1. Lauri Suu 6 th November 2013 Financing housing in Estonia

2. KredEx - solid foundation Founded in 2001 Under the jurisdiction of the Ministry of Economic Affairs and Communications State guarantee limit for: Business loan guarantees 96 mio Export guarantees 64 mio Housing loan guarantees 96 mio Fully accredited for using ERDF and ESF Member of AECM, NEFI, IUHF

3. ~95% housing stock is in private ownership: –~60% of the housing stock has been built in 1960-1990 –~30% before 1960 ~75% population living in multi- apartment buildings Low quality and low energy efficiency –Average energy consumption per year in buildings which have not been renovated 200-220 kWh/m 2 Energy used in buildings ~40% Housing stock

4. Who is responsible for the condition of the building? Owner Housing Associations - legal body Community of apartment owners - no legal body In all cases all apartment owners (private persons) are responsible for decisions and payments

5. Measures for EE in housing Studies about situation in buildings Favorable loan from revolving fund Grants (from state and municipalities): energy audits, project design documents 50% renovation 15-35% (Tallinn 10%) Consultants to help by decision making at GA Awareness raising campaigns Best Practice Projects Partners: Local municipalities Estonian Union of Housing Associations Estonian Union of Facility Managers

6. Holistic approach

7. Previous measure – grant scheme 2003-2007 state grants all over Estonia: –For energy audits, building designs and technical expertise 50% of the costs Supported 3 800 buildings Totally 1,4 million –For renovation, 10% of the costs Supported 3 200 buildings 17 million m 2, totally 11 million –Problems: Insufficient funding Singel works Grant available after payments

8. From renovation grants to revolving fund – why? Revolving character (re-usage of the funds) Funds stay in state Leverage effect (1/3 ERDF, 2/3 additional funds) Support scheme (10% support) versus loan scheme (state support is even bigger) Loan is needed for reconstruction anyway Opportunity also to smaller buildings Easier to administer, lower administrative costs End-beneficiary is used to take loan

9. Revolving fund Fund 72 mio ERDF to fund equity 17,7 mio ERDF to fund equity 17,7 mio State loan 16 mio Favorable funding to the commercial banks State guarantee EE loan to HOA, Commercial bank takes the risk of lenders CEB loan 28,8 mio KredEx funds 9,5 mio

10. Renovation Loan Multi-apartment buildings: at least 3 apartments Main purpose - energy efficiency (at least 20% energy saving for the buildings up to 2000 m² or 30% for bigger buildings) Self-financing 15% (grant or own funds or loan) Energy audit is obligatory, renovation according to energy audit Supervisory is obligatory Loan maturity: up to 20 years Interest: from 2013 ~ 3,5%, before up to 4,5% fixed for 10 years, average 4% No collateral is needed, credit against cash flow Decision by buildings: at least 50% +1 one owner at general assemble, decision with simple majority

11. Average loan amount /building

12. Grant for reconstruction Fund for the grant from Green Investment Scheme (selling AAU) –An Assigned Amount Unit (AAU) is a tradable 'Kyoto unit' or 'carbon credit' representing an allowance to emit greenhouse gases comprising one metric tons of carbon dioxide equivalents calculated using their Global Warming Potential In total 30 million ~ 140 million for investment Goal is to renovate multi-apartment buildings completely, to achieve: –energy saving from heating costs, considering all requirements for indoor climate –Achieve higher energy class –To increase use of renewable energy

13. 15% –fulfill the terms for renovation loan, –energy saving 20 or 30%, according to the size of the building –Energy label E, energy consumption < 250 kWh/m² 25% –roof, facade, windows (U 1,1), heating system, –energy saving at least 40% –Energy label D, energy consumption < 200 kWh/m² 35% –roof, facade, windows (U 1,1), heating system, ventilation system with heat recovery, –energy saving at least 50% –Energy label C, energy consumption < 150 kWh/m² In all the cases it is obligatory to fulfill the criteria for indoor climate! Grant 15, 25 or 35% Do more – get more

14. Results Loan ( 65 mio) Start 24.06.2009 By 30.09.2013: 650 contracts Ca 21 000 apartments, 50 000 inhabitants Ca 1,35 mio m² Total 72 mio Grant ( 24,2 mio) Start 30.09.2010 Pos. decisions – ca 500 houses –15% 4,2 mio 288 –25% 7 mio 182 –35% 13 mio 107 24,2 mio = ca 95 mio Finished: 460 houses Ca 1,1 mio m² Avg 26%, 41 300 house Expected saving 41%

15. 635 buildings, 23 500 apartments, 54 000 inhabitants Ca 1 550 000 m² (6,7% from total ap. m²) Total 49 mio credit, 20,8 mio grant Investment 87,2 mio, average 137 000 Expected saving 39%, 75 GWh per year (1 year production of Kuressaare Soojus) Expected saving 20 years 1 500 GWh 390 renovated, ca 110 in process Changes in behavior: –From single works to complex renovation –Heating costs are measured by apartments Results combined (15.04.2013)

16. Apartment building loan guarantee Who has higher risk (debtors, rural area, low market value) When reconstruction cost per m² is higher (complex reconstruction) The guarantee amount for apartment building is up to 75% of the loan amount. No collaterals needed Can be applied via banks

17. Awareness raising Campaigns since 2006 Info days/seminars/workshops - to end beneficiaries, builders, energy auditors, project designers, local municipalities Advertisements in newspapers/magazines Internet (website, banners, news, articles) Direct mails Leaflets/booklets Cooperation with banks Energy week in November (since 2010)

18. Golden Drum Grand Prix

19. Example: Sõpruse pst 202, Tallinn 11 375 m² (162 ap. 2012-2013) Investment 2 062 000, 181 /m² Grant 35% 721 600, 63 /m² Credit 1 340 000, 20 years Expected savings 65% ~500 MWh - Triple windows Brought to the frontage of facade - Heating system - Ventilation system - Facade, roof

20. Lessons learned Preparation took long time – 2 years Many different partners to negotiate (international banks, local ministries, local commercial banks) – do it parallel Funds stay in the measure and are used several times Economical situation in the country can change dramatically and influence the behaviour of end-beneficiaries Legal framework to support the measure – decision making process, building permits, supervisory … Combination of different measures is a key to success Information to market participants and end-beneficiaries – it takes couple of years for end-beneficiaries to be as active as you expect No actual opportunity to persuade end-beneficiaries, only raise awareness and motivate

21. Thank you! Lauri Suu KredEx Hobujaama 4 10151 Tallinn, Estonia Tel: +372 6674 111 Fax: +372 6674 101 E-mail: lauri.suu@kredex.eelauri.suu@kredex.ee www.kredex.ee