The LEMON project, using EPC in Social Housing – October 18th 2017 Claudia Carani – AESS Modena

AESS AESS is a no-profit organization created 1999 working to contribute achieving a sustainable development of the Emilia-Romagna region We have 60 associated public authorities We are a team of 16 energy experts We provide mitigation and adaptation services to the private and public sector

AESS and EPC experience Previous experience in EPC tenders: EPC tenders for Municipalities in Emilia Romagna Region; ELENA-Modena project, which provided 0,7m€ for technical assistance to Municipalities of the Province of Modena with an European Investment Bank contribution; this led to a total amount of 32 m€ in energy investments on municipal property; MARTE – MLEI PDA project Assessment of the interventions for the 5 hospitals energy retrofit, integrating ESCOs private investment with structural funds(grant+revolving fund).

LEMON project LEMON is a project funded as part of the European Horizon 2020 program (call-EE-20-2015: Project development assistance for innovative bankable and aggregated sustainable energy investment schemes and projects) with the purpose of providing technical assistance to public and private entities for the preparation of tenders for the energy retrofitting of 622 social housing units in the provinces of Reggio Emilia and Parma.

LEMON project LEMON will supplement regional and national loans and incentives to improve the energy efficiency of the buildings and apply two new contractual instruments to govern the relations between tenants and owners of the residences, the energy supplier and the ESCOs (Energy Service Companies) so as to ensure a return on investment within 15 years from the retrofitting.

LEMON partnership 4 organizations are partners of the LEMON project: Agenzia per l’Energia e lo Sviluppo Sostenibile di Modena (AESS), the project coordinator, ACER Reggio Emilia, ACER Parma and ASTER, the Consortium for the innovation and the technology transfer of the Emilia-Romagna Region. The Emilia-Romagna region is supervising the projects

LEMON objectives To experiment innovative financing models for social housing retrofit through EPC model contracts, mobilising 15,290 million Euros of investments in energy retrofitting, in order to reduce the buildings energy demand; To develop and implement energy efficiency projects in 622 private and public dwellings involved in the energy retrofit programme; To identify the buildings were retrofit intervention can maximise the energy saved, reaching at least an average 40% energy reduction.

LEMON objectives Lead to 5,74 GWh primary energy saved and 1.159 t CO2 emissions avoided for the social housing sector within the end of the project, in May 2018; To develop a new lease based on the energy performance of the housing unit, called EPTA - Energy Performance Tenancy Agreement.

LEMON activities PHASE 1: Preliminary activities Energy audits and feasibility studies set up in 622 dwellings involved by the retrofit interventions. Collaborative workshops where ACERs, research centres, local administrators and companies of the construction sector will exchange good practices and knowledge regarding social housing retrofit.

LEMON activities 50% with autonomous boilers and private owners 10% with centralized heating system and private owners 30% with autonomous boilers and ACER tenants 10% with centralized heating system and ACER tenants

LEMON activities

LEMON activities

LEMON activities

LEMON activities Business plan Yearly energy costs methan   Yearly energy costs methan € 1.175.806,65 € 705.483,99 - Total investments € 15.290.000,00 - Grants and national incentive ‘conto termico’ € 7.906.918,00 Net investment € 7.383.082,00

LEMON activities

LEMON activities

LEMON activities PHASE 2: EPC tender development and set up of the financial instruments City Council Deliberation that approve the LEMON retrofit programme and the energy performance objective, the economic and financing plan of the investment, the tenants scheme, extending the contract with ACER according with the payback period and define how to co-finance it (co-funding or increasing fee) Buildings board decision from the dwelling owners to co-finance

LEMON activities PHASE 2: EPC tender development and set up of the financial instruments Lemon project Tender to select the bank and loan subscription EPC tender for investment, maintenance and monitoring of the energy performance Call for tender of works in buildings with autonomous boilers EPTA -Energy Performance Tenancy Agreement

Centralized heating system – Mixed ACER tenants and private owners LEMON activities Centralized heating system – Only ACER tenants Autonomous boilers - Energy bills addressed to the ESCO   EPC according with D.Lgs.102/2014 (cannot include the energy supply); the ESCO is third responsible and maintain the boilers. The ESCO obtain the fiscal incentive “Conto Termico”. Energy bills addressed to the tenants EPC according with D.Lgs.102/2014 (cannot include the energy supply); the ESCO is not third responsible and cannot maintain the boilers. Mixed ACER tenants and private owners Thanks to the majority of ACER dwellings in the buildings the Building Assembly can deliberate on energy efficiency investments EPC according with D.Lgs.102/2014 (cannot include the energy supply); the ESCO is third responsible and maintain the boilers. The ESCO obtain the fiscal incentive “Conto Termico”only for the tenants. The owners can obtain the fiscal incentive “55% on tax reduction” Energy bills addressed to the tenants/owners According with this situation the ACERs agree on an a EPC tender with energy supply based on D.LGS.102/2014 for the centralized heating system buildings Monitoring, maintenance and guarantee of the performance in centralized heating system and autonomous boilers The hypothesis expects 70% of the investment covered by the ACERs and 30% on investments covered by the ESCO. The ACERs will have a payback period of 10 years, while the ESCO with the will have a payback period of 7 years.

LEMON activities 1) Scouting of financing/loan to different financing institutions EEEF, Cassa Depositi e Prestiti, BEI, Local Banks. Many findings: For local banks the investments fragmentation reduce the risk of the local banks; For large banks maximum 2 lots; For the EIB the investment is to low, it is necessary to integrate with other investments; For Cassa Depositi e Prestiti the bankability of ACERs is very low since they do not own the buildings, they request a bank guarantee; For EEEF the Municipalities can guarantee the loan, but the administrative barriers can increase the risks. The loan is for 18-20 years; The evaluation of the investment bankability requires between 2-4 months. 2) Competitive dialogue tender

LEMON activities PHASE 3: Procurement process The procurement phase is finalised to publish the tender and award and sign the contracts with the ESCos. PHASE 4: Capacity building, evaluation and LEMON monitoring Organization of capacity building events to increase the competence of target groups (tenants, regional and European policy makers) in the relevant fields of the project, such as the EPC tender development and management, the energy dwelling management, the EPTA. Furthermore, this phase aims to evaluate the project quality and monitor the LEMON impacts.

Phase 5: Communication and dissemination Exploitation of the Results Decision makers in social housing companies and public authorities (region, provinces and municipalities Energy Service Companies (ESCos), Innovation Companies, Financing institutions Building tenants Aims   Capacity building and Information on EPC contract energy saving potential Information on energy saving, RES and ICT measures Disseminate the EPTA Project website Presentation at regional stakeholders events and training courses EU short course National and European brochure Article in specific media Network of social housing companies (Housing Europe, Federcasa, CISPEL) Meetings with key decision makers Energy Performance Tenancy Agreement Other actions expected in the dissemination and exploitation plan Measures and channels Provide innovation solutions in EPC contract Informing on the project objectives Provide feedback on financing products viability Focus group events Presentation at stakeholders events Network of Innovation Community (Climate KIC) Report on financing products available Informing on the new contract Capacity building and information on the measure implemented in the buildings Dwelling Energy Management Manual for tenants Training courses on dwellings energy management Target Groups Phase 5: Communication and dissemination

http://www.lemon-project.eu

LEMON timeline LEMON lasts 28 months, from February 2016 to May 2018