IMPROVING ENERGY EFFICIENCY FOR THE LOW INCOME HOUSING SECTOR IN MACEDONIA Habitat for Humanity Macedonia Skopje/Geneva April 2013

SITUATION ANALYSIS  Increasing poverty 31% lived below the national poverty line in 2010  Poor maintainance of the housing stock in collective apartment buildings 35% of the residential buildings have only recently registered homeowner association At least 100,000 housing units in need of EE intervention  Raising energy prices Macedonian households pay three times less for electricity than EU average, up to 100% less than SEE countries Full price liberalization is expected by 2015  High levels of CO 2 emissions 5.5 metric tones/capita, higher than any other SEE country  Low level of awareness & poor regulatory framework

KEY CONSIDERATIONS  Energy consumption of the Macedonian residential sector is high, unaffordable, environmentally degrading and inefficient  Until recently the decay of homeowner association has not been addressed in any serious fashion  EE regulatory framework and supporting mechanisms still under development  National EE Strategy and the corresponding Actions plan provide no instruments/incentives for homeowners to take measures to improve the efficiency of their homes  Investing in improvement of collective housing and residential energy management has not been identified as business opportunity

LONG TERM GOALS  Decrease the households energy consumption in the structure of the final energy consumption by sectors  Decrease the consumption of electricity in the structure of households’ overall fuel consumption  Decrease the energy consumption on heating in the structure of households overall energy consumption

PILOT PROJECT  Residential Energy Efficiency as Social Safety Net Tool - USAID through IRG, along with SEVEn, TimelProject and Habitat for Humanity  Develop systematic information and experience: costs and benefits, household behavior, institutional issues (legal/regulatory, implementation, homeowners associations)  Research/demonstration effort, not a sustainable model

PROJECT OBJECTIVES A.Develop and test market-based models for energy efficient upgrades in collective apartment buildings B.Improve management of collective apartment buildings C.Facilitate investment, entrepreneurship and job creation on energy efficiency D.Foster a broad-based societal platform that affirms energy efficient consumption of clean energy and advocates for efficient and targeted state involvement in the housing sector

FINANCIAL MODELLING & EE UPGRADES  Objective A: Develop and test market-based models for energy efficient upgrades in collective housing units Selection of 30 buildings in 7 major cities to carry EE interventions Development of financing models Networking and capacity building of an EE investor forum Energy audits carried in 30 buildings (pre and after intervention) Establishment of a EE Revolving Fund, criteria and process EE renovation of selected buildings

EE REVOLVING FUND  Habitat for Humanity as interlocutor in securing capital and funding sources for the low- income housing sector in Macedonia  Initial funding: USAID MFI Moznosti Habitat for Humanity  Other socially motivated investors invited to join the Revolving fund

HFH MK Allocation (terms & conditions) MFI Cooperative Agreement Loan (terms & conditions) ESTABLISHING THE REVOLVING FUND USAID OTHER INVESTORS/CREDITORS Lending model 1 EE Interventions Lending model 2 Lending model 3 Lending model 4 EE REVOLVING FUND LG grant MoU

REVOLVING FUND Loan INTERMEDIARY (HOA, Company) or INDIVIDUAL HOMEOWNERS Intervention completed (families served) Building/family selection InterventionSupervising MUNICIPALITY Supervising Grant/loan FINANCING MODEL 5

EE INTERVENTION COMPLETED

HOUSING MANAGEMENT  Objective B: Improve management of collective housing units Supporting HOAs in selected buildings o Developing capacity for selection of companies for EE interventions o Criteria for HOA’s creditworthiness assessment Establishing and building capacities of the Tenants Association Resource Center (TARC) o Web based resources, including best practices, databases and manuals for HOA o Exploring TARC’s long-term sustainability options

INVESTMENT & JOB CREATION  Objective C: Facilitate investment, entrepreneurship and job creation on Energy Efficiency (green jobs) Promotion of business opportunities in EE sector o Researching EE and green jobs opportunities, regional and national o Capacity building, modeling and supporting ESCO in operations and service delivery Education, training and business opportunities in EE o Vocational trainings for young construction workers, high-school students, energy service companies and micro-entrepreneurs o Promotional events aimed to generate interest

SOCIETAL PLATFORM ON EE  Objective D: Foster a broad-based societal platform that affirms energy efficient consumption of clean energy and advocates for efficient and targeted state involvement in the housing sector Establishing and supporting platform of relevant stakeholders o SAG objective: Convening mechanism for legislators, public administration/local government, business, civil society, media, international organizations Public awareness, advocacy and lobbying campaigns o Workshops with municipalities and ministries o Harmonization of the legislation (Housing Law and Construction Law)

Financial modelling Investment & job creation Housing management Advocacy Awareness Construction companies Individual homeowners Financial institutions Homeowners’ associations General public High school students Unemployed workers Entrepreneurs/employers Government: central/local Loan Construction Training Capacity dev. Training Advocacy Societal platform PROJECT BENEFICIARIES

 Testing vs. Implementation of financing models Simultaneous: risky Consecutive: limited time frame  Sustainability/replicability of models and practices  Context change Favorable Unfavorable  Lack of mechanisms in reaching consent of homeowners  Awareness: Skopje vs. Macedonia average  Dependence on municipal procedures and funding: Uncertainty with the political will/decisions Uncertainty with the availability and procedure for matching funds Municipal prioritization in buildings selection Construction permits/approvals issue MID-TERM REVIEW: FY12 LESSONS LEARNED