Several thousand remediation projects will remain without funding, the state must urgently present alternatives

Raya Lecheva

Several thousand multi-family buildings may be left without financing. This was warned by Tsveta Nanova, vice-president of the Bulgarian Facility Management Association during the 25th annual conference of the municipal network "Ecoenergy" - "Investments in sustainable energy".

What will happen to several thousand ranked but unapproved remediation projects under the new program? The multifamily rehabilitation program under the Recovery and Resilience Plan began a month ago and will await owner projects through May. This is the first stage of the program, which still provides for 100% financing of the projects. At the end of May, it is expected to start the application under the pilot scheme for 20% co-financing of the projects from the side of the owners. Given that the approval of projects under the first stage of the program will last at least until the autumn and there will be no information about the finalists, how is the pilot scheme expected to start? How will the owners know if they will be ranked to prepare for the second stage. This advocacy is illogical and I hope we will soon learn what will happen to the ranked but unapproved projects and how people will be able to get involved in the next stage, commented Nanova.

We will trade one injustice for another, thousands of people will have funded energy surveys as part of their energy passports without receiving support, she added. At the same time, a new pilot scheme will be launched, which lacks two very important things - on the one hand, a financial instrument to secure the financing. It is expected that the National Decarbonization Fund will help in this, which will not be operational until 2024, and the application for this first pilot measure is expected to be completed by the end of the year.

It is already clear that the rehabilitation program is becoming a program for people who have savings under the mattress, and not for those thousands of Bulgarians who have no savings. This is the other paradox, the program was launched at a time when there is no definition of energy poverty, but priority should be given to those families who are energy poor.

On what basis are we stepping?

The implementation of energy efficiency in multi-family buildings is a systemic problem. 93% of the existing building stock is energy inefficient. 60,000 multi-family and 1.2 million single-family buildings need renovation. We have made a practically unfulfillable commitment to renew 12 million square meters of living space by 2030, or more than 12,000 multi-family and at least 16,000 single-family buildings. So far, we have reached less than 3,000 multifamily buildings, and with the new program under the Recovery Plan, in the most optimistic version, we will renovate about 1,000 buildings. And with the new model of BGN 300 million for co-financing, only a few hundred more will be renewed. In practice, it seems that we are not coping, and there is tons of European funding, commented Nanova.

In most European countries, co-financing programs come with a credit resource that can only be repaid with realized savings. In every building there is a group of owners who cannot afford an investment, have no disposable income, they can get additional help. According to a recent survey, 35-40% of people say they cannot afford 20% co-financing even with 80% grant support. But when they are offered options and it is explained to them that there are alternatives, this percentage drops to 5%, Nanova shared.

The actual required funds are from BGN 1,000 to 3,000 and it can be in the form of a loan against realized savings, i.e. this money will be paid in the form of savings on energy bills.

The program started without any important reforms

The energy renovation or remediation program has started without some of the reforms to facilitate the process having been launched. These are:

- Creation of one-stop service

- Changes to the Condominium Law

- Creation of financial mechanisms for participation, National Decarbonization Fund

- Definition of energy poverty

- Allocation of funds for the energy poor

How does the lack of these reforms reflect on the project?

Again, large buildings are favored at the expense of small ones, but to some extent this is explainable because energy and emission saving indicators have to be achieved.

We are focusing on a program that will make a small number of owners happy, and there are no other parallel programs that would support, even with less intensity, more buildings even below 50%, Nanova also commented.

But the obstacles and the challenges don't stop there. The short application deadlines affected the capacity of the municipal administration and energy auditors, no training was provided for the municipal administrations, and they are in a new, albeit familiar, role of administering the process. In addition, European funding will be possible for the recruitment of extra staff, but not for the teams in the municipalities that deal with this. There is no thought to allocate a national resource, which is demotivating for municipal employees.

At the same time, changes to the Condominium Management Law were not adopted. To a large extent, they were related to easing the process of convening a General Assembly. Also the possibility of electronic voting and the possibility of participation in rehabilitation programs with the consent of not all, but the majority of owners. Even at the moment, how in a building with 150 owners is logistically organized a meeting in person, how are the signatures collected from all the signatures on 4 different documents, but it is surprising to me that people do it, comments Nanova.

Interest is strong despite the lack of a communication strategy on the part of the owner assistance program. But people have difficulty even ordering a technical and energy survey, they need to go through this process with a trusted partner, and these are the municipalities, according to the specialist. But here is a new trap: the owners are expected to share with the partner the municipality the responsibility for meeting the savings indicators and, if they do not achieve them, to share the responsibility for financial corrections.

In all countries with the exception of Bulgaria, support is received for this professional expertise, for technical and energy audits, for control, even grant assistance of up to 30% for construction and repair works, Nanova said.

Required actions and steps

It is important for the Ministry of Regional Development to provide perspective on ranked and unfunded proposals. Let's remind the administration to think carefully about all those who have obtained energy surveys if they are not ranked.

It is important to consider diversifying the programs and initiatives that are implemented with public support. Energy efficient measures are 30% of the investment. You can't compare an old building with a new building, an industrial building with a flat roof. It is important to diversify the fan of programs for co-financing and lending. It is necessary to find provision of 20% co-financing.

In order to properly evaluate the results of the rehabilitation, professional management is needed, with money from the national budget if financing with European funds is inadmissible, experts suggest. Reforms to be accelerated to facilitate the implementation of energy efficiency programs

Energy renovation has no alternative

There are three reasons:

1. The market situation is such that it motivates more and more for investments in energy efficiency, price increase, risk of energy poverty, situation in world economy and geoplotics, the best solution to achieve energy independence. The cheapest energy is energy saved.

2. Attitudes have changed, there are huge expectations of the people and preparatory activity is boiling, there will be many times more applications than the resources of the program will be able to cover.

3. There are many financial resources from European sources

· RepowerEu, under which Bulgaria stated that it will apply for an additional 500 million euros.

· Cheap loans from the Recovery and Resilience Mechanism for a total of 4 billion euros, but Bulgaria has not requested. This can only happen with a working, market-oriented model, but in any case not with 100% co-financing.

· Modernization fund for the emissions trading system

· Social climate fund for the most vulnerable groups and energy poor households

· Just Transition Fund for Coal Regions

· The EU's multiannual financial framework

The state lifted the mandatory requirement that every building have energy passports, and now because of the program and increased demand, it is difficult to find well-qualified energy auditors. But there will be funds for training and the municipalities will be able to benefit, commented Dragomir Tsanev, executive director of the Center for Energy Efficiency "EnEfect". At the moment, electronic aids are being prepared for professionals, for home managers and citizens, who will be able to easily walk in the footsteps of zero energy buildings.

Municipalities and schools can now use a very simple calculator for energy savings, which becomes a mandatory condition for financing and reporting projects, developed by "EnEfect", said Kamelia Georgieva from the National Trust Ecofund.

Municipalities will have to have more and more specialists in this field in order to be able to advise people, and this is the important role of the energy manager, and it will still develop, the participants in the conference commented.