Investing in Energy Efficiency in Europe’s Buildings: A View from the Construction and Real Estate sectors

Report bundle / Business / Europe
Authors: The Economist Intelligence Unit (EIU), commissioned by the GBPN, in collaboration with BPIE

An EIU European survey of building sector executives commissioned by the GBPN in collaboration with BPIE finds that European real estate and construction executives are convinced that European legislation for energy efficiency and energy performance in buildings is a benefit for the building sector. While the financial crisis has set a downward trend to real estate valuations, the renovation of the existing building stock could be a means to reverse the tendency. Regulatory uncertainty seems to be the main barrier to increased energy efficiency investments. 

 

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Glossary

The building energy consumption is the amount of energy consumed in the form in which the user acquires it. The term excludes electrical generation and distribution losses. [Source: BPIE Glossary]

Deep Renovation or Deep Energy Renovation is a term for a building renovation that captures the full economic energy efficiency potential of improvements. This typically includes a focus on the building shell of existing buildings in order to achieve very high-energy performance. The renovated building consumes 75% less primary energy compared to the status of the existing building before the renovation. The energy consumption after renovation for heating, cooling, ventilation, hot water and lighting, is less than 60 kWh/m2/yr. (Definition often used in Europe) [Source: GBPN, 2012]

Deep retrofit or Deep Energy Retrofit implies replacing existing systems in a building with similar ones that are of higher quality and performance, which leads to a better energy performance of an existing building. The primary energy consumption includes energy used for heating, cooling, ventilation, hot water, lighting, installed equipment and appliances. After the deep retrofit the buildings consume 50% less primary energy compared to the status of theexisting building/s the retrofit (Definition mainly used in US). [Source: GBPN, 2012]

Under this 2010 Directive, Member States must establish and apply minimum energy performance requirements for new and existing buildings, ensure the certification of building energy performance and require the regular inspection of boilers and air conditioning systems in buildings. Moreover, the Directive requires Member States to ensure that by 2021 all new buildings are so-called 'nearly zero-energy buildings'. [Source: European Commission]

Project finance, by contrast to balance sheet financing (loans, debt and equity), bases its collateral on a project’s cash flow expectations, not on individuals or institutions’ credit‐worthiness. It is off‐balance sheet financing. A typical project finance is divided between debt and equity financing. Debt is usually a conventional commercial bank loan to which a customer pays interest (i.e. thereby paying for the loan and the price of the debt). Lenders normally charge a pre‐determined rate of interest that is set by adding an interest margin to the banks standard inter-bank lending rate, which represents its income. [Source: IEA (2010) Money Matters]