KfW Development Bank Promoting Energy Efficiency in Buildings Claudia Loy Asia Pacific Union for Housing Finance New Delhi, 31 January 2012

Agenda KfW at a Glance The German Way The International Perspective 1 2 3 The International Perspective India – Energy Efficiency in New Residential Housing Southeast Europe – Promoting EE in SME and Housing China – Energy Efficient Refurbishment of Residential Housing

KfW Public Promotional Bank with Wide Array of Functions Domestic Promotion International Business We ensure inter-nationalisation We promote development We promote Germany Promotion of SMEs, business start-ups and environ- mental & climate protection Promotion of housing and education Financing of municipal infrastructure projects and promotion in Europe International project and export finance Promotion of developing and transition countries Promotion of Environmental and Climate Protection

KfW A Strong Environmental and Climate Protection Bank Commitments in 2010: EUR 25,3 billion for environmental and climate protection EUR 23 billion for energy efficiency (EUR 11.5 bn) and renewable energies (EUR 11.3 bn) ► KfW is the no. 1 Environmental Bank in Germany and one of the world’s leading financing institutions for EE and RE

Agenda KfW at a Glance The German Way The International Perspective 1 2 3 The International Perspective India – Energy Efficiency in New Residential Housing Southeast Europe – Promoting EE in SME and Housing China – Energy Efficient Refurbishment of Residential Housing

System of Energy Efficiency Promotion Information and Consulting Promotional Programmes Gives an impulse for investing in energy-efficient construction and rehabilitation Regulations are the basis. In germany the most important regulation within the housing sector is the Energy Conservation Ordinance (called EnEV). The EnEV defines the energy efficiency requirements for new and existing buildings Instruments are necessary to realize the requirements in the housing sector Two main Instruments: Information and Consulting f.e. we have a Energy Performance Certificate for buildings, the energy consultant becomes more and more important in housing Promotion: f.e. promotional programmes of KfW or BAFA (renewable Energies), different municipal and regional programmes Legislation, Rules and Regulations, Technical Standards ► German Energy Conservation Ordinance (EnEV)   6 6

Making energy demand transparent! One of the essential elements for promoting EE in Housing Making energy demand transparent! "KfW-Efficiency House" – the performance standard for buildings in Germany! für Bauherren relevant: „der Wert ist entscheidend, nicht der Weg der Berechnung!“ kompetente Beratung über durchzuführende Maßnahmen notwendig.

Primary Energy Demand (kWh/m2/a)* KfW Efficiency House Standard Primary Energy Demand (kWh/m2/a)* B U I L D N G S T O C K KfW-115 e.g. 108-63 = 115 % of NL** KfW-100 e.g. 94-55 = 100% of NL N E W B U I L D G S e.g. 80-47 KfW-85 = 85 % of NL KfW-70 e.g. 66-39 = 70 % of NL The benchmark is the new building level according to EnEV The blue bar symbolizes the primary energy demand, we have a range of absolute demand which is allowed for a new Building according to EnEV, depending on the type of building, there is a range from 94 to 55 KwH per square meter and year Referring to this benchmark we defined the promotional stages : The numbers refer to the demand of primary energy in relation to the new building level according to EnEV : KfW-130 means f.e., within this standard the maximum primary energy demand of the building is 130% of demand allowed for a new building according to the EnEV In general you can say: the smaller the number the higher the energy-efficiency and the higher our promotion. KfW-55 e.g. 52-30 = 55 % of NL KfW-40 e.g. 38-22 = 40 % of NL *Acctual values vary, depending on the reference building according to the German Energy Conservation Ordinance (EnCO) **NL = New Building Level according EnCO

construct. supervision Promoting EE in housing – KfW in Germany Funding and On-lending system Capital market Loan (maturity e.g. 30 years) Loan (maturity e.g. 30 years) Funding Individual homeowner Bank Interest subsidy Re-financing Interest rate depending on efficiency standard Margin for credit risk and handling 0.75% German Government + addl. bonus for construct. supervision (max. EUR 1,000) + addl. repayment bonus (5% or 12.5% of principal)

