Finance Sustainable Buildings
Based on a successful Dutch energy transition program, Energiesprong is an initiative that promotes the whole house refurbishment with funding support. The initiative eases high quality and net zero retrofits and new built houses in a market while creating proper financing and regulatory conditions at the same time.
The renovation or new build is financed by future energy cost savings plus the budget for planned maintenance and repairs over the coming 30 years. This allows tenants to keep the same expenses. In the case of housing associations, residents pay the housing association an energy service plan which is the equivalent of their previous energy supplier bill. The housing association can use this new income stream to partly fund the renovation works.
Energiesprong UK is being more innovative in this approach. Their model involves whole house retrofit, with an innovative mechanism for the landlord to recover the investment through charging a separate ‘energy service plan’ alongside the rent. Tenants get the benefit of improved comfort for the same cost, but most importantly landlords get access to a new revenue stream. However, this only works when the landlord keeps the property long enough to be profitable.
The key innovation behind Energiesprong is a cost-neutral business model for social landlords. The cost of installation will be offset by long-term savings and income equal to or greater than the value of the work. This makes Energiesprong an extremely cost-effective route to heat decarbonisation as well as delivering multiple other benefits including eliminating fuel poverty and providing resilience to future temperature rises. Large amount of homes could benefit directly from Energiesprong retrofits, and the approach could indirectly benefit many other homes through cost reduction in components and innovations in business models.
Landlords would be the new energy provider, and this could create an additional problem. The regulatory framework should improve here to incentive landlords to do so. For tenants could be challenging as well as the landlord would be their only option for energy-providing. A possible change in mindset would be required.
Renovation wave. This evolution of this innovative instruments that UK is exploring could lead to one-step deep renovations what would be a huge improvement In the desaacrbonisation progress.
Sufficiency. If a SER framework is establish for integral retrofits, including sufficiency on top of efficiency and renawables, it could lead to a new real estate market.
Circular Economy. New technologies and links will be developed. These will ease the transition from linear economy to circular economy.
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