Habitat for Humanity Europe, Middle East and Africa has launched a new report on energy poverty aspects of the REELIH project in the three implementing countries – Armenia, Bosnia and Herzegovina, and North Macedonia. The aim of the study was to find out how these countries were able to contribute to the fight against energy poverty by encouraging energy efficient renovation of multi-family residential buildings. The study was conducted by the team of experts from Metropolitan Research Institute (MRI) and Buildings Performance Institute Europe (BPIE) and thanks to the financial support of USAID. Find out more about the interrelation between the energy efficient retrofits and energy poverty alleviation and read through the main findings of the study and our recommendations below.
How to define, measure and tackle energy poverty?
Energy poverty refers to a condition in which individuals or households are unable to meet materially and socially necessary energy services at an affordable cost in their homes. There have been many attempts to come up with a general definition of this term, however, the environment around the energy poverty stimulators is different in each country and therefore, proffered is to work with the concept of energy poverty on a specific national level.
The study highlights two standard ways of measuring this state of condition:
- expenditure-based approach
- consensual approach
While each is required to capture both quality and affordability aspects of energy services that are important especially from a policy perspective, they differ in how they pin down energy poverty. As the study explains, the expenditure-based approach relies on monetary calculations derived from the ratios between the cost of energy and household income. The consensual approach relies on rather a subjective self-assessment of the households’ comfort and on affordability of their housing costs. No matter what approach one uptakes,
the energy efficient retrofits have proven to be effective instruments in fighting against energy poverty faced by, especially, low-income households. What is more, they are considered the most sustainable and effective way to tackle energy poverty.
Under the REELIH project we have carried out energy efficient retrofits of multi-apartment buildings in the three of the implementation countries. The overall findings reveal that every REELIH renovation program increased the level of comfort among the multi-apartment buildings’ inhabitants and symptoms of energy poverty were somewhat reduced as well. Furthermore, complex interventions managed to decrease the energy needs of apartments and thus either decreased the energy costs in a longer term or permitted to heat up at an adequate level the apartment without financial sacrifice. Read out more about the country level implementation of REELIH project in the next section.
REELIH Implementation Countries
1. Armenia: Crucial impact on the institutional level
In the common areas of 13 multi-family buildings in the cities of Yerevan and Vanadzor, the basic energy efficiency interventions that were carried out included the replacement of the doors and windows with more efficient ones, improvement of the lightning system and insulation of roof and basement. Due to the limited space for interventions, they resulted only in 2-6% of energy savings, therefore the impact on financial situation at the individual level was not that significant. However, at the institutional level, the impact was much more significant. The project initiated crucial changes in the framework conditions of energy efficiency renovations in three main ways:
- by testing a new financial model
- modernizing the home-owner associations’ legislative regulations
- creating new networks of municipalities
2. Bosnia and Herzegovina: New Schemes supporting building retrofits
The pilot buildings in 4 cities were renovated. The owners joined the program to fix crucial structural problems of the buildings such as falling facades or leaking roofs. After the renovations, their comfort level increased and the energy costs are expected to decrease in the longer term. Very importantly, by upgrading from wood-burning stoves to electrical heaters, the projects have met the goals of the local decisionmakers to reduce the air pollution as well.
The shift of the project’s focus from actual renovations of buildings to investment of the efforts into advancement of the legal and financial framework of energy efficiency retrofits has resulted in a growing number of municipalities and cantons starting to introduce new grants schemes to support energy efficient renovations of multi-apartment buildings.
Our implementing partner ENOVA in Bosnia and Herzegovina is conducting extensive audits of the residential building stock in multiple municipalities and based on the results of its analysis, prepare residential energy efficiency action plans for selected municipalities for implementation of recommendations.
The main obstacles that REELIH project faced in Bosnia and Herzegovina were related to the regulation of multi-apartment buildings. Namely, it is the paralyzing legal obligation that the owners who vote for the renovation have to finance it, where a simple majority decision already counts and enforcement of payment of minority is unacceptable; and non-transparent accounting mechanism of management companies. Moreover, some renovation is blocked also because of the uncertainty of the ownership of the buildings.
3. North Macedonia: enabling environment for energy efficiency retrofit works
North Macedonia is, from among the three implementing countries, a leading example in terms of tackling the energy poverty. The main reason for this is that its renovation processes are inclusive as the HFH loan is provided to low-income households as well. In North Macedonia, HFH Macedonia (HFHM) provided complementary financial assistance to the already existing renovation schemes of the local municipalities through a “Residential Energy Efficiency Revolving Fund”. A building management company funded by HFHM is now managing over 100 buildings in a professional and transparent way, and also carries out renovation works. Even in the cases where savings were not that significant, the comfort level of the apartment definitely increased. Outstanding success of Macedonian case is likewise connected with the fact that HFHM has several other energy efficiency projects accompanying the REELIH project which serves primarily as a creator of the enabling environment for energy efficiency retrofit works.
Learnings from the REELIH project and EU Best Practices
The study discussed the key considerations stemming from the evaluation of the implementation projects. It finds out that the financial and institutional environments are crucial for there are structural factors that hinder the implementation of energy efficient retrofits of multi-apartment buildings (e.g., low level of trust towards home-owner associations, lack of financial products). Improving building quality is crucial both for achieving energy efficiency and generally necessary maintenance of buildings. Another important learning from the REELIH project is that it is important to ameliorate not only the buildings themselves but the heating system as well.
Evaluation of effective renovation programs reaching vulnerable households in the selected countries has shown, however, that a number of challenges likely accompany their implementation. Therefore, the study collects the practices of different retrofits programs across the European Union and reflects on the lessons learned there as well. For instance, the analysis of the “Multi-Apartment Buildings Modernization” program in Lithuania has revealed that the uptake of loans increased, when local municipalities got involved in the program. Or that tackling the problems of the poorest can be an efficient tool to accelerate the renovation market in general. The first large-scale renovation program in Greece, so called “Saving money at home”, has managed to increase the share of dwellings with C or better energy certificate from 0% to 33%. Our analysis has, however, pointed out that sophisticated income-based criteria incorporated in the program are likely to work well only in the case of individual contracts, such as in the case of the detached houses’ renovation.
However, in the setting of multi-apartment buildings where an entire building as a single entity applies for a grant might cause significant difficulties.
Overall, the lessons learned from the non-REELIH case studies suggest that the seemingly competing environmental and social goals might be united though well-designed financial schemes that combine socially targeted subsidies with loans. Social targeting of financial schemes for energy efficiency retrofits will accelerate the renovation rate if:
- loans are combined with non-refundable support
- subsidies and loans fully cover up-front costs of low-income households
- loans are long-term enough
- budget for renovation is balanced to accommodate the needs of as many households as possible
Recommendations for policy makers
Last part of this research is devoted to proposing several recommendations following the deep analysis of REELIH project and other best practices in tackling energy poverty across Europe, and even beyond. The recommendations are made for both EU and national level representatives. The following are the areas and the topics that should not be omitted when looking for solutions that attempt to tackle energy poverty, especially in co-owner multi-apartment buildings.
- EU legislation and energy poverty
- different types of ownership structure require specific approaches, including private ownership structures in residential housing
- provision of proper financing
- holistic approach with joint social and energy policies
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