1. Financing EE in housing in Estonia
Mirja Adler KredEx
29 November 2011

2. KredEx Foundation, financing Enterprises and Housing
A self-sustaining and non-profit guarantee fund that offers:
Business loan guarantees
Mezzanine financing
Long term funding for commercial banks
Export guarantees
Housing financing and loan guarantees

3. Solid foundation Founded in 2001
Under the jurisdiction of the Ministry of Economic Affairs and Communications
State guarantee limit for:
SME guarantees EUR 96 million
Export guarantees EUR 64 million
Housing loan guarantees EUR 96 million
Fully accredited for using ERDF and SF
Member of AECM, NEFI, IUHF, IFHP
Number of staff: 35

4. Housing stock ~17 000 multi-apartment buildings
~95% housing stock is in
private ownership:
~60% of the housing stock
has been built in
~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 kWh/m2
Energy used in buildings ~40%

5. Financial measures Grants Low interest rate loan
From state
From municipalities
Low interest rate loan
Beneficiary can combine the measures

6. Previous measure – grant scheme
state grants all over Estonia:
For energy audits, building designs and technical expertise 50% of the costs (since 2003) – still continuing
Supported buildings
Totally 1,4 million €
For renovation, 10% of the costs
Supported buildings
17 million m2, totally 11 million €
Problems:
Insufficient funding
Singel works
Grant available after payments

7. From renovation grants to revolving fund – why?
Opportunity for re-usage of the funds
Funds stay in state
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
Innovative scheme

8. Low interest rate loan - revolving fund scheme

9. Credit from Fund to the Bank
Credit to 2 banks
Maturity: 20 years
Annuity loan
Maximum limit of risk margin for Banks
Terms for credit to multi-apartment buildings
Fixed interest rate for end-beneficiaries
Bank is responsible for credit risk of multi-apartment buildings

10. Credit to apartment buildings
Main purpose - energy efficiency measures:
to save at least 20% of energy in buildings up to 2000 m²
to save at least 30% of energy in buildings more than 2000 m²
Self-financing 15% (now grant)
Energy audit is obligatory
Renovation according to energy audit (by priorities)
Loan period: up to 20 years
Interest rate: up to 4,2% (first tranche) fixed 10 years

11. Selection of works Thermal insulation: New windows/outdoors
of the roof
of the walls/facade
of the cellar/roof ceiling
New windows/outdoors
New heating system/renovation of the heating system
Renovation of the ventilation system / new ventilation system
Installation renewable energy devices

12. Obligations of banks Monthly reporting about loans given
Information about building
Description of investments
Number of dwellings concerned
Date of energy audit, savings
Total investment cost
Loan amount
Supplementary Bank loan
Loan maturity
Loan interest rate / margin
KredEx can carry out audits in banks
Loan is given in maximum 8 tranches, next tranche available after previous is used

13. SF loan vs usual loan SF loan Usual loan Interest: Contract fee:
Fixed for 10 years
Between 4,3 – 4,8%
Interest on € loan 4,5% 10 years €
Contract fee:
0,5% - 0,75% from loan amount
Maturity:
Up to 20years
Interest
Fixed for 5 years or floating
Interest ~ 7-10%
Interest € loan 7% 10 years €
Contract fee :
Up to 1% from loan amount
Maturity:
Average 2008: 11,8 years

14. Combination of national and municipal funding schemes
Credit guarantee from KredEx – if needed
State grant from KredEx for:
energy audit – 50%, max 700 €
technical inspection – 50%, max 700 €
building design documents - 50%, max €
Reconstruction grant from GIS up to 35%
Tallinn city grant 10% for apartment buildings using renovation loan

15. Grant 15, 25 or 35% Do more – get more
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, heat-recovery ventilation system,
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!

16. Burden of payments – building 2000 m², interest 3,8%, loan 20 years

17. Steps for end-beneficiary

18. Results so far Start 24.06.2009 By 20.11.2011: 355 buildings
Loan
Refurbishment grant
Start
By :
355 buildings
Apartments
Ca m²
Total 31 mln €
Average €
Saving 36,18%
Start
By :
282 applications/252 buildings
7 mln €
243 pos decisions
6,4 mln €/Investment 29,3
15% 2,1 mln €
25% 2,6 mln €
35% 1,6 mln €
Ca m²
Average €

19. Lessons learned Preparation takes long time – for Estonia 2 years
Many different partners to negotiate – parallel negotiations
Economical situation in the country can change dramatically
Legal framework to support the measure
Combine different measures
Information to market participants and end-beneficiaries

20. Problems during implementation
End-beneficiaries are still careful with taking the loan
No actual opportunity to persuade end-beneficiaries, only raise awareness and motivate
Many documents to prepare before loan application can be finalized
Loan conditions are rather difficult
Reporting is burdensome

21. Information to market participants
Press-conference in public media
Infodays/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

22. 10 campaigns since 2006

27. Technical studies by Tallinn University of Technology
Studies for 4 different building types, including social studies about residents attitude and expectations
Brick
Concrete large panel
Wooden apartment buildings
Newly constructed buildings

28. BEEN-PPP: energy savings
Paldiski 171 heating consumption *
2005
2010
Heating consumption MWh
392
165
Price EEK MWh
431
989
Heating costs, EEK
Costs EEK/m²/month
4,48
4,33
Average per apartment monthly, EEK
234,84
226,88
Comparison :
Heating consumption has decreased ca 58%
Heating price has risen ca 129%
The costs for heating per month have
decreased ca 3%
* Heating consumption is corrected with degree days

29. Conclusions Building reconstruction is unavoidable
2 years for preparations – long period
Economical conditions have changed drastically during preparation, are getting better again
Scheme has great future (low interest, high energy efficiency) – combined with grants in Estonia now best financial terms over history
All-round approach - awareness raising, promotion, state and local support, legal and financial framework – is the key for success

30. Contact: KredEx Mirja Adler Hobujaama 4
10151 Tallinn, Estonia
Tel: Fax: