1. Energy investment in Housing- Estonia Mirja Adler Head of Housing Division 21.05.2010

2. KredEx – Credit and Export Guarantee Fund Founded in 2001 Under the jurisdiction of the Ministry of Economic Affairs and Communications Capital ~60 million € State guarantee limit for: –Housing loan guaranteesEUR 96 million –Business loan guaranteesEUR 96 million –Export guaranteesEUR 192 million Fully accredited for using ERDF and SF 34 employees

3. Housing stock ~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%

4. Previous measure – grant scheme 2003-2007 state grants all over Estonia: –For energy audits, building designs and technical expertise 50% of the costs (since 2003) – still continuing 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 Single works Grant available after payments

5. From 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, help from kfW

6. Steps for approval Preparation of measure Negotiations with: –Ministries –Politicians –Banks in Estonia –International banks –European commission Contracts Information to market participants

7. Challenges during the implementation Convincing politicians in Estonia –Good overall conditions for changing grant scheme to loan scheme (2008) Old regulation – discussions with European Commission for 8 Months –(criteria, integrated plan, new financing scheme) – end of 2008 Change of economical situation State guarantee for CEB – June 2009

8. Revolving fund for energy efficiency KredEx (Fund) EUR 49 Million (+15% self-financing, total 57 mln €) ERDF EUR 17 Million Development Bank (CEB) EUR 29 Million SwedbankSEB 3. Favorable funding to the commercial banks, intress 4% to end-beneficiaries Apartment Building 1. ERDF to equity of the fund 2. Additional funding up to 50% of total 4. Loan to the apartment associations. Commercial Bank takes the risk of the lenders State guarantee

9. Banks selection Tender for the banks, criteria: –Rating at least Baa 3 (Moodys) or BBB (Fitch or Standard & Poors) –Respond to credit institutions act and have license –Budget over 15 billion EEK –Bank has at least 1 year experience with financing multi-apartment buildings –Bank accepts loan-maturity for 20 years

10. Steps to implement Terms of measure Approval from European Commission Tender for the banks Agreements with banks –Terms for buildings, monthly reports –Terms for financing (tranches, interest rate, risk margin, auditing etc) “Work” with end-beneficiary

11. Process for end-beneficiaries Decision in General Assembly Self-financing part (own funds or usual loan) Energy audit for the building Building design documents – approved by energy auditor Building permit Credit from banks Tender and agreements with builders Guarantee (state) from KredEx if needed – up to 75% of loan amount Construction with owner supervision

12. SF loan vs usual loan SF loan Interest: –Fixed for 10 years –Between 3,9 – 4,4% –Interest on 64 000 € loan 4,01% 10 years 13 731 € Contract fee: –0,5% - 0,75% from loan amount Maturity: –Up to 20years Usual loan Interest –Fixed for 5 years or floating –Interest ~ 7-10% (fixed) –Interest 64 000 € loan 7% 10 years 25 137 € Contract fee : –Up to 1% from loan amount Maturity: –Average 2008: 11,8 years

13. Burden of payments – building 3000 m², saving 30%, loan 3 mln EEK, interest 4,0%

14. Status quo Start 24.06.2009 31.03.2010: 70 contracts with multi-apartment buildings, total 5,1 mln € (average 74 400 €, 2035 apartments, saving 33%) Interest is there, but under current economical situation the self-financing part is the problem and also people are careful with loans

15. Information to market participants Press-conference on 25.05.2009, coverage on biggest newspapers 67 (2009) presentations to end beneficiaries, builders, energy auditors, project designers, local municipalities Advertisements in local and Estonian newspapers, magazines, internet, direct mailing, articles

16. Campaigns 2009

17. Financial support to end- beneficiaries State grant (ERDF) from KredEx for: – Energy audit – 50%, max 10 000 EEK (640 €) – Technical inspection – 50%, max 10 000 EEK (640 €) –Building design documents - 50%, max 50 000 EEK (3 195 €)

18. 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

19. Contact: Credit and Export Guarantee Fund KredEx Mirja Adler Hobujaama 4 10151 Tallinn, Estonia Tel: +372 6 674 100 Fax: +372 6 674 101 E-mail: mirja.adler@kredex.ee www.kredex.ee