How to finance energy retrofit projects

Proposals by the Caisse des Dépôts et Consignations[1]
at the 2013 Ecocity Summit

Energy retrofits in buildings, a key step towards sustainable cities

The Ecocity World Summit, held from 24 to 26 September, 2013, in Nantes – a city which received the European Green Capital Award the same year – featured about a hundred workshops and conferences, bringing together experts from all around the world to discuss sustainable cities, energy efficiency and building renovation.

Upgrading the energy efficiency of existing buildings is a crucial undertaking, as it could save up to 43.3% of final energy consumption in France. Many of the conferences held during the summit dealt with this topic; more specifically, participants discussed the possible ways of financing public and private investments necessary to meet the ambitious goals the government set itself, as repeated during the environmental conference a week earlier.

Ambitious government targets

The housing investment plan announced by Minister of Housing Cécile Duflot on 21 March, 2013, sets the goal of renovating 500,000 housing units – 380,000 of which private – until 2017.

In order to meet these targets and to stimulate the energy retrofit market by improving access to finance, the French government commissioned a report by Caisse des Dépôts so that adequate schemes be put in place.

Caisse des Dépôts proposals at Ecocity Summit

Although it has not received much coverage since it was published last summer, the report by Caisse des Dépôts, entitled Interim report on the financing of private housing energy retrofit projects, includes interesting measures, some of which were already announced in September by the President and the Prime Minister during the environmental conference.

The Caisse des Dépôts took the opportunity of the conference to present its proposals once again, chief among which is the creation of a National Energy Efficiency Fund (with no related increase of the public debt level). Other proposals fall into three major themes:

  • bank financing
  • third-party financing
  • fuel poverty

In order to finance the National Energy Efficiency Fund, Caisse des Dépôts proposes to make it possible for energy utilities and retailers to contribute to the fund as a way of achieving part of the energy savings imposed on them by the EU Directive on Energy Efficiency. According to its estimates, the fund’s maximal endowment total 250 million € annually and enable the fund to guarantee up to 5% of each bank loan that finance energy retrofits in 380,000 housing units, on the basis of 12,500€ per housing.

The Caisse des Dépôts group advocates legal and administrative changes as well as financial guarantees to allow the banking sector to confidently take part in energy retrofit projects. Different financing schemes, resembling the German bank KfW or the British Green Investment Bank, were also considered, before it was decided that it would be best to adapt existing structures rather than undertake a complete overhaul of the system.

A banking conference chaired by the Prime Minister is expected to take place in the spring of 2014 in order to gather the opinions of various stakeholders and to reflect on strategies to finance the energy transition.

[1] “ Deposits and Consignments Fund”, a French public financial group investing in development projects nationwide

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