Subsidies provide incentives for renovations

The retrofitting of apartment blocks may decrease the energy use of flats by up to 60% ­— according to the findings of the Energiaklub’s international project, which examined the renovation and savings opportunities in specific buildings as well as the reasons for the public’s low willingness to invest. Although resident communities are open to modernisation, their financial opportunities are limited, with even the costs of preparations being a large burden. According to the latest survey of Energiaklub and the Hungarian Energy Efficiency Institute, almost two-thirds of the public will not start modernising their homes within the next three years if they can only rely on their own savings and bank loans. The revitalisation of the outworn building pool is impossible without non-reimbursable state subsidies.

 

 

Renovations may result in energy savings up to 60%

World leaders expressly supported the mitigation of climate change at the 2015 Paris Climate Summit. It is in Hungary’s utmost interest to improve the country’s energy efficiency, and if we want to achieve substantial energy savings swiftly and efficiently the modernisation of residential buildings is a good solution. The energy efficiency of Hungarian homes has hardly improved since the early 2000’s. The rate of residential energy performance renovations is very low in Hungary as well as in other EU member states.

In the framework of the Energiaklub’s international project called ‘Low Energy Apartment Futures‘ six European countries investigated the reasons for the public’s low willingness to invest and the obstacles affecting retrofitting. Four apartment blocks were selected for the Hungarian programme where residents received the energy assessments necessary for starting as well as a proposal package supported by savings calculations free of charge. The measurements carried out in the buildings confirm that these unrenovated buildings have a huge potential that could be technologically very easily harnessed. 

“In some of the inspected buildings a simple insulation and window replacement project can reach energy and utility cost savings of up to 62%. This adds up to over 3 million forints in savings for the residents, with 100,000 forints saved by each household. If a flat’s EPC rating improves by five bands its market value will increase, and the property can be sold more quickly”, said Mihály Czabarka, CEO of Projectdoctor.

One of the fundamental problems with apartment block renovations is that a large number of stakeholders have to decide on a large-scale, complex investment. This can only be done on the basis of a carefully prepared and developed concept, with adequate information, involving multiple steps of negotiations.

 

Expert professionals are essential

Within the scope of this project, Energiaklub prepared a project management guide that serves as a useful tool for the leaders of residential communities. The guide takes stakeholders through the entire process of energy performance retrofitting, provides assistance for managing the investment from preparations to implementation (the guide can be downloaded here). For an apartment block investment of dozens of millions of forints, a botched construction can push residents into severe financial crisis, making additional works necessary, and renovations may not yield the expected savings.

“Good consultants are essential at the start of an investment project, they can help keep the costs and the timeframe of construction within the set limits, thus ensuring technological quality and the expected rate of savings. Experts have a systemic approach, they know the characteristics of specific products and how they will cooperate once they are built in. Our company trains almost 6,000 experts annually”, pointed out Béla Markovich, CEO of Mapei Kft.

Although residential communities are open to expert assistance and need it, often the costs of preparations are overburdening them.

“In our experience high investment costs represent the biggest obstacle, consequently financial issues are clearly impedimental to modernisation projects. Even richer countries have this problem. The project’s British participants also found that state subsidies increase investment incentives. Such subsidies would be desirable here as well”, stated Zsuzsanna Király, project manager of the Energiaklub.

A recently published survey by Energiaklub and the Hungarian Energy Efficiency Institute (MEHI) also confirms the need for non-reimbursable subsidies. Almost two-thirds of the respondents said they could not start modernising their homes relying only on their own savings and bank loans.

“The purpose of non-reimbursable tender funds is to supplement lacking financial resources and to shorten the period of return of the investment. Without such funds the majority of investment projects go unrealised, or compromised solutions are implemented. In order to stop the further deterioration and significantly improve the energy efficiency of Hungary’s four million apartments, 100,000 homes should be renovated annually, but the retrofitting trend will not begin on the basis of reimbursable subsidies only”, said Gabriella Szalai from MEHI.

 

Energy performance renovations are beneficial for all stakeholders

Experts say that residential energy efficiency investments have a positive effect on the state of Hungarian economy, create jobs and yield income for the central budget. Each tax forint spent from non-reimbursable subsidies yields several times as much in return. In 2010 Germany provided grants of 1.4 million euros for complex energy efficiency developments for residential real estate. This created 340,000 new jobs and an additional 5.4 billion euros in tax revenues, which equals a five-fold return on the investment.

“According to our calculations, Hungary could launch a programme for 64 billion forints per year, and the return on the investment would be several times as much from the second year on. 25,000 new jobs would be created annually, the central budget revenues would increase by up to 70 billion forints, the market of taxed construction materials would boom, and this measure would help small and medium-sized enterprises as well”, explained László Kanyuk, head of marketing at Knauf Insulation Kft.

These investments would result in a 4% decrease in Hungary’s natural gas import, decrease greenhouse gas emissions, and, through the decreased CO2 emissions, generate more in emission trade revenues for the state.

 

 

Further information:

Zsuzsanna Király

ENERGIAKLUB

[email protected]

 

The joint survey of the Energiaklub and the MEHI was conducted in December 2015, through questionnaires via telephone interviews with 1000 people. The survey is representative in terms of gender, age, education, regions and types of municipalities.