructure - Petrol (ESCO company);

GGE (ESCO company) SID banka

KSSENA, Energy Agency of Savinjska, Šaleška and Koroška Region;LEAG - Local Energy Agency in Gorenjska region

JHP (law office);Energetika.NET

Ae3R Over 200 participants - - yes yes yes The Society of Power Engineers in Romania


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Stakeholder b Local

AuthoritiesCentral

Government



SMEs


Banks


Partner d

EnEffect

Gabrovo, Smyadovo, Burgas, Dobrich, Gorna Malina, Stambolisky, Dobrich, Vratsa, Sliven, Svishtov, Harmanli, Devin, Valchi Dol, Smyadovo, Veliko Tarnovo, Lom, Petrich, Etropole, Sofia, Chepelare, Bistritsa, Pavlikeni, Kula, Lyaskovets, Karnobat, Plovdiv

Roundtable 1: Minister of Regional Development and Public Works, Ministry of Energy,Ministry of Regional Development and Public Works,Sustainable Energy Development Agency

Union of Bulgarian Black Sea Local Authorities,Bulgarian Cities and Regions Association

Bulgarian Energy Efficiency and Renewable Sources Fund,Bulgarian Building Insulation Association,Bulgarian Construction Chamber,BACC PLC,Henkel Bulgaria Ltd.,Baumit Bulgaria Ltd,CEZ Bulgaria PLC,Street Lighting Arista Ltd.

Bulgarian Trust Eco Fund

SEA SOFENA (Sofia Energy Agency), Black Sea Regional Agency for Energy Management (BSRAEM),Black Sea Energy Cluster,Energy Management Agency Dobrich

Sofia University “St. Kliment Ohridski” Open Society Institute,Habitat Bulgaria,BPIE,French Institute in Bulgaria

EnEffect

Roundtable 2:European Parliament,European Commission, Directorate for Energy;Ministry of Energy,Ministry of Regional Development and Public Works,Sustainable Energy Development Agency,Ministry of Labour and Social Policy, Ministry of Economy,

Energy Cities,National Association of Municipalities in the Republic of Bulgaria,

Bulgarian Energy and Mining Forum, Bulgarian Association Polymers,Bulgarian Energy Holding and many companies related to energy efficiency in buildings

Environmental Protection and Energy Efficiency Fund,Energy Efficiency and Renewable Sources Fund,

SEA SOFENA (Sofia Energy Agency),Black Sea Energy Research Centre;

GIZ,BPIE,Habitat Bulgaria,Open Society,University for National and World Economy,University of Architecture, Civil Engineering and Geodesy,Bulgarian Academy of Science,Institute for Zero Energy Buildings,Confederation of Labour Podkrepa,Greenpeace Bulgaria,NGO GREEN LAND,


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Stakeholder b Local

AuthoritiesCentral

Government



SMEs


Banks


Partner d

REGEAKrapina-zagorje county, City of Karlovac

Ministry of Construction and Spatial Planning

NALAS (Network of Associations of Local Authorities of South-East Europe)

- ZABA

REGEA- North-West

Croatia Regional Energy Agency

University of Belgrade

Roundtable 1: Aleksinac, Aranđelovac, Babušnica, Bač, Bajina Bašta, Savski Venac, Stari Grad, Bogatić, Bojnik, Bor, Bujanovac, Čačak, Ćuprija, Dimitrovgrad, Gornji Milanovac, Kosjerić, Kragujevac, Kraljevo, Krupanj, Kučevo, Kuršumljia, Lapovo, Lebane, LJig, Loznica, Lučani, Majdanpek, Mali Zvornik, Malo Crniće, Merošina, Mionica, Zemun, Ivanjica, Niš, Niška Banja, Novi Pazar, Osečina, Pančevo, Požarevac, Priboj, Pirot, Rača, Raška Ražanj, Šabac, Senta, Smederevo, Sokobanja, Sombor, Surdulica, Svilajnac, Topola, Trgovište, Trstenik, Užice, Valjevo, Velika Plana, Veliko Gradište, Vlasotince, Vranje, Vrnjačka Banja, Zaječar

Ministry of Construction, Transport and

Infrastructure, Ministry of Mining and Energy

Secretaries,Standing

Conference of Towns and Municipalities

Regional Economic

Development Agencies


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Stakeholder b Local

AuthoritiesCentral

Government



SMEs


Banks


Partner d


Roundtable 2:Mladenovac, Sopot, Novi Sad,


Roundtable 3: Vrbas, Paraćin, Svilajnac, Zrenjanin, Niška Banja, Trgovište, Zemun, Lazarevac, Šabac, Vršac, Mladenovac, Sopot, Zvezdara, Lajkovac, Ivanjica

Ministry of Construction, Transport and Infrastructure


Roundtable 4:Vrbas, Paraćin, Svilajnac, Zrenjanin, Sokobanja, Trgovište, GO Zemun, Babušnica, Šabac, Mladenovac, GO Zvezdara, Lajkovac, Ivanjica, Kraljevo, Kragujevac, Sr. Karlovci, Dimitrovgrad, Trstenik, Aleksinac, Kikinda, Vranje, Surdulica, Ćuprija, Loznica, Boljevac, Mali Zvornik, Kuršumlija, GO Stari Grad

