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

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A home-based financing model to boost investments in sustainable renovation

An innovative financing model for energy efficiency projects is being tested in different cities across Europe. Its success could be hugely beneficial to achieving Europe’s climate goals.


As we suddenly had to live within four walls to slow down the progression of COVID-19, most of us started looking at our homes differently. We resumed long overdue renovation works, while those of us living in cities started dreaming of a nice balcony or terrace. David Cannarozzi, CEO and founder of GNE Finance, believes this ‘New Normal’ also calls for another drastic change. Now is the time to invest in healthy, connected and sustainable homes.

Introducing PACE

With the project EuroPACE (Developing, piloting and standardising on-tax financing for residential energy efficiency retrofits in European cities), Cannarozzi and a consortium of seven companies, energy agencies, cities and non-profits have been looking to the US for inspiration. The property assessed clean energy (PACE) financing model has been doing wonders there since 2007. In nearly 40 states, upgrades that increase energy efficiency, harness renewable energy, conserve water or protect against natural disasters can benefit from affordable loans through PACE. The model has already resulted in USD 7 billion (EUR 6.1 billion) worth of energy efficiency and renewable energy improvements to homes and commercial buildings. “The real innovation lies in 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,” Cannarozzi explains. “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.”

Building a European PACE

As its name entails, the purpose of EuroPACE is to support the EU’s clean energy transition by bringing PACE’s best practices to Europe and enhancing it. For 2.5 years, the consortium has been assessing market readiness, deploying a pilot in Spain, and supporting leading cities willing to set up EuroPACE platforms. Timing is of the essence: the European Commission has estimated that achieving the current 2030 climate and energy targets will require EUR 260 billion of additional annual investment. Emulating the US model wasn’t a walk in the park. The idea of changing tax legislation was 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. “EuroPACE provides a ‘safe conduit’ so that municipalities can have an active role in remitting loan repayments from homeowners to private investors. It decreases the risk of payment default, thus attracting cheaper private funding,” Cannarozzi notes. EuroPACE brings its own share of innovations to the European home renovation market. These include: a way to mobilise both private capital and public funds; a simplified and digitalised home renovation process with a one-stop shop (OSS) providing all technical advice, support, training, verification and financing services; and a twofold public policy innovation. “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 an asset financing,” says Cannarozzi.

The HolaDomus programme

All innovations created by EuroPACE are extensively tested in Olot, Spain. The consortium launched the HolaDomus programme there earlier this year. COVID-19 seriously impacted the programme but it didn’t prevent it from mobilising nearly EUR 1 million in projects and training/validating 47 contractors. A total of 150 homeowners have already expressed interest. Following a preliminary legal and fiscal analysis conducted across the EU, Belgium, the Netherlands, Portugal and Spain were identified as the countries where the implementation of EuroPACE is most likely to succeed. GNE Finance has already recruited Lisbon and Porto to explore the adaptation of EuroPACE via local workshops. Additionally, Valencia (Spain) and Mouscron (Belgium) are planning workshop sessions in autumn 2020. “Our success depends on cities and regions and their willingness to lead the clean energy transition by developing local eco-sustainable renovation programmes. But EuroPACE is a flexible model that can truly be adapted to local contexts,” Cannarozzi concludes.


EuroPACE, renovation, PACE, financing, energy efficiency, renewable energy, climate, property assessed clean energy

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