Deliverable 3.1 Report on possible financing schemes for one-stop-shop service for sustainable renovation of single family house : Report prepared for Nordic Innovation Centre

• There are significant potentials to improve energy efficiency of single-family houses in theNordic countries. Technical solutions exist, but there are market and financial barriers toimplementation of such measures. The aim of the report is to identify financial barriers toimplement energy efficiency measures in Nordic single family houses and to discuss optionsto address those barriers.In the initial phase of a market formation, the targeted potential customers (the “innovators”who are few in numbers) usually have capacity to invest in energy-efficient measures.However, such measures, though cost effective in a life-cycle perspective, often incur highinvestment cost and majority of the consumers tend to stick to the least efficient products.Moreover, a lack of awareness about the possible energy efficiency measures, including theirbenefits, and the uncertainty regarding the level of energy savings due to a lack ofstandardised measurements and verifications protocol may not encourage, both the customersand financiers, to go for energy efficiency investments. Financiers perceive energy efficiencyprojects as risky investments maybe because of their small size, difficulty to control energyuse behaviour of the occupants and the difficulty to predict future energy prices.The options to finance energy efficiency renovations include homeowners’ own resources,mortgage refinancing, flex loan, personal loan, financing by service providers, preferentialloan, subsidies/grants, credit cards, and financing supported by guarantee on energy savings.Each option has its own advantages and disadvantages. It is less likely that the one-stop-shopservice providers in Nordic countries, at present, will give any guarantee on actual savings inenergy use or cost. But, such a concept is emerging in some European countries and could bean option in future.The best option to finance energy efficiency improvements in Nordic countries seems to bethat one-stop-shop service providers collaborate with commercial banks to offer mortgagerefinancing. Such a mechanism is convenient for the homeowners, and banks will have a lessrisky asset in their portfolio. In situations where homeowners cannot avail additionalmortgage financing, e.g. those who recently purchased a house and used the limit to suchloans, banks may consider an energy efficient renovation plan prepared by an entrepreneurand pre-evaluate the post-renovation value of the house. This pre-renovation valuation couldform the basis for the bank to confirm the homeowner and the service provider that certainamount of investment cost would be available from mortgage refinancing. To cover the costthat exceeds the amount available from mortgage financing (or base loan), nationalgovernments may consider to provide soft loans or subsidies.In countries where tax deduction on home renovation is available, amendments should bemade to such programs to incorporate specific requirements regarding energy efficiency ofimplemented measures. Also, higher tax deduction could be offered for energy efficiencyimprovement than for other renovation. Moreover, a simple tool to inform the homeownersabout the cost-efficiency of energy renovation investment would be that banks and utilitiescollaborate to send a joint invoice which contains the monthly cost of mortgage loan and theenergy cost.

Ämnesord

NATURVETENSKAP  -- Geovetenskap och miljövetenskap -- Miljövetenskap (hsv//swe)

NATURAL SCIENCES  -- Earth and Related Environmental Sciences -- Environmental Sciences (hsv//eng)

Nyckelord

Environmental engineering

Miljöteknik

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