Why cooperate with financial institutions?

The Summer Meeting of the transnational EU Peers Community took place on the 10^th of September 2024 and was attended by more than sixty participants. It explored a question crucial for most one-stop shops - how can they best engage financial institutions in financing renovation works?

At the online event, Ina Karova from the Plovdiv Energy Agency in Bulgaria presented a challenging real-world situation. Gabriel Quentin from the French one-stop shop Octave and Sandra Bautista Esteban from the Spanish Union de Créditos Imobiliarios reacted to the problem in their presentations and sparked a discussion on the cooperation of financial institutions and one-stop shops (OSS).

Similarly to other countries, Bulgaria is suffering the adverse effects of a well-meant but not thoroughly thought-over state intervention. A national renovation programme offering 100% subsidies was in place from 2007. Unfortunately, it stopped people from investing their own money in renovation and discouraged financing institutions from proposing their own products. When the subsidies were reduced to 80% in 2024, residents became frustrated and willingness to renovate diminished – the programme has killed the market. To make matters worse, the renovation goals were not ambitious (the expected outcomes were Class C, and recently Class B), better outcomes were not linked to more financing, and there were no synergies with other state programmes focused on heating or renewable energy. 

The Plovdiv region is currently looking for solutions as to how to revive the market: their new Integrated Home Renovation Services (IHRS) approach, Multihome Programme, is developing new business and financial models together with market actors.

Gabriel Quentin, from Octave, noted that the emotional aspects of renovation are probably even more important and difficult than the financing part. Homeowners are anxious, and it is a hard decision for a condominium to embark on a 3-4 million EUR renovation. This is why OSS should be dedicated to people: simplifying, accompanying, listening, understanding the needs of the homeowners. Having said that, financial institutions are also rather difficult to involve: they are not very experienced in renovation. The spread of Energy Performance Contracts (EPC) is going to be a game-changer, and European financial institutions will probably be ready to finance massive energy renovations if OSS can deliver EPC guarantees. The LIFE project, CondoReno, is also working on this topic.

It turned out during the discussion that financial institutions need to be onboarded at the very beginning of the process of OSS creation, even 3-5 years prior to multi-family projects. Both public and commercial banks are too slow to move, they are rigid, and there is a limit to what they can do; therefore, it is advisable to involve them as soon as possible in the process.

Sandra Bautista, from the Spanish Union de Créditos Inmobiliarios (UCI), presented the other side of the coin. She gave insight into the activities of a financial institution specialising in loans for sustainable, energy-efficient renovations. They provide loans granted to communities represented by their presidents (instead of individual loans to homeowners). Additionally, they act as a facilitator between homeowners and architects, constructors, installers, renovation agents, technicians or promoters. UCI benefits from ELENA EIB funding to provide an integral solution that facilitates energy renovation of housing (RER Plan).

Key takeaways from the Summer Meeting include the need to educate homeowners that it is beneficial to invest their own funds in energy renovation or obtain funding from financial institutions. Ideally, one-stop shops can also convince financial institutions and public grant authorities to cooperate and develop blended funding. Attention should also be paid to vulnerable customers and energy poor households: targeted financial support has to be provided to ensure that they have access to home energy renovation.

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