Periodic Reporting for period 2 - NEEM (Nordic Energy Efficiency Mortgages)
Période du rapport: 2022-06-01 au 2023-05-31
The EU green deal and ambitious climate targets of the Nordic governments require massive private investments into energy efficiency of the Nordic building stock, electrification of heating and smart energy systems. Though a substantial part of the needed investments is profitable on paper, they are not actually carried out – an issue labelled the energy efficiency gap. The purpose of the NEEM Hub is thus to address the "energy efficiency gap", which is a significant challenge for the Nordic market because even if energy renovations become more attractive (e.g. through taxes and subsidies), households may not consider making them.
Therefore, the hub's primary objective has been to develop a solution that informs households of their options and potential benefits from energy renovations. Moreover, we wanted to provide recommendations, without households providing any information themselves. The reason is that once households are asked to enter personal information (e.g. report their energy bill or their number of windows), we would likely lose many potential customers. Also, our purpose is to create a solution where the bank can do some minimum screening of investment opportunities and hence address only households where existing available information suggests there might be a case for investing and providing financial gains for the customer without requiring the customer to provide any information. Following these principles, we believe the solution developed under the NEEM hub will get the highest uptake across Nordic Banks and thus highest impact on society, supporting the green transition by promoting energy efficiency renovations and thereby lowering the carbon footprint of buildings.
Therefore, the hub's primary objective has been to develop a solution that informs households of their options and potential benefits from energy renovations. Moreover, we wanted to provide recommendations, without households providing any information themselves. The reason is that once households are asked to enter personal information (e.g. report their energy bill or their number of windows), we would likely lose many potential customers. Also, our purpose is to create a solution where the bank can do some minimum screening of investment opportunities and hence address only households where existing available information suggests there might be a case for investing and providing financial gains for the customer without requiring the customer to provide any information. Following these principles, we believe the solution developed under the NEEM hub will get the highest uptake across Nordic Banks and thus highest impact on society, supporting the green transition by promoting energy efficiency renovations and thereby lowering the carbon footprint of buildings.
We intended to provide tailor-made energy renovation advice to households without requiring them to provide us with their personal information. This presents a significant challenge in terms of data collection and has become a primary focus for our team.
Early in our work, we identified hourly energy consumption data as the key parameter for estimating a house’s energy efficiency. While these data should technically be accessible to households, obtaining them directly by asking the owners would likely drive away many households, excluding them from our analysis.
To address this, we established agreements with utility companies that could also provide us with the necessary data (after receiving consent from the households). By combining this with public information on building characteristics (e.g. size of the home and number of floors) and local weather data, we were able to estimate the energy efficiency of the respective households. Our next step was to estimate the energy efficiency. If a new EPC label already existed for the household, this step would become unnecessary. However, a majority of households in the Nordics had no labels or only outdated ones. This is particularly true for older buildings, which typically require energy renovation. To estimate energy efficiency, we developed a model that identifies correlations between energy consumption and weather conditions. Here, we can identify signs of poor insulation or inadequate wind tightness by observing the impact of temperature and wind on energy consumption.
Once we have estimated energy efficiency for a particular household, we estimate the relevant energy renovation needed. To do this, we use a renovation costs model, which is based on correlations between increasing energy efficiency and renovation costs identified from 130,000 EPC label reports. By using these correlations, we can estimate the likely energy renovation costs for a specific household and identify the renovations that are most likely to provide the largest net savings for the household.
With these estimates in hand, we produced the two-pagers that provide households with the information they need to make informed decisions about energy renovation. The Financial Institutions used these two-pagers as a key instrument in reaching out to households, showing the results of the digital energy screening. However, the purpose of the two-pager, which the household receives when a potential for energy efficiency renovation exists, is not to provide a final answer on whether a renovation is a good idea or not. Rather, the purpose is to identify the cases where the house owner may wish to explore the opportunity and take further action to investigate the potential
benefits. The estimates provided on the two-pager serve as a Call To Action, providing a clear picture of the potential savings that can be achieved through energy efficiency improvements.
Early in our work, we identified hourly energy consumption data as the key parameter for estimating a house’s energy efficiency. While these data should technically be accessible to households, obtaining them directly by asking the owners would likely drive away many households, excluding them from our analysis.
To address this, we established agreements with utility companies that could also provide us with the necessary data (after receiving consent from the households). By combining this with public information on building characteristics (e.g. size of the home and number of floors) and local weather data, we were able to estimate the energy efficiency of the respective households. Our next step was to estimate the energy efficiency. If a new EPC label already existed for the household, this step would become unnecessary. However, a majority of households in the Nordics had no labels or only outdated ones. This is particularly true for older buildings, which typically require energy renovation. To estimate energy efficiency, we developed a model that identifies correlations between energy consumption and weather conditions. Here, we can identify signs of poor insulation or inadequate wind tightness by observing the impact of temperature and wind on energy consumption.
