Putting the cost of energy efficiency renovations on the meter
Massive renovation of the housing stock is key to achieving the EU climate neutrality target. The potential for energy savings is great, and most technical solutions already exist, needing only to be implemented on a large scale. So, why isn’t everyone doing it? “Renovating a home is often too expensive for many European families,” explains Pablo González Reed, a consultant at Creara Energy Experts (website in Spanish). “Although such renovations will save homeowners money in the long run, many lack the means of paying for the work up front.” One possible solution to this is on-bill schemes (OBS). “OBS are a relatively new financing mechanism where the utility company covers the upfront cost of the renovations,” says González. “Similar to a loan, the homeowner then repays the utility company via their monthly energy bill.” While OBS have the potential to put energy renovations within reach of nearly every homeowner, to work, they need the backing of both utility companies and financiers. However, according to González, utility companies tend to be sceptical about OBS, and financial institutions approach the idea from a creditor’s perspective. “Financers disregard the renovation’s energy savings as being a key factor for measuring the success of these financing mechanisms,” he says. “And if OBS are to work, we need the cooperation of both energy utilities and financial institutions.” This is where the EU-funded Ren-on-Bill (Residential Building Energy Renovations with On-Bill Financing) project comes in. Coordinated by Creara Energy Experts, the project is designing a set of innovative, reliable and replicable OBS business models tailored to the different needs and situations utilities may have when seeking to commercialise these kinds of services. “We’re also accommodating these business models to attract investment from financial institutions and find synergies between the energy and financial sectors,” adds González.
A portfolio of effective solutions
At the heart of the project, which won the Citizens’ Award at the 2021 EU Sustainable Energy Awards, is the creation of a stakeholder network. The network consists of national energy platforms in Germany, Italy, Lithuania and Spain. “Our stakeholder engagement activities allowed us to identify any potential challenges to implementing OBS in each focus country,” notes González. “This was critical to enabling the project to understand each country’s unique situation and develop a portfolio of effective solutions.” One such solution is the Energy Renovation Valuation tool. “This tool provides a simple way to understand the energy and economic feasibility of conducting an energy renovation on a selected group of homes,” says González. The tool, which is currently being migrated to an online version, has received considerable praise from utility companies and financers alike.
Entering new markets
Although still a work in progress, Ren-on-Bill has already pushed the needle towards the large-scale acceptance of OBS. “Much of the initial scepticism that surrounded these financing mechanisms at the beginning of the project has since been overcome,” remarks González. With more utilities and financers on board, the project is now leveraging its vast network to replicate its initial successes in additional markets. “The results of the project have been designed for easy replicability,” concludes González. “As such, we will continue to push for the implementation of OBS as a means of boosting the much-needed energy efficiency renovation rate of the EU’s building stock.”
Keywords
Ren-on-Bill, on-bill schemes, energy efficiency, home, renovation, financing, homeowners, utility companies, energy renovation
