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Developing, piloting and standardising on-tax financing for residential energy efficiency retrofits in European cities

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Helping homeowners invest in sustainable renovation

An innovative financing model for energy efficiency has been extensively tested by the EuroPACE project, and is now being implemented in different cities across Europe. Its success could be key to achieving the EU’s climate goals.

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Renovating a home to make it more energy-efficient can be challenging, especially in uncertain times. Owners must obtain a loan, find a reliable architect and contractors, and juggle with limited budgets. Add to this new sustainability requirements and a mountain of paperwork, and you have enough obstacles to dishearten even the most motivated homeowners. But there may be some light at the end of the tunnel. With support from the EU-funded project EuroPACE (Developing, piloting and standardising on-tax financing for residential energy efficiency retrofits in European cities), a consortium of seven companies, energy agencies, cities and non-profits have digitalised the entire renovation process and tested it with a Public-Private Partnership (PPP) in Olot, Spain. “The idea was to support Olot residents in their home renovation journey. What we created there is the first eco-sustainable home renovation programme to ever combine affordable financing, technical assistance and smart funding,” explains Eduard Puig, COO at Spain’s GNE Finance, one of the project partners. EuroPACE delivers three innovations. It provides: a new way to mobilise both private capital and public funds; a simplified and digitalised home renovation process with a one-stop shop providing all the necessary technical advice, support, training, verification and financing services; and a twofold public policy innovation. With these tools, EuroPACE overcame the main barriers to home renovation. The project team supported local homeowners as they selected contractors, verified the works, and secured financing. All in all, some EUR 1.87 million of investment was mobilised for smart homes, better accessibility, energy-efficient windows and doors, insulation, heating and cooling, as well as renewable energy solutions. Even vulnerable groups could benefit from the programme, thanks to a de-risking mechanism that grants affordable financing even in the case of high loan risks.

Bespoke local strategies for Europe

EuroPACE draws inspiration from the highly successful PACE financing model of the United States. “This model sees local and state governments acknowledging the fact that energy retrofits are a public good. This justifies the use of a tax system to support the collection of loan repayments,” David Cannarozzi, CEO of GNE Finance, adds. “Besides, PACE programmes pioneered a new way to engage energy services contractors in the sales process. This resulted in a dramatic stimulation of demand for home renovation.” Emulating the American model wasn’t a walk in the park. The idea of changing tax legislation was initially met with scepticism in Europe, but the consortium eventually found a legal solution to implement it, by allowing municipalities to participate in repayment and collection. “First, we enable public administrations to participate in the debt collection process in case of non-performing loans and defaults to provide security to investors. Then we ensure that the financing is attached to the property, thus converting it into asset financing,” says Cannarozzi. Following a preliminary legal and fiscal analysis conducted across the EU-28, three cities (Lisbon, Mouscron and Valencia) were selected as the best candidates to further test EuroPACE. Partners were found during the project and local one-stop shop frameworks set up. But that’s not all. Since its end, EuroPACE has inspired many other EU projects and become a brand of its own. One such programme is being developed in the Balearic Islands, while Barcelona launched a HolaDomus (website in Catalan) programme of its own after the end of the project. “We now have a toolkit that can and will help actors develop scalable and integrated home renovation models,” notes Puig. This toolkit is expected to outlive the EuroPACE project. He adds: “Our spin-off legal entity, Fundació EuroPACE (website in Catalan), is already operating in eight more towns in the Girona province and is in discussions with the provincial government to reach the whole province.”


EuroPACE, renovation, PACE, financing, energy efficiency, renewable energy, climate

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