Ministry of Construction, Transport and Infrastructure

Secretaries,Standing

Conference of Towns and Municipalities



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EmBuild Regional Roundtable was held on the 3rd October in the frame of the international Sustainable Energy Finance and Investment Summit - Croenergy 2017. The Roundtable event involved municipal representatives from five partners (EnEffect, Bulgaria; REGEA, Croatia; University of Belgrade, Serbia, KSSENA, Slovenia; Ae3R, Romania) The event was recorded and web-streamed at: https://twitter.com/RegeaAgency/status/915208211178848257

The Regional EmBuild Roundtable served to discuss experiences and best practice in improving investment climate. The roundtable involved local officers and regional, national and other actors, as an integral part of the international event. As access to financial means to cover the cost of energy efficiency measure is quoted as the main bottleneck, it served as reference for implementing the national roundtables that could be used as a platform to discuss different possibilities to secure investments. Depending on the country, the focus of the discussion differed. It depended very much on the type of funds and investments accessible to local level public officers.

The roundtables involved all levels of public authorities (local, regional, central government) along with stakeholders who have significant role in the process of energy efficient renovation in public buildings such as representatives of business, NGOs, energy agencies, local government associations, consumer organisations, energy companies, financing institutions.

EnEffect Experience (Bulgaria)Two national roundtables were held within two big events– on 26-27 October 2017 in Burgas and on 19-20 March in Sofia.

On 26-27 October 2017 an event entitled Financing of energy efficiency projects in the public buildings. The future of the National Energy Efficiency

Programmes has been organized in co-organization with the Municipal Energy Efficiency Network EcoEnergy. The event was held in Burgas

with more than 70 participants from different target groups: public authorities (national and local), local governments, professional associations,

international and local institutions, SMEs and energy agencies including EnEffect and their representatives in EmBuild and other projects. The event was

combined with individual presentations followed by roundtables.

To prepare the roundtable discussion, several presentations were held describing the investment climate and opportunities at national level, including speeches by Zhecho Stankov,

Deputy Minister of Energy, Malina Krumova, Deputy Minister of Regional Development and Public Works, Dimitar Doukov, Executive Director of the Bulgarian Energy Efficiency and Renewable Sources Fund, and Kamelia Georgieva, Executive Director of the Bulgarian Trust Eco Fund.

On the first roundtable the debate was concentrated on the experience of the local authorities with the implementation of the National Energy Efficiency Programme and other energy efficiency projects in the public buildings. As the current funding mechanisms (mostly based on substantial grant component, often reaching 100%) rarely require the use of innovative financing models, the discussion was structured around the future perspective for decreasing the grant component and transferring it to a more sustainable financing mechanism, which, of course, provok es resistance from both the citizens and many of the local authorities. However, it was confirmed that the benefits of the executed projects are tangible, and despite the ambition in terms of energy savings could be higher, the momentum gained by the programmes so far has to be maintained. The municipalities agreed upon a common declaration, based on 4 specific issues (also related to the local capacity and resources needed for implementation of the programme and the communication to the citizens), as follows: to introduce an additional “Technical Assistance” component to improve the conditions for professional management and control over the implementation of the Program; the grant component reduction should be reviewed as an opportunity to increase the commitment of the end users, to introduce the possibility of upgrading to higher energy classes, including through the step-by-step method, as well as ensuring the quality of project implementation; there is a need for a systematic and large-scale communication campaign at national and local level with a view to achieving sustainability of the policies pursued and limiting the expected outflow of interest in reducing the share of public co-financing; energy efficiency tools in residential buildings should be an integral part of energy, environmental and territorial development policies.

2 EmBuild Regional Roundtable

EmBuild National Roundtables 3



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On 19-20 March 2018 a regional event entitled Fighting off Energy Poverty through Streamlined Energy Efficiency Policies in Multilevel Governance Perspective took place in the Representation of the European Commisson in Bulgaria. Organized together with the Municipal Energy Efficiency Network EcoEnergy, the event gathered more than 150 participants. The event was combined with individual presentations followed by roundtable discussion.

To prepare the roundtable discussion, several presentations were held describing the investment climate and opportunities at national level, including speeches by Megan Richards, Director, Directorate-General for Energy, European Commission, Zhecho Stankov, Deputy Minister of Energy, Feodor Salmov, Head of Housing Department at the Ministry of Regional Development and Public Works, Dimitar Doukov, Executive Director of the Bulgarian Energy Efficiency and Renewable Sources Fund, Marco Giuli, European Policy Centre, European Energy Poverty Observatory, Irina Birlica, Romanian Energy Regulatory Authority, Mladen Ilijević and Božena Pastuović, Croatian Environmental Protection and Energy Efficiency Fund, Julian Popov, Building Performance Institute for Europe / European Climate Foundation, Tsveta Naniova, Bulgarian-Austrian Consulting Company, Fréderic Boyer, Energy Cities / Covenant of Mayors.