Once we have estimated energy efficiency for a particular household, we estimate the relevant energy renovation needed. To do this, we use a renovation costs model, which is based on correlations between increasing energy efficiency and renovation costs identified from 130,000 EPC label reports. By using these correlations, we can estimate the likely energy renovation costs for a specific household and identify the renovations that are most likely to provide the largest net savings for the household.
With these estimates in hand, we produced the two-pagers that provide households with the information they need to make informed decisions about energy renovation. The Financial Institutions used these two-pagers as a key instrument in reaching out to households, showing the results of the digital energy screening. However, the purpose of the two-pager, which the household receives when a potential for energy efficiency renovation exists, is not to provide a final answer on whether a renovation is a good idea or not. Rather, the purpose is to identify the cases where the house owner may wish to explore the opportunity and take further action to investigate the potential
benefits. The estimates provided on the two-pager serve as a Call To Action, providing a clear picture of the potential savings that can be achieved through energy efficiency improvements.
Throughout the project’s timeframe, the consortium has progressed in a three-front manner by focusing on new solutions, new processes, and expected results.
For starters, the NEEM Hub has focused in applying state of the art research with the support of DTU, through contact with banks in order to supply real solutions for their costumer.
Secondly, the consortium has focused on the creation of new process through the identification and creation of a value chain and ecosystems needed for the development of green financing, and thereafter for the development of NEEM core solutions.
Regarding expected results, the NEEM Hub is projected to have the following impact (same projections apply at the end of the second year of the project as at the end of the first year of the project):
Quantification: Within project duration
Primary energy savings triggered by the project: 800 GWh/year
Investments in sustainable energy triggered by the project: 0.9 Billion EUR
Number of EEMs triggered by the project: 26,000 (Number of efficient mortgages issued)
Share of banking market in the Nordics offering EEMs: 25% (Share of financial institutions by market size)
Share of Nordic Financial Institutions reached by communication: 80% (Share of financial institutions by market size)
Communication reach among households relevant for energy efficient mortgages: 100,000 (Number of households)
Reduction in CO2e emissions triggered by the project: 0.24 (CO2 e reduction per year)
Climate reduction relative to national ambition baseline levels: 0.14 (Share of 1990 baseline)
Quantification: 10 years after project ends
Primary energy savings triggered by the project: 4,000 GWh/year
Investments in sustainable energy triggered by the project: 4.5 Billion EUR
Number of EEMs triggered by the project: 130,000 (Number of efficient mortgages issued)
Share of banking market in the Nordics offering EEMs: 50% (Share of financial institutions by market size)
Share of Nordic Financial Institutions reached by communication: 90% (Share of financial institutions by market size)
Communication reach among households relevant for energy efficient mortgages: 500,000 (Number of households)
Reduction in CO2e emissions triggered by the project: 1.2 (CO2 e reduction per year)
Climate reduction relative to national ambition baseline levels: 0.7 (Share of 1990 baseline)
For starters, the NEEM Hub has focused in applying state of the art research with the support of DTU, through contact with banks in order to supply real solutions for their costumer.
Secondly, the consortium has focused on the creation of new process through the identification and creation of a value chain and ecosystems needed for the development of green financing, and thereafter for the development of NEEM core solutions.
Regarding expected results, the NEEM Hub is projected to have the following impact (same projections apply at the end of the second year of the project as at the end of the first year of the project):
Quantification: Within project duration
Primary energy savings triggered by the project: 800 GWh/year
Investments in sustainable energy triggered by the project: 0.9 Billion EUR
Number of EEMs triggered by the project: 26,000 (Number of efficient mortgages issued)
Share of banking market in the Nordics offering EEMs: 25% (Share of financial institutions by market size)
Share of Nordic Financial Institutions reached by communication: 80% (Share of financial institutions by market size)
Communication reach among households relevant for energy efficient mortgages: 100,000 (Number of households)
Reduction in CO2e emissions triggered by the project: 0.24 (CO2 e reduction per year)
Climate reduction relative to national ambition baseline levels: 0.14 (Share of 1990 baseline)
Quantification: 10 years after project ends
Primary energy savings triggered by the project: 4,000 GWh/year
Investments in sustainable energy triggered by the project: 4.5 Billion EUR
Number of EEMs triggered by the project: 130,000 (Number of efficient mortgages issued)
Share of banking market in the Nordics offering EEMs: 50% (Share of financial institutions by market size)
Share of Nordic Financial Institutions reached by communication: 90% (Share of financial institutions by market size)
Communication reach among households relevant for energy efficient mortgages: 500,000 (Number of households)
Reduction in CO2e emissions triggered by the project: 1.2 (CO2 e reduction per year)
Climate reduction relative to national ambition baseline levels: 0.7 (Share of 1990 baseline)