ComAct Policy Brief: Financing models adapted to the needs of energy-poor households & policy recommendations

There is no silver bullet for mitigating energy poverty in multifamily buildings: historical trajectories, operating financing schemes and political contexts require a carefully designed individual approach, tailored to the local conditions.

The financing approaches for multifamily building renovations in Eastern and Central Europe, despite similar building stock typologies and ownership models, exhibit considerable diversity. Legal and institutional frameworks, access to financial resources, and distinct post-communist development trajectories contribute to this divergence. From Bulgaria’s 100% renovation grant to Lithuania’s market-based schemes, the spectrum reflects the necessity of tailored strategies.

The pressing need to boost renovation rates is evident across all pilot countries, calling for increased public financing in Hungary, North Macedonia, and Ukraine, distribution of resources among a broader range of beneficiaries in Bulgaria, and increased public engagement in Lithuania. However, the success of these endeavours hinges on sustained political will, a fact illustrated by constant disruptions in public support in Bulgaria and Hungary, which had tangible negative consequences on both renovation rates and the public discourse. In this context, the role of local authorities is crucial but constrained by limited resources and dependence on central government policies.

The primary focus of this policy brief lies in examining the accessibility of financing for building renovation for energy poor households. This remains a central concern due to the persistently unclear national definitions of energy poverty, hindering the development of accessible financing, as current policy efforts still largely revolve around the applicable concept of vulnerability. While each of the analysed financing schemes to some extent presents viable approaches to involve vulnerable households, such as the elderly, the disabled, and single-parent families, it is imperative to broaden
the discourse to explore possibilities for engaging other low-income citizens. Encouragingly, there is tangible progress in this regard, seen in a systematic approach with a dedicated definition, as observed in Bulgaria, as well as in the enhancement of access to commercial financing through the introduction of risk-sharing mechanisms, a common feature across several countries. This is especially crucial given the constraints on disposable incomes, particularly in light of rising energy prices, limiting opportunities for investments in deep energy retrofitting projects.

Authors: Dragomir Tzanev and Teodora Stanisheva, EnEffect