The discussion on the second roundtable was designed to formulate conclusions related to the role of the municipalities in the fight against energy poverty through mobilizing investments for energy efficiency in the building sector – the most sustainable solution to this regional problem. Despite being a topical issue in public and policy discussions, there is still no common definition of energy poverty - both at national and at European level. One of the most widely applied definitions claims that energy poor are those households that spend more than 10% of their income on energy. Unfortunately, this definition does not take into account whether these costs are sufficient to provide adequate thermal comfort. An additional appropriate parameter, which is undoubtedly applicable in Bulgaria, is whether, after spending on energy, the family budget remains above the poverty line. Last but not least, access to energy services is another key indicator: increased competition between different suppliers and facilitated penetration of individual RES installations have the potential to significantly change the energy poverty line. The behaviour of citizens and their “energy culture” also plays an important role in optimizing energy costs, which directly refers to the need for a systematic communication and educational campaign on the subject. In this aspect, energy saving measures in buildings prove to be the most sustainable direction for designing policies and financial instruments combatting energy poverty: they reduce the energy demand and, respectively, household spending needed to achieve optimal thermal comfort; they make alternative heating and cooling solutions cost-effective (thus contributing again to improve the external air quality); they provide opportunities for innovative energy services. Probably most importantly, they are an incentive for increased civil participation and change of end-user behaviour – but without the active involvement of the municipalities, which are closest to the citizens, these effects could hardly be achieved. However, grants that cover 100% of the cost of improving the energy efficiency of multifamily blocks of flats foster the expectation that energy performance improvements should be fully paid by the state and hamper the development of the emerging energy services market. It is absolutely necessary to find a sustainable financial scheme for continuing investment in renovation of the building stock. Low energy prices (inaccessible to much of the population, but still 30% lower than the regional market) make the cost of deep renewal less financially attractive and with a longer payback period.

Conclusions:Bulgaria is in front of the critical situation of moving from a pattern for financing of energy efficiency projects in both the public and private sector with a significant grant component (in many cases, up to 100%) to more economically efficient and sustainable financing mechanisms, which bears the risk of disappointment and resistance from both the citizens and the local authorities. However, it is already recognized that there is no other way to maintain the momentum in the building renovation sector, obviously delivering tangible benefits for all stakeholders. This requires a joint effort not only to develop socially acceptable new public support programmes, but also the corresponding financing mechanisms to fund the private co-financing. There are good practices already available and active (despite the unfavourable business climate due to the high grant components), especially those represented by the Bulgarian Energy Efficiency and Renewable Sources Funds, which provides technical consultancy, soft credits, ESCO and bank guarantees, and bridge financing, which can be exploited for covering of the co-financing part of beneficiaries under different financing schemes (or covering costs for additional energy efficiency measures for programmes focusing on only one measure – e.g. on relacing the heating system). However, other venues should also be explored, including financing of projects by obligated parties, marketing achieved energy savings, expanding the ESCO market, implementation of innovative technologies, especially with a view to exploit the big RES potential, becoming an active side on the energy market.

All these activities should be a part of a streamlined energy strategy, aligned with the national strategic priorities, and the building renovation plan should be an integral part of it. In the case of Bulgaria, there is a significant problem with the low thermal comfort in many of the public buildings, which means that it is difficult to achieve

a positive cash flow through renovation projects, because most of the savings are used for reaching normal temperature levels during the heating and cooling seasons. This situation, being also one of the reasons for the excessive grant financing, requires a very specific approach in determining the financial framework, defining the priority projects and channelling investments from the right sources to each specific project, in order not to pick up only the low-hanging fruits but also to revitalize old buildings and the urban environment and to serve deeper social goals (as keeping the young people in the small cities and towns). In many cases, this requires the exploitation of the step-by-step renovation approach, which unfortunately is still mostly neglected.

As strategic recommendations, the following the following 3 issues are outlined: Using the leverage potential of the public money. At the moment, all national energy efficiency support programmes offer a significant grant component, exemplified by the 100% public grant for renovation of private multifamily buildings under the National Energy Efficiency Programme. It is already publicly recognized by the national authorities that this programme should be transformed into a more sustainable financial mechanism; unfortunately, there is still no clear long-term vision and financing mechanism accepted. These efforts should be guided by the National Renovation Strategy as required by Art. 4/EED (the new Art. 2a/EPBD); however, stricter monitoring over its implementation is needed, given the fact that the current practice has built strong social expectations for continuing the 100% grant financing, which represents a major communication barrier.

Much more active communication and involvement of the end users. Within the current programme, not a single cent from its 1 billion Euro budget is spent on communication. The involvement of the end users is limited to the minimum, and hence, such is their appreciation and responsibility towards the maintenance of the renovated buildings. In the expected and highly necessary transition from the 100% grant to a financing scheme, the increased understanding of the benefits of building renovation and the trust towards public authorities is crucial - and both are built in a continuous communication process (supported by professional monitoring of the achieved savings, which will hopefully be strengthened in the new EPBD).

