Big money, low results reforms: There is still a lack of adequate incentives to encourage people to renovate their homes

Raya Lecheva

Why are 65,000 units and all single-family homes being left behind in the remediation grant? There are no clear mechanisms how they will be able to find suitable financial instruments to renovate their homes.

Nearly BGN 1.2 billion from a total of BGN 1.4 billion will be for 100% financing of the building renovation of only 1000 buildings-1200 buildings, and the remaining nearly BGN 270 million will be with 80% grant and 20% co-financing by the owners. On the one hand, if we assume that this is a pilot procedure, the decision may seem acceptable to us, but if we talk about these reforms in the sector for at least 10 years, the ambition now seems too timid and insignificant. The stated goal of "transforming the existing model of providing 100% non-grant financial assistance" is totally defaced by the fact that 92% of the funds are directed specifically to non-grant funding, writes the statement to the application guidelines of nearly 10 non-governmental organizations in the sector.

The public discussion of the new procedure for sustainable energy renovation of multi-family housing in Bulgaria ended at the end of October and the Ministry of Regional Development is currently summarizing the received proposals. Not only is communication with the regional ministry difficult, but it also does not lead to concrete results. The branch that participates in the Commission for Energy Efficiency at the Advisory Council in the Council of Ministers for the European Green Deal has not even seen the proposal of the procedure in advance. And some of the thoughtless proposals and decisions could have been avoided even at the level of discussion in the Commission. The branch then asks why it should collect and invest effort and time, when in reality these structures will not function and fulfill their role.

It turns out that the program will be a gift for about 1,000 buildings and all the other 65,000 that need renovation are left behind, commented Dragomir Tsanev, executive director of the Center for Energy Efficiency "EnEfect". Contrary to all public statements, the latest version of the energy efficiency project to the Recovery and Sustainability Plan confirms the trend of total rejection of reforms in one of the most important civil sectors, according to the industry. The two reforms in the plan that should mediate this transformation – the National Fund for Decarbonisation and the Development of a Definition of Energy Poverty – are not even mentioned in the draft text.

Such an investment is necessary because such projects can achieve significant energy, environmental, financial and socio-economic effects. This is precisely the reason why these policies have the full support of the European Union.

But even in the last version of the project, there are no points of contact not only with European, but also with regional practices. Despite the huge amount, its scope is negligible, the ambition is far from even what is set in our own national plans, and the long-term effect of its implementation is negative, believes Mincho Benov from Habitat Bulgaria. This is due to the continued practice of providing 100 percent grant financing for a limited number of multifamily residential buildings. Single-family residential buildings, in which nearly half of the Bulgarian population lives, are again excluded. This was confirmed by Deputy Minister of Regional Development Desislava Georgieva in answers to 3eNews.

Realistically, at best, by mid-2026, no more than one-third of the set national goal for 2030 will be achieved. It remains unclear how the necessary resource to fulfill the remaining two-thirds will be provided.

Decisions have been delayed for years and that is why even today we find ourselves in a situation where we do not have a real reform and vision for the development of the housing stock, even with the perspective of 2030, comments Tsveta Nanyova from the Bulgarian Facility Management Association. Introducing a principle of co-financing for part of the buildings without providing a parallel mechanism to support self-participation and the inclusion of vulnerable households dooms it to failure, especially in the competition of a program with 100% grant funding. Yes, the government has passed changes to the Condominium Management Act and makes it possible for condominiums to open a bank account to be able to participate in various financial instruments. But these attractive financial instruments for people are not there yet. And the National Decarbonization Fund, which is expected to provide funds for co-financing, will start working only at the beginning of 2024. In fact, he will not give funds to co-finance the investment, but he will give the funds to a wider range of financial instruments and institutions to lend to people who want to renovate their homes.

We asked topical questions to the Ministry of Regional Development, which proposals of the business will accept and which will not, what decisions will be made now or in the future to include all people in the process of energy renovation of housing.

We are waiting for more specific answers to our questions, if there is a lot of interest, can it be done in such a way that all the grant funding is used, because in practice this is how the procedure for 80% co-financing is depersonalized? In reality, all over 3,000 buildings that were approved but failed to be financed under the previous program can now apply. Adding the large and active municipalities such as Sofia, Burgas, Gabrovo are also ready with a large number of new proposals, and in reality the funds will be enough for about 1000 buildings. Why is priority given to large blocks in large cities? Why can the photovoltaics that are built be only for own needs? How will actually be measured the achieved results for saving and reducing emissions, which are the main criteria of the program. What financing mechanisms are being discussed for the buildings that will not be financed anyway?