A huge competition is emerging between 3,000 projects for 4 billion BGN with a resource of 1.1 billion BGN for rehabilitation

Raya Lecheva

Over 3,050 projects for over BGN 4 billion have been submitted for the rehabilitation of the buildings under the first stage of the procedure for the renovation of multi-family housing, which provides for a 100% grant, the last procedure that takes place with the provision of 100% grant aid. This was announced by Dobromir Vasilev, director of the "Housing Policy" Directorate at the Ministry of Regional Development and Public Works during a round table on financing energy efficiency investments in Bulgaria. It is part of the national conference and exhibition "Zero-energy buildings: the future is now", which takes place until June 2 in Burgas.

This opens a gap of BGN 3 billion, which cannot be secured at the moment, because the program has a resource of BGN 1.1 billion.

The deadline for submitting project proposals was extended to 5 p.m. on June 1 due to technical issues. Thus, in practice, the era of 100% free financing of buildings is put to an end. From now on, every condominium will have to provide co-financing in some way, whether through own funds or other financial instruments, it became clear from Vassilev's words.

The problem will be not only for all those who are yet to prepare projects, but also for those who have been active enough and have already submitted their proposals. The biggest question is what happens to all those approved projects for which the funding will not be sufficient. This is the question posed by Tsveta Nanova, a consultant in the field who worked on the construction of the first remediation program. According to the data of the regional ministry, all municipalities have submitted projects, and Burgas is the record holder, as well as according to the national rehabilitation program. Over 214 projects for over BGN 500 million with a limit for the municipality of EUR 80 million, Varna has also submitted projects for BGN 200 million, there are also many submitted projects from the Metropolitan Municipality.

All approved projects, for which the funds are not enough, will be able to apply for the next stage of the procedure under the Recovery Plan, where a little under 300 million BGN is planned, Vassilev said. But it is clear that the hole remains nearly BGN 3 billion, which cannot be found at the moment.

I cannot say that there is a financial instrument with funds under the Recovery Plan to cover this 20% co-financing or to fill this missing resource, Vassilev said. However, we are currently in talks with financial institutions to stimulate ESCO initiatives, he said.

60,000 residential buildings must be renovated in the country, and with the current resource of BGN 1.1 billion, no more than 700 buildings will be renovated. Therefore, it is imperative to find financial mechanisms that stimulate people to look for different instruments, and the state to guarantee loans from financial institutions.

The deadline for submitting proposals for rehabilitation with an 80% grant will be extended until January 16

Vassilev promised that within four months they will evaluate the projects received so far. From tomorrow, it will be possible to submit projects for 80% grant and 20% co-financing of projects for the renovation of buildings, the deadline for submission will be extended from December 31 to January 16, 2024, Vasilev pointed out. It's a huge competition for the limited resource we have, he explained. From his words, it became clear that the projects that have missing documentation will be returned to provide the necessary documents, relying on the companies to have made good evaluations. In practice, they have no way to assess technical gaps in the quality of surveys and technical passports to achieve savings and rely on the expert assessment of specialists. The quality of surveys and energy passports will not really be evaluated.

The requirements will not change for the second stage of the procedure. Funds given for surveys and energy passports, as well as for consulting assistance, will be included in the co-financing percentage. All municipalities can start work if they want to apply for the second stage. The condominium has 3 months to approve that it will join the program with 80% co-financing. Even if they apply in the second stage of the procedure and are approved for the first stage, they will receive all the funding as provided for in the first stage procedure with a 100% grant under the Recovery Plan.

All buildings must be commissioned by June 30, 2026

Several years have passed since the national rehabilitation program, we cannot wait another 4-5 years for the next resource, there must be consistency of funds, said Tsveta Nanyova, a consultant in the field who worked on the construction of the first rehabilitation program.

With the available resources, 3 million square meters of built-up area will be renovated, and our goal is to reach 19 million square meters, as the EC has said that our goals are not ambitious enough, Nanova emphasized.

In Poland, there have never been grant mechanisms, they have always ranged from 15%, 20%, 26%. The renovation rate is 3500-4000 buildings per year in Slovakia, where there are also no 100% grants, the state provides guarantees for 60% of the funds, and the remaining 40% is private financing (co-financing by the people).

At the moment, however, suitable financial instruments are not open in our country. And the banks seem to have no interest in getting involved in the process yet. If a condominium comes to us and wants us to finance renovation of the block for BGN 500,000, we can offer two things, Procreditbank said. One is to ask for collateral, which is difficult to do if all the owners are able or willing to do it or only some at the expense of the others, the bank explained. The other option is to have a grant scheme such as the well-known "Kozloduy" fund, which guarantees a rate of return in case of non-return of the loan. If it is about 20% co-financing, for example, or BGN 100,000, if the state provides a guarantee, we are ready to discuss the possibilities of lending to such projects. Currently, it is a fact that no bank will finance a rehabilitation project if it is not secured in some way.

Over 3,000 projects is a great achievement and a really serious result, but we need to work even harder to explain to people how important it is to invest in refurbishing their homes and to be active and that there are many opportunities to take advantage on their own, only with our logistical support from all programs, said the deputy mayor of Burgas municipality Chanka Koralska.

People's activism is key for the administration to be more active and to create working financial instruments to respond to people's interest in changing their attitudes towards the way they use energy in their homes, said Dragomir Tsanev, executive director of the Center for energy efficiency EnEffect. He asked Dobromir Vassilev whether Bulgaria would take advantage of the opportunity of another European financial instrument RePowerEU to use financing of energy efficiency instruments, but said that there is no information whether the Ministry of Energy is working on this issue.

275 billion euros per year until 2030 for the EU will be needed to achieve a 55% reduction in emissions from buildings, Silvia Rezesi from the European Commission announced today at the conference.