Optimal use of the energy saving potential and new technologies. Through the current target for renovation to energy class C (191-240 kWh/m2 primary energy), the potential for energy savings is not optimally exploited – on the contrary, a blocking effect is achieved, preventing further savings in the economic lifetime of the applied measures. Much more ambitious energy levels should be targeted (especially when using public money), potentially by using staged renovation which can optimize the initial investment and leave space for utilizing the full energy savings potential of the building. This would also allow increased support for new technologies, including economically efficient scaling up of RES solutions in buildings, which can effectively put the end user in the centre of the energy market – and open new pathways to innovative financing schemes.

Best practice examples: In the city of Burgas, a number of renovation projects are executed through combining grant funds from the Operational programmes with financing from the Bulgarian Energy Efficiency and Renewable Sources Fund. Some of them reach very ambitious energy efficiency levels; as for the EmBuild pilot buildings – the “Mladost” sports hall, the energy audit suggests reaching energy class A as the most suitable option. Under the influence of EmBuild, the municipality has decided to invest in a modern energy management system, which will be developed in cooperation with Municipal Energy Efficiency Network EcoEnergy and will allow for better planning process and channelling of funds to the most appropriate projects.

In the city of Gabrovo, several projects are developed with the goal to apply for ESCO financing schemes. The audit of the pilot building under EmBuild (Museum of Humour and Satire) is specifically elaborated by EnEffect so that it is suitable for ESCO financing. Additionally, a project for building automation is prepared and currently applying for financing under a programme of the German government. Gabrovo is also the first municipality which has explored the options for step-by-step building retrofit.

On the other side, and innovative project for solar district heating for several public buildings with potential for involvement of private houses was not included in the plan of Gorna Malina, as the necessary investment was too high compared to financial capacity of the municipality (1,5 million Euro compared to own investment of 150,000 Euro in all public buildings for the period until 2025). Combined with poor thermal comfort maintained in the buildings currently (which affects negatively the actual cash flow after implementation of measures), this is a major barrier to specific projects. In such situations, instruments as staged renovation and bundling of projects have the potential to overcome some of the financial barriers.



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REGEA experience (Croatia):On 03 October 2017 an event entitled Experiences in energy renovation projects on local and regional level has been organized within CROENERGY 2017 summit. The event numbered around 60 participants from different target groups: public authorities (national and local), local government associations, international and local institutions and energy agencies including partners involved in EmBuild project. The event was combined with individual presentation with key speaker from Ministry of Construction and Spatial Planning followed by roundtable with following participants: Milena Garthley (NALAS), Julije Domac (REGEA), Snježana Turalija (City of Karlovac), Anđelko Ferek-Jambrek (Krapina-zagorje county) and Ivana Milan (Ministry of Construction and Spatial Planning) .

The conversation was moderated by Ivana Benković (REGEA).

After initial presentation held by Ivana Milan from Ministry of Construction and Spatial Planning (Cofinancing of energy renovation of public and residential buildings with EU funds) a discussion started with already named participants.

Conclusions: r There should be emphasis on necessity for long-term public building renovation. The policies and measures, as well as provision of funding for their implementa-tion should be well coordinated.

r The involvement of private investors using ESCO models should be encouraged and fostered, and the funding and practice should lay on coherent legislative framework.

r Further awareness raising about energy savings and wider benefits concepts among decision makers will accelerate the public demand for renovation in public buildings.

r Krapina-zagorje county is one of the leaders in energy renovation projects of public buildings;

r Nearly-zero energy building (nZEB) standard should become obligatory technical standard in long term. Dissemination of good practice, as well as cases of “what did not work” will exemplify the effects of the implemented measures, thus encouraging the application of the standards.

Best practice examples:

Involvement of public & private funds in energy renovation project in Karlovac county through EPC model.

Energy performance contracting (EPC) showed to be a good model for public authority as well as for private investor. Investment in changing the energy carrier (refurbishment of boiler room) from fuel oil to biomass was split between public and private financing where private investor is afterwards responsible for maintaining the boiler room and for the fuel (biomass) supply. This relationship is defined with contract between public authority who owns the building and private company (contractual period is usually up to ten years).

eza! experience (Germany)It was planned to integrate the national round table in Germany in an event of the district of Oberallgäu that was held on 19.th of March 2018. The event was the so-called “Energiebeirat Lkrs Oberallgäu” – a periodic meeting of the mayors of the 26 municipalities in the county of Oberallgäu. This committee decides about projects and measures that are part of the implementation of the climate-protection plan of the county. Unfortunately, the topic of EmBuild was taken from the agenda on a short notice. The reason for this is, that building renovation is not very much in the focus of the municipalities at the moment. The activation of enterprises and companies is of bigger interest for the municipalities at the moment, for the share of their energy consumption is around 45% of the total energy consumption of a municipality (on a territorial view). To get nevertheless insights into the views of municipalities, bilateral interviews with public officers were held by end of March.