Promoting EE in housing – KfW in Germany Results Year Budget Subsidies (million €) Loan Commitments CO2-reduction (1000 tons p.a.) Housing Units (in 1000) Investments 2007 850 3,336 568 204 5,127 2008 1,300 767 280 8,552 2009 2,035 8,677 1,452 617 17,724 2010 1,337 8,746 1,049 953 21,330

Key Elements of Success Financial incentives based on energy performance of building - not individual measures Performance Assessment Tool robust and easy to handle Accepted Performance Standards or Label - more important than legal building codes Training of auditors High energy prices

THANK YOU! For more information, please contact: Claudia Loy, Head of Energy Sector and Policy Division Silke Hermes, Senior Project Manager KfW Development Bank, Energy - Asia, silke.hermes@kfw.de +49 69 7431 9786 KfW Office Building “Westarkade”, Electricity Consumption: 98 kWh/p.sqm/p.a.

Agenda KfW at a Glance The German Way The International Perspective 1 The German Way 2 3 The International Perspective India – Energy Efficiency in New Residential Housing Southeast Europe – Promoting EE in SME and Housing China – Energy Efficient Refurbishment of Residential Housing

Promoting EE Buildings in India Results-based Tool and Label Joint Assessment Tool developed by Fraunhofer Institute and TERI, India Based on the whole-building-approach (Flexibility) Robust energy performance assessment (Comparability) - Easy to use by architects and auditors (Scalability) Easy to compare different EE design, material and technology combinations (Optimization) Basis for Energy Efficiency Label (Communication)

Agenda KfW at a Glance The German Way The International Perspective 1 2 The International Perspective 3 India – Energy Efficiency in New Residential Housing Southeast Europe – Promoting EE in SME and Housing China – Energy Efficient Refurbishment of Residential Housing

South East Europe Promotion of EE in SME and Housing Key Features: EE loan programmes for SMEs & Housing via various partner banks Average loan size: EUR 115,000 (SME), EUR 2,200 (Housing) No/ only slightly reduced interest rates Total loan volume: EUR 215 million (2010) Additional TA for Capacity Building & co-finance of energy audits target: minimum of 20% savings on energy Typical Measures for Energy Efficiency in Residential Buildings: High-performance windows; Installation of thermostatic valves; etc. Insulation of walls, roof and basement ceilings and pipe Modernization of hot water boilers and meters, heat systems;

Agenda KfW at a Glance The German Way The International Perspective 1 2 3 The International Perspective India – Energy Efficiency in New Residential Housing Southeast Europe – Promoting EE in SME and Housing China – Energy Efficient Refurbishment of Residential Housing

China Energy Efficient Refurbishment of Housing Blocks Starting Point: GiZ Pilot Scheme 3 pilot buildings in Tangshan (2006 – 2009) 30-50% reduction of energy demand for heating by thermal insulation of walls and roofs, double-glazed windows, refurbishment of heating systems Current stage: KfW Program Climate Protection in Urban Areas 2010-2012 Tangshan: Volume: € 23.64 m, refurbishment of 800,000 m² Tonghua: Volume: € 36.36 m, refurbishment of 1,100,000 m² Aim: 50-60% reduction of energy demand for heating CO2 Reduction of 0,32 m tons per year agreement on high efficiency standards Choice of most cost-effective measures Know-how transfer & quality control during planning and implementation Before refurbishment After refurbishment 355 kWh/m²y 144 kWh/m²y GER: 220-260 kWh/m²y Germany: 90-120 kWh/m²y

KfW Development Bank Promoting EE in Buildings Worldwide - Examples Housing Public Buildings Commercial Buildings Southeast Europe EUR 30 million India EUR 50 million China EUR 60 million (in planning) Mexico EUR 85 million (in planning) South Africa Jordan EUR 34 million Albania Turkey EUR 20 million EUR 35 million Croatia EUR 25 million Global: EUR 290 million Global: EUR 150 million Global: 150 million Global: approx. sum of ongoing and planned programmes and the respective share under these going into EE buildings Commercial Buildings: currently under EE Lines of Credit for SMEs, in cold climate high share of loans for isolation of plant buildings (assuming up to 50% of LoC).

