How to promote financing of Energy efficiency

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Sylvain Bosquet

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1192 Last modified by the author on 08/07/2016 - 00:00
How to promote financing of Energy efficiency

RentalCal Workshop at ERES 2016 in Regensburg, Germany

The European Real Estate Society (ERES) Conference is the leading annual real estate research event in Europe and one of the biggest of its kind globally. The ERES meeting also acts as an important interface between academic researchers and industry practitioners. It shares this approach with the RentalCal project, which aims to unite academic thoroughness with industry expertise to produce tangible and practical results. Both this alignment of purposes as well as a gloriously blue sky and sunshine over the conference venue in Regensburg boded well for the two dedicated RentalCal conference sessions and workshops.

And indeed, the workshop was a full success by any measure. The attention it attracted from conference attendants was matched by the quality of the insights gained from the audience and panel discussions. At an event where attendants are spoiled for choice with up to eight parallel sessions competing for their interest, the workshop was overwhelmingly well attended by an international audience of about 50 participants from academia and industry.

The programme of the workshop consisted of nine presentations from the RentalCal partners under the sponsorship of EU programme Horizon 2020 and the Executive Agency for Small and Medium-sized Enterprises (EASME).

Speaking for EASME, Janna Schönfeld presented a European policy overview of energy efficiency in buildings. The “Smart Finance For Smart Buildings” initiative is central to the development of policies and an important focal point for the European Commission. RentalCal is contributing to this aim with research, providing transparency for investors who are uncertain about the measurable financial benefits of energy efficiency retrofits in the private rental market.

Overall, the workshop delivered a fast-paced mixture of nine presentations combined with brief Q&A sessions. 

Below is a summary of the nine presentations:

  • Session 1, Presentation 1: Cajias/Fuerst/Bienert 
    Energy efficient housing is rented at a premium

    A large-scale study of the value of energy efficiency in the private German residential rental market demonstrates that energy efficient properties are rented at a premium. However, this finding does not apply to very tight metropolitan markets where scarcity of supply may mask the ‘true’ value of energy efficiency in these markets. In a separate analysis, it is found that energy-efficient rental properties tend to lease up more quickly than their non-efficient peers. This study of half a million property listings provides a robust framework for policy makers and property companies for understanding how energy efficiency and expected utility costs of a rental property affect demand and rents.

  • Session 1, Presentation 2: Terkelsen/Hvelplund 
    Heat conservation incentives in a 100% Renewable Energy Scenario

    The reduction in heat demand per sqm is implemented at the same time as the heat supply is undergoing a basic restructuring process from fossil fuels to renewable energy supply and industrial heat (especially wind power based heat supply, by means of heat pumps). When aiming for energy conservation in buildings, particularly rental buildings, it is also important to take into account the impact of fluctuations in wind power. Consequently, energy conservation cannot be seen independently of the supply system in which it is supposed to be embedded in the future.

  • Session 1, Presentation 3: Rajkiewicz 
    The need for renovation of the housing stock in Poland is enormous

    Since most Polish dwellings were constructed before 1985, only very old energy performance requirements are met. Incentives to invest in energy efficient refurbishment exist as soft loans through sponsored economic assistance programs, established by ecological funds or the state budget. The funds and the progress in financial solutions however are insufficient compared to the needs. The slow development might be seen in the light of the ownership structure, where less than 20% of households rent their dwellings adding up to approximately 2,2 million rental apartments.

  • Session 1, Presentation 4: Hillrichs/Aydin/Brounen 
    Energy Capitalisation in the Dutch Rental Market

    A key contribution to handle climate change is the improvement of energy efficiency in the building sector. The incentives, however, are distorted as the landlord has to bear the costs of such upgrades while the tenants benefit from the reduced expenses. An empirical study of the Dutch market confirms previous studies that found a positive and significant premium for more energy efficient dwellings.

  • Session 1, Presentation 5: Lützkendorf/Lorenz 
    Value development and value stability of the existing building stock for rental housing

    The question concerning the status of integrating energetic qualities into valuation practices arises across Europe. Valuation professionals mention the lack of reliable energy performance data as one big barrier among others. A presentation of the results from the RenoValue study is provided and their consequences for the development of RentalCal tools are discussed. Initial approaches for the inclusion of additional benefits of energy saving measures and consideration of the impact of energy performance on the market value of residential buildings were presented.

  • Session 2, Presentation 1: Lützkendorf/Mörmann/Enseling/Hinz
    Data and tools for profitability evaluation of measures for enhancement of the energetic quality of residential buildings – a contribution to RentalCal

    The speakers highlighted the evident economic advantages when increasing the energetic quality of residential buildings. Improvements are necessary to achieve the goals for the conservation of resources and climate protection. Initial, transparent and reliable, up-to- date data are, however, needed to evaluate the profitability of investments. Methods of calculation to identify the maximum financial expenditure until which profitability is still given will be useful to planners and decision makers. The range of current cost values of energy saving measures for Germany was presented, as well as advanced tools for profitability calculation using Monte Carlo Simulations.
  • Session 2, Presentation 2: Vaché
    Overcoming the split incentive barrier in the rental housing market: Germany’s approach of green premiums in rent regulation. 

    The German federal government considers increasing investments in energy efficiency an urgent matter. Attempts are made to provide sufficient incentives for these investments. National rent regulation offers different strategies for cost-benefit sharing. Costs can be transferred to tenants in a quite bureaucratic process. Alternatively, rent premiums for superior efficiency standards are enabled for the willingness to pay. Larger German cities implement rent information systems based on empirical rent surveys to assure transparency in the market.

  • Session 2, Presentation 3: De Coo/Stevens 
    Configuration of the RentalCal tool

    Empirical data shows that technical solutions for energy efficiency get installed only at a very slow pace. An alleviation of detected barriers for the use of new possibilities is necessary all over Europe. It is demonstrated how the RentalCal tool could help landlords of residential dwellings assess the financial consequences of planned improvements.

  • Session 2, Presentation 4: Hahn/Hirsch/Bienert
    How green prima mark the asking prices in the German rental markets. 

    The energy consumption of properties naturally affects the achievable rent and the purchasing prices. The regulated sharing of costs for investments in energy efficiency between owners and tenants leads to increasing rents. An analysis is now undertaken to make the green prima for quality in energy consumption comparable within regional diversity by adjusting green values according to the local climate.

See links to all the presentations on the website:www.rentalcal.eu/events

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