The answers are reproduced analogous below:

General aspects: r The municipalities are already investing in the renovation of the building stock – but only where it is abso-lutely necessary and cannot be avoided.

r The topic is not of interest for the mayors, because the topic is well known and annoying to them because of constant repetition (by media, energy agencies, government etc.).

r Other reasons are the increase of prices and costs for building and the constant change of regulations (energy savings regulations ENEV, fire protection, disposal for demolition waste etc.). The mayors think they are doing everything that is necessary and possible, especially from a financial point of view. And there are more urgent topics at the moment that draws their attentions (sewage systems, high-speed internet) and last but not least the currently low prices of fossil fuels cause a low profitability.

r Concerning renovations, high building standards – like passive house – are not realized. For them, a pragmatic approach demands low-tech solutions that are due to existing norms and regulations not easy to realize. And there is the aspect of financial feasibility that is a strong focus of the municipalities. It is more likely, that two buildings are renovated with a lower energetic standard than to realize one shining light-house project.

r The national (German) renovation strategy and the requirements of the EU (Energy Efficiency directive) are part-ly not known or not of interest in the local administrations. They do not affect the daily work of public officers.

r As an effect of the EU-legislation the national framework, especially the ENEV (Energy Saving Directive) is constantly adapted (every 2 to 3 years). In the eyes of the municipal administration the effect is a constant rise of the costs for building and the renovating of buildings. The adherence to the energy savings directive is an obligation of the building department.

Identification and financing of energy efficiency measures r Some municipalities have set their own standards for climate protection or for buildings:

X County of Oberallgäus plan is to increase the share of renewable energy to 70% until 2020 (decision of the district council from 2011).

X The city of Kempten has decided that all new built public buildings have to be in passive house standard.

X Some municipalities offer a bonus for their citizens if they overfulfill the actual regulations for energy efficiency, e.g. Altusried, Kempten, Durach.

r Energy efficiency measures and renovations are financed with own capital resources. At the moment, the situation for the municipalities is good. Due to a flourishing economy, the municipalities have high tax rev-enues that can be invested. If this situation changes and the revenues shrink, measures will be postponed and only absolutely necessary measures will be implemented.



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r In some cases, if the municipalities use loans, they use interest subsidy loans e.g. from the Bavarian state (Bayern-Labo) with 0%.

r The municipal budget is planned from year to year. Some projects may be multi-annual, but there is no long-term planning of investments within the budget planning. The municipalities may have a list of priori-ties, but the decision on the sequence of measures is more a political decision.

r Contracting is an instrument for financing energy efficiency measures for bigger municipalities. The city of Kempten for example has implemented a contracting project for street lighting in 2010, the city of Memmingen implemented a contracting project for technical infrastructure for 25 buildings in 2008. In Memmingen, the experiences were generally good, but when it comes to changes in the buildings, the things may get complicated. The baseline for the calculation of the savings has to be determined newly in order not do down any party. In Memmingen the implemented measures were limited to measures in the technical infrastructure, for building renovation measures were financially not interesting because of long payback periods (> 15 years). Subsidies for measures on the building exterior (insulation of walls, replacement of windows etc.) can not easily be used in contracting-schemes. Usually the building owner gets the subsidies – in this case the municipality, not the contractor who is investing.

r Alternative ways of financing like private-public-partnership are taken into consideration but were rejected because of negative examples from other cases. The opinion is, that PPP-projects are complex to imple-ment, and make projects more expensive. It is contrary to the obligation of the municipalities to use the financial means in a thrifty way.

r Crowdsourcing is not common among municipalities. Big cities like Munich or Ludwigshafen issue bonds, but this is not an option for small municipalities on local level.

r Triggers for the implementation of measures are mostly because of needs for repair or for structural reasons. In some cases, motivated from the political will, for example a new building of a fire brigade in Memmingen, because of the merging of local firefighters. In some cases, additional measures can be car-ried out together with necessary measures: e.g. if a school needs a new roofing, the question is, can it be combined with thermal insulation. Combinations of measures are taken into account if the subsidies will be higher by implementing additional measures.

r The impulse for renovation measures often comes from the technical department. Benchmarks or refer-ence values are seldomly taken into consideration, but technical necessities trigger investments.

Barriers r Although it is likely that with the actual legislation (Energy Savings Act ENEV), that the goals for climate protection will be missed, the strategy of the national government cannot be considered as a motivation for the municipalities. There are special subsidy programmes (timely limited) like the KIP 2 (Kommunal-Investitions-Programm 2 – programme for investment in communal infrastructure) that offer grants of 80%, but they are not linked to ambitious energy standards. The measures that are fostered with subsidies only have to meet the actual ENEV-standard.

r A more differentiated view on the costs of energy saving measures would be too complicated in the eyes of the municipalities. There is no common standard or norm for the calculation of costs related to energy savings and costs that are for measures that are anyhow necessary. The consideration of measures be-forehand is very unlikely in this setting.

r There are various barriers in the planning process, too. Other regulations than energy norms have to be kept in mind, e.g. fire protection, soundproofing etc. If the regulation weren`t that complex, more measures could be implemented. For the calculation of subsidies and grants, the financial calculations have to be adapted, according to the terms of the subsidy programme – this results in higher planning costs.

r The tendering and awarding procedures on EU-Level (thresholds depending on the planned budget) are complex and time consuming for the administrations of small municipalities. Due to a flourishing economy, the prices for construction services are high at the moment. In some cases the municipalities don`t get offers from craftsmen and companies at all because they are busy.

