50 years after its construction, number 2 Pavasario street was not serving its residents well. During heavy rain, water would leak into the building – and there were some even more worrying leaks too, due to sewage pipes suffering from blockages and cracks. When people there turned on their heating, some rooms would get too hot, while others barely heated up at all, and different apartments would warm up at different rates.
Solving a problem at that scale can take a lot of time and investment, and not everyone was convinced that it was worth it. Some residents, however, felt it was time for action, and they were spurred on by the energetically titled municipal organisation ‘Atnaujinkime miestą’ – ‘Let’s renovate the city.’
“Our institution provides a wide range of services that cover the overall customer journey, starting from the proactive engagement of homeowners, providing building refurbishment project management, and coordinating the refurbishment process on behalf of the homeowners until completion. The main objective is to simplify the customer journey and thus achieve a stronger and measurable engagement by homeowners in the area of building refurbishment,” explains Lina Bubulytė, International Project Manager at this ‘one stop shop.’
The main objective is to simplify the customer journey
The city in question is Vilnius, where the local authority created this organisation to give energy efficiency upgrades through the deep retrofit of buildings a huge boost. As in the rest of Lithuania, most residential buildings were built before 1990, and the apartments are privately owned by the individual residents. Bubulytė’s colleagues don’t just arrange everything at the beginning, they’re on hand for the entire lifecycle of each renovation: “We take it from initial consultations with residents to the final completion of construction.”
Working to support and promote the energy-efficient refurbishment of multi-apartment buildings in Vilnius, this one-stop-shop offers advice and outreach counseling to homeowners and supports them in preparing and implementing comprehensive refurbishment measures for their buildings.
The organisation, with about 40 staff, has teams dedicated to each stage of the process, including development, implementation, finance, legal, and human resources. They manage each project phase, from voter engagement and investment planning to the implementation and final construction oversight.
As one of the cities selected for the EU’s Mission for 100 Climate Neutral and Smart Cities by 2030, an EU Commission initiative supported by Eurocities through the NetZeroCities project, Vilnius is seeking to cut its emissions across the board.
Financial strategies
Thanks to funding via the national government, ultimately sourced from the European Regional Development Fund, Atnaujinkime miestą is able to access substantial grants for residents to incentivise this work. “Government finances up to 30% for energy efficiency increasing measures,” Bubulytė explains. This subsidy, relatively high when compared to other countries, is available to residents as a grant that can be drawn down once the renovations are complete and the targeted energy improvements have been achieved.
With the grant only available after work is complete, how do the people pay for the initial investment? For this, Atnaujinkime miestą secures ‘soft loans’, loans at extra-low interest rates, for residents. Loans are granted at a fixed interest rate of 3% for up to 20 years. Further, the scheme allows multi-apartment building owners in Vilnius to borrow collectively, eliminating the burden that individual loans would impose on each of them.
Lower energy bills after the renovations mean that the repayment of these loans is eventually canceled out by cumulative savings. In buildings where residents propose highly innovative renovations, such as creating sustainable energy on site and selling it back to the grid, far higher grants can be offered on a case-to-case basis.
You only get the subsidy when you choose complex renovation
The subsidies are only available for ‘deep renovation,’ comprehensive sustainability upgrades. “You only get the subsidy when you choose complex renovation,” Bubulytė says. This includes a range of measures from upgrading windows and doors to insulating roofs and walls, and overhauling electrical and plumbing systems. These projects are detailed in an investment plan, prepared by experts who assess the technical condition of the building and specify necessary upgrades. It’s up to the residents to agree to the investment plan and, when it is prepared, to vote on the specifics of the renovation.
For Vilnius, the environmental transition must be socially just. To create incentives for low-income apartment owners such as pensioners and young families, a 100% subsidy covered by a grant from the national public budget has been in place since 2013, covering all renovation costs. This support is offered to families that receive state assistance for their domestic heating expenses.
When the money runs out
It is very valuable for a one-stop shop such as Atnaujinkime miestą to explore innovative options for funding local sustainability efforts – something that the city has endeavoured to do through participation in a community of practice run by Eurocities as part of the EU-funded project Prospect+.
Time to beef up your #budget? Join us and the #EU Commission's @Energy4Europe for the latest on #policy #cities must consider for #financing projects. #H2020Prospect will be your guide #sustainable finance.👩💻Join online on 2 March, 10:00-11:45 CET
👉https://t.co/RqCqisLDNc pic.twitter.com/HgLssMJJjC— Eurocities (@EUROCITIES) February 22, 2023
Prospect+ is a way to learn about financial instruments
Bubulytė’s emphasises the importance of this project for municipalities. “Prospect+ is a way to learn about financial instruments and to meet like-minded peers who are in the same kind of pot,” she explains. Through a Prospect+ Masterclass, Bubulytė has had the opportunity to do just that, identifying energy performance contracting as an avenue with substantial potential for removing even more of the financial burden from the city and residents.
Others can pay
Energy service companies (often shortened to ESCOs) are companies that invest their own capital in energy saving interventions, such as building renovation, installing solar panels, or replacing public lighting with LEDs. They then charge customers at a price point somewhere between the previous level of energy bills and the newly reduced cost, resulting in savings for the customer and profits for the company.
Some Lithuanian cities are already trying the approach with public street lighting. For example, Sirvintu and Kupiskio saved 68% and 50% respectively, reducing their operational costs and demonstrating energy services companies’ effectiveness in public sector applications.
In the Lithuanian context however, as is true to varying degrees throughout Europe, challenges remain. These barriers include the complexity of energy performance contracting and the lack of a clear, supportive legal and financial environment to facilitate large-scale implementation of energy service agreements. Addressing these barriers could involve clearer regulatory guidelines and further capacity building for local governments, as well as more supportive policies that encourage public-private partnerships.
Other models shared through Prospect+ could also be fruitful for Lithuanian cities, including revolving funds and green bonds.
Half the battle
Finding finance, however, is only half the work for Vilnius. Residents also have to be convinced to participate in the city’s renovation programme. Despite the big benefits, they are often skeptical at first – after all, isn’t this too good to be true?
It’s to bring the community together
The proactive approach of Atnaujinkime miestą goes a long way to tackling this. The organisation also keeps an eye on two Vilnius city municipality district programmes. For example, for renovated multi-apartment building quarters Vilnius municipality offers subsidies to renovate the surrounding environment. “We also renovate the areas around the houses; we could put benches in, a new pavement, grass, and everything… It’s to bring the community together,” Bubulytė explains.
In central Vilnius, the residents of number 2 Pavasario street are not regretting their decision to engage in Atnaujinkime miestą. Their apartments are now cosy thanks to external insulation with a decorative effect, as well as a completely new heating system that gives each resident more control. Solar water-heating panels have seen the cost of hot water plummet and, thanks to ecological roof coverings fashioned into a shared terrace, they now have to look outside to find out if it’s raining.
