Housing and the EU Energy Union
The Energy Union is a strategy proposed by the European Commission and endorsed by Member States which aims to make energy policies more coherent in the EU, while contributing to the fight against climate change. It is based on the three long-established objectives of EU energy policy: security of supply, sustainability and competitiveness.
To reach these objectives, the Energy Union focuses on five mutually supportive dimensions:
- Energy security, solidarity and trust; the Commission called on policy makers at national and EU level to make clear to citizens the choices involved in reducing our dependency on particular fuels, energy suppliers and routes.
- A fully integrated internal energy market, in terms of both ‘hardware’ (interconnection infrastructure) and ‘software’ (regulations).
- Energy efficiency as a contribution to the moderation of energy demand and dependence on energy imports; this includes increasing the energy efficiency of the buildings sector, and achieving an energy-efficient, decarbonised transport sector.
- Decarbonisation of the economy; an ambitious EU Climate policy supported by a well-functioning EU Emissions Trading System, coupled with leadership in renewable energy.
- Research, innovation and competitiveness; producing the next generation of renewable technologies and storage solutions, putting the EU at the forefront of smart grid and smart home technology, supporting clean transport, as well as reducing the impacts of fossil fuel use and ensuring safety of nuclear generation.
The obstacles for Public, Cooperative and Social Housing providers
Back in 2012, EU Member States were working on new definitions and a framework to promote Nearly Zero-Energy Buildings (NZEBs), with the Energy Performance of Buildings Directive (EPBD) and the Energy Efficiency Directive (EED) implementation already underway.
Public, cooperative and social housing have a very important role to play in the above ambitious frameworks. With 70% of Europe’s 2050 housing stock already built, any attempt to deliver energy efficiency must look at retrofitting. However, individual homeowners do not represent a market large enough to develop retrofit technology at a scale. Housing associations with their large stock portfolios (26 million homes, meaning 11% of existing dwellings in the EU), either individually or in partnerships, are best placed to make retrofit happen.
Within this context, public, cooperative and social housing federations across the EU, represented by Housing Europe, carried out surveys and discussions that revealed the barriers to delivering Nearly Zero-Energy Buildings (NZEBs). The research was implemented in the framework of the “POWER HOUSE Nearly Zero-Energy Challenge” initiative and with the help of external experts. The barriers identified, which actually also apply to the whole residential sector, may be broadly categorised into the following five key areas:
- Technical – insufficiency of relevant expertise and skills throughout the construction sector, as well as uncertainties on how new technologies perform.
- Economic and financial – affordable financing for new constructions or retrofitting of existing buildings, in order for these to meet NZEB standards, may not be accessible.
- Legislative – definition(s) of NZEBs missing or inadequate, while there is limited policy coherence and legal structures to address energy retrofitting under shared ownership.
- Social and organisational – saving energy is not simply a technical issue but also depends on the lifestyle of residents and effective building stock management.
- Credibility – limited mainstream examples of good practices and robust data from nearly zero-energy homes has fostered confusion and misinformation.
The relevant opportunities from the Energy Union initiative
Within this context, some elements foreseen under the Energy Union dimensions are directly relevant to the public, cooperative and social housing providers’ points of interest in respect to energy efficiency:
- Empowerment of citizens for energy security, solidarity and trust, in order to address social and organisational barriers: housing organisations are doing a lot to make energy use more efficient, but this also depends on the behaviour of the people living in the buildings. In order to lower energy consumption and make the future energy market possible, impartial information and training is needed, along with the involvement of tenants themselves in this process.
- Energy market integration, in particular as regards the ‘software’ (regulations), addressing legislative barriers: the main challenge lies in fully and efficiently implementing the current framework (EPBD and EED), in promoting approaches that have been proven successful on the ground, and in continuing support for research and innovation. Many countries are struggling to implement the measures proposed so far, while measures vary from country to country in terms of their efficacy. Flexibility for Member States to meet the targets in different ways, while ensuring affordability, is vital.
- Financing energy efficiency in order to moderate energy demand, addressing economic barriers: what is absolutely crucial is a subsidy covering the gap between energy efficiency measures that are profitable for the housing company in the long run, and meeting the climate targets – i.e. a guarantee that energy saving investments not covered by up-front costs, or by energy gains over the project’s lifetime, are supported by subsidies. A key to success will be the guarantee of affordability for residents.
Keys to unlock future perspectives
In order for the above potential synergies to be optimally exploited, a number of parameters need to be observed; as usual, details matter:
- A flexible approach to defining expected levels of energy performance is required
The final achievable level of retrofit varies widely across the financial models implemented. Some of the most successful models – KredEx and KfW for example, offer a sliding scale of grant or subsidy which is linked to the final energy performance level achieved. In new housing projects, both for very low energy buildings and for passive houses, extra costs of construction for additional insulation and ventilation with heat exchange account for a total of 6,7% for small and of 9,7% for large (compact) buildings, and cannot be compensated by energy savings in the long run. In practice, differences in consumption between very low energy and passive buildings are very small; cost implications should be taken into consideration when defining the optimal levels for Nearly Zero-Energy Buildings.
- Projects and funding must be brought together – a possible role of intermediaries
Simple, sustainable and reliable financing schemes tailor-made for Public, Cooperative and Social Housing companies are essential in order to gather the initial capital required for deep renovation projects. Loans must be available to complete the subsidy part of the financing scheme, possibly all integrated under the same mechanism. Having seen the issues at stake, qualified support could be provided by third parties (such as sectorial associations or energy agencies), for a condominium to start the process and meet the right project partners.
- Cost optimality is a relative concept and should be treated as such
Some parameters used to calculate cost-optimal levels are not easy to predict (future primary energy factors, cost development, price trends, performance of new technologies). In addition, there are strong connections / interactions between various technical components of energy efficient buildings, e.g. insulation levels with heating and ventilation technologies combined with renewable systems (heat pumps, solar heating, photovoltaics). The integration between these components is challenging and definitely not only subject to expert calculations, but also a matter of debate and even competition between different stakeholders in the energy services sector, including energy providers.
- Quality assurance is needed for the housing organisations and for the tenants
Training and certification of building professionals is essential to deliver at anything beyond demonstration scale. ‘Nearly Zero’ is an innovation technology and as such requires the right skills to guarantee its delivery. There is a market for companies involved in the maintenance of systems that have detailed operations within a certain price range, especially in the field of tertiary buildings. In the residential sector, particularly in Social Housing, it is necessary to develop specific maintenance programmes for NZEB. Guidelines should be produced on this topic to help technicians with ordinary programmed maintenance operations as well as with preventive maintenance to avoid damage, over-consumption or even total system failure. Supporting tenants and residents to make best use of the refurbished dwellings is crucial. Residents must be able to understand the technology used in their home and feel comfortable making decisions about the residence.