Wider Benefits r Wider benefits are taken into account when measures are discussed within the relevant bodies in mu-nicipalities. In Memmingen, for example, prior to the replacement of the windows in one administration building (Welfenhaus) the improved comfort for the building users was taken into consideration. But this aspect was not evaluated financially.

Locally added value by contracts for local companies may be a contradiction because of tenders on a EU-wide level. Due to this procedure, a company from abroad may get awarded with a contract.

Experiences from Serbia (University of Belgrade)First national roundtable event was held on 29th of September 2016. and was jointly organized with the GIZ-DKTI project “Energy Efficiency in Public Buildings in Serbia“, as a kick-off meeting marking the beginning of data collection on public buildings in order to asses their energy efficiency. The event was organized in hotel Metropol, with representatives of about 70 Serbian municipalities (local government), representatives of central government, energy agencies, public companies and other relevant stakeholders. This project is supported Ministry of Mining and Energy, Ministry of Construction, Transport and Infrastructure, University of Belgrade, and among included partners are also Standing Conference of Towns and Municipalities and Regional Economic Development Agencies. EmBuild project relies on the process of data acquisition performed through this project, within the municipalities in the EmBuild network. With intention to gather stakeholders from all 169 cities and municipalities of Serbia, 174 people were invited to attend this event, while around 80 people attended it.

Kick-off meeting of the research project Energy Efficiency in Public Buildings in Serbia - Acquisition of energy related data of public buildings and EmBuild project in Serbia was held also in Novi Sad. The event in Novi Sad took place in The Assembly of APV, The Banovina Palace Building on 3rd of October 2016, and 57 stakeholders from Vojvodina region attended.

Second national roundtable was held within the 61st International Technical Fair, on 16th of April 2017, where representatives of collaborating municipalities were invited for the presentation of the EmBuild tool, prior to the launching of the on-line webinars. Representatives of the EmBuild team from University of Belgrade Faculties of Architecture, Mechanical and Electrical engineering presented the gathered information on the public building stock in the network municipalities as well as methodologies

“Energy Efficiency in Public Buildings in Serbia“ kick-off meeting Metropol hotel; professor Milica Jovanović Popović giving an introductory lecture (Photo: ND Studio)

Roundtable held within 61st International Technical Fair (Photo: EmBuild team Serbia)



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developed within the project, on preliminary and detail analysis. Also, a case study of a preliminary analysis of a school in Belgrade was presented. Representatives of several collaborating municipalities attended the event.

Key findings of these roundtable events are that currently the greatest obstacles for public building refurbishments are lack of project documentation and preliminary assessment of present state and savings potential, on the building stock level, as well as on single building level. Also, local public officers and stakeholders are not familiar with mechanisms of applying for international financing institutions calls and projects, and regular and comprehensive information about open calls is lacking. Means from local budgets are insufficient and cannot cover necessary works on refurbishment of public buildings. There are several national funding schemes (Public Investment management office, budgetary fund for energy efficiency…) but process of applications and selection criteria are often not transparent enough. All partners agreed that comprehensive list of public buildings with appropriate tools for addressing their refurbishment potential, along with renovation plans on national and local level would facilitate process of systematic public building stock renovation.

Third national roundtable was held on 22nd of December 2017, as an Energy refurbishment of buildings – thematic day, organized by EmBuild within Balkan Architecture Biennale Conference. One day within the Balkan Architecture Biennale venue and conference has been dedicated to energy refurbishment of buildings. In the morning a roundtable with local public officers and partners in EmBuild project was held, as well as representatives of Ministry of Construction, Traffic and Infrastructure. About 30 public officers from 13 EmBuild municipalities participated in the event. Discussion about possibilities of incorporating renovation plans in local planning procedures followed presentations on future steps in the EmBuild project. Partners agreed that different approach for formulating renovation plans needs to be developed based on the status of municipalities. Significant differences exist between local self-governments with and without obligations to establish energy management system, depending on its size. Also, based on the size of the municipality, structure and number of public buildings vary significantly. It was agreed that several pilot renovation plans will be developed, based on characteristic types of municipalities.

Part of the roundtable was also a lecture about incorporating wider benefits of energy efficiency refurbishment in strategic planning of building stock renewal, by Mr. Sebastian Botzler from Centre for sustainable building, Technical University Munich.