Back-up

KfW Financing with a public mission Founded in 1948 as promotional bank of the Federal Republic of Germany Shareholders: 80% Federal Republic, 20% federal states Headquarter: Frankfurt am Main Branches: Berlin and Bonn Representative offices: around 70 offices and representations worldwide Balance sheet total at the end of 2010: EUR 450 billion About 4,530 employees (2010) Top rating: AAA/Aaa/AAA Zero-weight under Basel II

KfW Development Bank Global Energy Sector Commitments 2006 - 2010 Total Commitments in the Energy Sector (cumulative 2006-2010): EUR 3,739 million of which renewable energy: EUR 2,281 million Commitments for Demand-Side Energy Efficiency since 2006: Asia 31 % Europe/Caucasus 27 % Latin America 23 %

Promoting EE Buildings in India Energy Efficient New Housing Programme Loan (Eur 50 million) and Technical Assistance (EUR 1.5 million) to the National Housing Bank (NHB) as apex bank to refinance sub-loans for buyers of energy efficient new urban apartments Highest energy savings potential in new apartment blocks for middle income residents: 46-51% depending on climate zone - out of which ► 20-36% Building Envelope ► 16-22% Appliances Investments to achieve up to 40% savings financially attractive at 5 yr. payback (Average FIRR 25%) Preconditions for feasibility: - optimization of whole building design at planning stage - early contact to advise architects/developers - robust energy performance assessment tool - training of auditors and energy advisors

Promoting EE Buildings in India Promotional Programme Status Early stage of implementation: Agreements signed 12/2010, first disbursement 07/2011, TA tender ongoing Five residential housing developments located in the composite climate zone being evaluated: 23 individual buildings assessed and optimized with the Fraunhofer/TERI assessment tool Energy efficiency certificates under preparation by TERI: Covering 17,000 apartment units to be built in the next 5 yrs with Savings of up to 2000 kwh p.a. per apartment; and Expected total savings of 22,000 tCO2 p.a. Fraunhofer/TERI tool is being amended for the hot-dry and warm-humid climate zones (by November 2011) Wo in Indien: NOIDA/Delhi, Lucknow, Nagpur Project 1 Lucknow: kwh/m² p.a. actual bldg 67,00 77,00 42,00 49,00 kwh kwh/m² p.a. ref. Bldg 87,00 106,00 61,00 65,00 Project 2 Nagpur: kwh/m² p.a. actual bldg 67 77 42 72 49 kwh kwh/m² p.a. ref. Bldg 87 106 61 104 65 Project 3 NOIDA: kwh/m² p.a. actual bldg 69 68 77 59 50 kwh kwh/m² p.a. ref. Bldg 81 80 90 65 58 Project 4 NOIDA: kwh/m² p.a. actual bldg 77 83 51 64 82 69 kwh kwh/m² p.a. ref. Bldg 82 97 60 73 94 80 Project 5 NOIDA: kwh/m² p.a. actual bldg 88 105 109 kwh kwh/m² p.a. ref. Bldg 102 120 121 Developers: 3C, Sahara PLIs: HDFC, talks to Dt. Postbank, LIC

Promoting EE Buildings in India Promotional Programme – Next Steps & Challenges Next steps under the Programme TA: Establish the „Energy Efficient Housing“ brand and label in the Indian market Train energy auditors and architects in the energy assessment of new residential buildings with the Fraunhofer/TERI tool Achieve EE assessment and certification endorsement by public and private institutions Continuous Challenges to the Promotional Programme: No mandatory minimum EE standard for residential buildings Multiple ministries and public agencies dealing with the residential building sector Lack of sustainable financial incentives to promote EE residential buildings Endorsement of tool and label to be seeked by BEE; Indian Green Building Council, GRIHA, etc. Ministries: Ministry of Power/BEE, Ministry of Urban Development; Ministry for New and Renewable Energy; MHUPA Ministry of Housing and Urban Poverty Alleviation, BIS Bureau of Indian Standards and National Building Code

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