The Investment Plan for Europe, an asset for energy efficiency improvements to buildings. The example of the Île-de-France

Towns and cities are responsible for 70% of greenhouse gas emissions. Getting the energy transition under way in towns and cities is thus both a challenge and a necessity. That is why the Urban Agenda, to be signed in Amsterdam on 30 May, has made it one of its 12 priorities. Its goal is to implement the transition to renewable energy with a focus on promoting innovative approaches for energy supply, increasing local production of renewable energy and improving energy efficiency, particularly in buildings.

These are all areas of investment that are eligible for European Investment Bank loans guaranteed by the European Fund for Strategic Investment (EFSI) set up under the Juncker Plan. The energy sector consequently accounts for 29% of the projects financed by the EFSI to date.

One of these is a housing renovation project being carried out by a platform set up in the Île-de-France (France). Jyrki Katainen i, vice-president of the European Commission, indeed mentioned it as an example of good practice during a discussion on 22 April assessing the EFSI’s impact at regional level.

So we wanted to find out a little more about this SEM (mixed ownership company) Energies Posit’if, that was set up in 2013 and whose main shareholder is the Île-de-France Regional Council. The company specialises in the energy renovation of co-owned buildings in the Île-de-France and offers turn-key solutions that include a financing plan, project design and supervision of work. The building renovation project being undertaken by Energies Posit’if, which was approved in May 2015 by the European Investment Bank (EIB), will be the first to benefit from this kind of loan. It aims to improve the energy efficiency of more than 40,000 homes in the Île-de-France (France) area by 50 to 70%, and to reduce their energy bills by the same amount.

The company has signed an agreement with the EIB for a loan of EUR 100 million. The leverage effect of this funding should generate work to the tune of EUR 200-300 million and create 2 000 to 2 500 jobs. In the long term, this loan will above all offer an innovative solution, i.e. third party financing, which will encourage co-owners to commit to energy renovation work. The third party financing company can essentially advance funds to the (co-)owners (third party funding), which the latter then repay in the form of a fixed “rent , calculated partly on the energy savings that will be made after the refurbishment. This makes energy renovation accessible to many more people.

And this is what is happening at the Lançon-Rungis apartment building in the 13th arrondissement in Paris. It is an exemplary energy renovation project that should enable the co-owners to achieve energy savings of up to 64% and increase the value of their property. The cost of the thermal insulation of the shell (facades, roofs, windows), renovating the boiler and ventilation systems and installing solar thermal panels, will be an average of EUR 33 000 for each apartment. More than 50% of this amount is covered by various sources of financial aid. With the EIB wanting to use the EFSI to strengthen its commitment to generating the investment needed to reduce energy consumption and emissions, this Energies Posit’if project is truly an example of good practice as well as a success story.

Nevertheless, the company’s projects have run up against a number of mainly legislative obstacles, some of which have still not been overcome. First of all, the company had to wait for the enactment of a law enabling third party financing companies set up by local authorities to receive EIB subsidies. Third party financing is still not operational to date because it has not been possible to set up a partnership with a guarantee company. To ensure that no co-owner having recourse to third party financing has effectively to bear the cost of another co-owner defaulting on repayments, the Warsmann Law stipulates that joint lending transactions have to be guaranteed by an approved insurance undertaking. Despite several months of negotiations with guarantee companies operating on the co-ownership market, Energies Posit’if has still not been able to reach an agreement.

But in spite of these difficulties, the renovation work on the Lançon-Rungis apartment block was started in April - with the help of Energies Posit’if, but without funding from the EIB.