Fourth national roundtable event was held at Faculty of Architecture within a joint workshop of EmBuild project and Standing conference of town and municipalities. Event was titled Strategic framework of building refurbishment planning was held on 27th of March 2018. Participants were representatives of local self-governments, municipalities and cities from SCTM and EmBuild partner network. Aim of the workshop was discussing further steps towards adoption of pilot local renovation strategies, and also announcement of the Energy Efficiency Knowledge Hub, which will be mutually led by SCTM and faculty of Architecture, with support of GIZ. About 30 public officers from 13 EmBuild municipalities participated in the event, and total number of participants was about 60, together with representatives of other municipalities from SCTM network and representatives of central government. Results and experiences from preliminary and detail analysis conducted for selected public buildings in EmBuild partner municipalities were presented by Bojana Stanković, while EmBuild project coordinator in Serbia, prof. Milica Jovanović Popović presented

the framework for future local renovation strategies and moderated the discussion. In the very live discussion significance of local initiatives was emphasized, as well as importance of dialogue with citizens and opportunity for local decision making in the hands of energy managers (case of Šabac municipality), as well as creation of a database with relevant characteristics about local public building and training of employes in those buidling to provide relevant energy consumpation data for enabling energy consumption monitoring (case of Vrbas municiplaity). Also, good examples of public buildng refurbishment by local means, and by cumulative savings achieved from previous refurbishments as a basis for further investments into renovations were highlighted (case of municipality of Ivanjica).

Energy agency KSSENA (Slovenia)On 12 October 2017 an event entitled Energy Renovation of Public Buildings in Slovenia has been organized in co-organization with the Montel Energetika.NET. The event was held in Ljubljana with more than 100 participants from different target groups: public authorities (national and local), local government associations, international and local institutions, investors’ associations, banks, SMEs and energy agencies including KSSENA and their representatives in EmBuild and other projects. The event was combined with individual presentations followed by roundtables. KSSENA combined event with project NEW FINANCE (Interreg Mediterranean), which focuses on innovative approaches to financing energy efficiency in public buildings. To start roundtable discussion we shortly present possibilities for financing energy renovation of public building and innovative financial mechanisms that might be used in near future.

r In Slovenia, the financing of energy efficient renovation remains the main concern for the local authorities. New financial instruments are being prepared – long-term loans and loans for ESCO companies, which the Slovenian Ministry of Infrastructure is preparing together with banks and which are expected to be launched in mid-2018. After 2023, there will be no more grants.

r the market share of the ESCO companies is increasing. The risk ownership remains an issue. The local banks are reluctant to share the risk whereas EBRS, EIB and other international actors are supporting such investments. A guarantee fund would be of significant help for the municipalities to guarantee the investments. Regardless of the difficulties on the ESCO market, the Slovenian model is being replicated or upscaled elsewhere in Europe. ESCO model is also a good example of stakeholder cooperation.

r the size of the investor at local level in Slovenia is also an issue. Small companies are often unable to respond to tenders for large projects, whilst the bigger investors are not interested in small investment markets. It is better for the municipalities to follow models of the small contractors that will lead to choos-ing smaller tenders which are uninteresting for the large contractors.

r the legislative framework is improving towards less bureaucracy and simplifying the procedures. This is especially important for smaller municipalities with weaker technical and human resource capacity.

r the future of energy efficient renovation in public build-ings looks very promising in Slovenia with new mecha-nisms and financial schemes being developed. Such possible solutions are green bonds, municipal revolving founds, crowdfunding, which are currently not attractive due too high transaction costs and high expected rate of return. On longer period, blockchain technologies and other possible financing sources could be an option al-though public building owners will have to have sound and realistic budget plan to invest and maintain the low consumption in their buildings.

Discussion within Energy refurbishment of buildings – thematic day; Incorporating wider benefits in strategic planning – Mr. Sebastian Botzler from TUM (Photo: EmBuild team Serbia)

Discussion within Strategic framework of building refurbishment planning roundtable event (Photo: Celina Thaller de Zarate)

Nejc Jurko, Energy Agency KSSENA (Photo: Barbara Reya)



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AE3R Experience (Romania)During the 25-27 October 2017, AE3R has participated at the international conference and fair CNEE 2017 in Sinaia. CNEE is a conference that was initiated and sustained by the Society of Power Engineers in Romania (SIER) and it is taking place every two years.

On the 26th of October 2017, the EmBuild National Roundtable Event was organized in co-organization with the Society of Power Engineers in Romania.

CNEE is dedicated to the managers and specialists who work in or make business with the operating/maintenance companies from Romanian power sector, which are interested into the exchanges of information, the state-of-the-art in the energy field, solutions and the most recent achievements, suitable/adequate to the Romanian power sector.

The event was held in Sinaia and it was attended by managers and specialists important companies in the energy field from Romania and abroad, institutes, universities, consumers, specialists etc. It is estimated that was is visited by aproximately 200 specialists from Romania and abroad, with participants from different target groups: public authorities (national and local), local government associations, international and local institutions, investors’ associations, banks, and SMEs.

The event was moderated by Mr. Bogdan Potlogia, director of AE3R and had individual presentations which were intended to be starting points for a dynamic exchange of ideas and perspectives, with different themes such as:

r Improving energy efficiency of the existing building stock- especially public buildings.

r Thermal rehabilitation of public buildings and use of local RES potential;

r Improving energy management;

r Improving the energy efficiency of electrically operated systems;

r Improving the energy efficiency of heating and cooling systems (for example, using heat pumps, replacing existing boilers with new and more efficient boilers that use thermal energy from renewable sources and by reducing the fuel, modernizing industrial heating/cooling systems);

r Improving the energy efficiency of lighting systems (for example, replacing existing lamps with new and more efficient ones, using digital control systems, motion sensors for lighting systems);

r Improving the energy efficiency of refrigeration systems (for example, replacing existing units with new and more efficient devices, introducing systems for industrial waste heat recovery);

The Roundtable had mainly the following purposes:

r Stimulating debate between stakeholders involved in the development and implementation of the strate-gies in order to reach a consensus concerning the steering of policies and initiatives aimed at enhancing the energy performance of buildings;

r Encouraging all stakeholders to adopt ambitious and adequate attitudes aimed at the improvement of the quality of the public buildings to ensure immediate and long-term benefits for building owners and to support the economy. The renovation of the existing building stock in order to increase the energy perfor-mance thereof is one of the most important and strategic investments that could be carried out. The key driver of EED is the achievement of the EU’s 20% energy saving target by 2020, and reaching the long-term environmental protection objectives, referred to in the roadmaps on energy efficiency and reduction of carbon emissions, while the benefits of such achievements have a major impact on various aspects of the economy and society.

Conclusions:

The roundtable was full day event that mixed plenary sessions and round table format conversations, with the key objective of drawing the essential lines for the future renovation and energy strategies. An insightful conversation with key sector leaders and experts provides policymakers and investors with valuable information and a clear vision for decision makers. With all the contributions and discussions of the roundtable we have taken more steps in the direction of:

r transparent and sustainable stakeholder involvement,

r better coordination of the national and LEEAPs in the frame of the implementation of the EU Directives,

r exploration of the link between thorough sustainable energy and cross-sector planning (mobility, transport, private housing building stock, etc.) and

r attraction of investment, and mid- and long-term measures to improve the investment climate.



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r The local authorities assert that they are aware about significance of energy efficiency and innovation in public buildings and its benefits. That is certainly the case with the local authorities participating in the roundtables across the EmBuild partnership. However, more awareness raising is necessary to encom-pass all sizes of municipalities and provide them with arguments in favour of energy efficient renovation in public buildings, including financial and wider benefits.

r Most of the LGs have renovation in public buildings in LEAPs as separate documents or are integrated part of Sustainable Development Plans. Nevertheless, the sections of LEAPs concerning energy efficient renovation in public buildings should also indicate the wider benefits, their advantages and possibly their financial expression. The Leaps should also be in line with the NEEAPs which often is overlooked or per-ceived as only a formal requirement.

r Universities, energy agencies, international organisations etc. help the LGs with formulating their LEAPs. These institutions should be also aware not only about the energy savings and financial benefits but also of indirect but significant effects on human health, wellbeing, absence from work, comfort, etc.

r The participation of energy agencies is a significant help to municipal energy management activities.

r Different sizes of municipalities deal with same issues when investing in energy efficiency in public build-ings.

r A lot depends on motivation and enthusiasm of local energy managers and professionals.

r Some national renovation programmes (Romania and Bulgaria) provide 98-100% financing for the projects – rather an exception – elsewhere it is combination between own sources, regional, national, EU (ELENA) and other programmes.

r Different standards in different countries are at place and investors, especially international, are experi-encing obstacles in stepping in local energy efficiency investment market.

r Very complex and time-consuming procedures for financing and implementing EE measures in public buildings should be simplified and, if possible, standardised, especially if the aim is to attract international investors.

r There should be more Incentives for municipalities that invest in deep renovation of public buildings. This can be achieved by relevant legislative changes, fiscal incentives or non-material incentives (awards, competitions, dissemination campaigns) that provide the decision maker with opportunities to take pride in the achievements – and take the political benefit for them.

r There is a need for new ways of financing EE projects in public buildings (ESCOs, PPP, ease of legislation and local borrowing). The decision makers should be aware of the different options for investment in public buildings’ renovation. The local energy experts are often the local heroes of energy efficiency. The decision makers and the municipal experts who are involved in the preparation and implementation of the plans for deep renovation in public buildings should have enough opportunities to exchange with colleagues.

r The local governments need certain level of readiness for energy investments in public buildings. Thorough planning of renovating of building stock is the first step toward successful local energy efficiency policy and therefore benefits from its implementation.

r The implementation of the deep renovation is often a balancing act between application of technical mea-sures and financial potency of the local government. Municipalities face challenges in finding resources for applying the desired measures, especially if latest materials and technologies are used versus those that have already have become mainstream tools. The resolution is in tailor-made financial and incentive schemes, bankable projects, loans and energy efficiency funds for local governments.

r Thorough planning renovation in public buildings is one of the best approaches to optimize financial impli-

cations of the implementation of renovation strategies of the local governments.

EE is a resource, it is about comfort, health, performance at work.

4 Conclusions

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