Chance for Buildings has been reviewing energy saving support programmes that are currently running under the authority of three different ministries to make recommendations for a new government. "Effective setting of energy saving support programmes should be one of the priorities for a new government. They make about 25 billion CZK a year in construction, but their potential is 2,5 times higher. It is important to note that the success of the programmes should not be reviewed only by the speed of drawing on European or other sources, but especially by their efficiency and thus by the total investments that will be generated in the economy, especially in the building industry, "says Petr Holub from Chance for Buildings, an alliance of leading trade associations that support energy efficient construction.
"Now is time to start preparing the addition of grant support with the so-called financial instruments. The Czech economy is showing a quick growth, so we can expect that within the framework of cohesion policy we will not have such a generous allocation as we have in the next multi-year period. Czech programs build 3 CZK of total investment per 1 CZK; this share is 1 to 18 in Germany. We can gradually approach this figure. In this case, the Czech-Moravian Guarantee and Development Bank, transformed into the National Development Bank, should play its role, "says Petr Holub, the director of Chance for Buildings alliance.
Operational Programme Environment (OPE) run by the Ministry of Environment supports the energy efficient renovation of public buildings. The conditions were modified last year and at present the support is awarded according to the energy standard that has been achieved, thus motivating to more quality renovations. The call is announced as continuous, so it does not put an extreme pressure on the applicant or the administrator. Additionally the construction of new public buildings in an energy-passive standard is supported. Even with a subsidy of about 40 %, which is lower than in the previous period, when it was on average 60 %, the applicants are interested. In 2017 applications were submitted for about CZK 3,5 billion. The total of growing investments in construction will be over CZK 8 billion. The call to support new buildings in the passive standard is open until 2019.
Evaluation and recommendations for existing support programmes.
A well run programme that creates a predictable and stable environment for both applicants and implementing companies. No need to change.
The New Green Savings programme (NZU) under the Ministry of the Environment supports the realization of energy savings in family houses and apartment buildings in Prague. In 2015, there was a qualitative change and a continuous acceptance of applications was opened instead of announcing calls allowing owners of family houses to plan the renovation of their building. The owners can decide whether their house is actually in need of repair or when they save enough money and not to make renovations according to a call scheduled by the state. It is a good thing that the largest volume of applications is in the second level of renovation quality, where houses save more than 50 % of energy. The annual draw down is at the level of CZK 2 billion with exported total investments of about CZK 6 billion. The program has also supported the construction of 1 800 new buildings over the past three years in a passive energy standard. Since 2009, when the original Green Savings was launched, more than 115 000 projects have already been supported.
The programme is well set. Regarding to financial allocation and supported projects, it is a unique programme in Central and Eastern Europe. Continuous acceptance, low administration and stable conditions build the requisite trust of applicants.
The Operational Programme Enterprise and Innovations for Competitiveness (OP PIK) run by the Ministry of Industry and Trade supports energy savings in the business sector, including renovation of buildings. In the beginning the programme was struggling with poorly defined evaluation criteria, which did not allow a support for high-quality building renovation projects. However, in the 2017 call, the conditions were well adjusted but the receipt of applications in the call was interrupted for not very clear reasons. But due to the pressure of professional unions, a subsequent call was immediately announced. The distrust of the business companies is also caused by an inconclusive evaluation of project economy. The call for the support of new buildings in the passive standard was announced for only four months, which is a much shorter period than the normal preparatory phase of the construction. In the calls for 2017, applications for approximately CZK 4 billion are expected to be received and total expected investments of CZK 8 billion.
Rating and recommendations:
The programme has already a well-defined evaluation criteria; unfortunately, it´s reputation hampers the unplanned closing and re-opening of applications, as well as the unclear evaluation of the project's economy.
Both in the area of energy savings in existing buildings as well as in new buildings in passive standards, we recommend a long-term call with a continuous receipt of applications.
The Integrated Regional Operational Programme (IROP) run by the Ministry for Regional Development supports energy savings in apartment buildings out of Prague. The conditions of the programme are set well and the support is awarded according to the quality of renovation. A great administrative burden was a problem; it was same for the city constructing a stadium and for a three-member committee of Flat Owners Association meeting in the basement of the apartment house once a quarter of a year. A significant adjustment to administrative requirements occurred in spring 2017; however, flat owners often do not have this information. The second problem is lack of capacity of the staff of Center for Regional Development to provide guidance to applicants. The third is the absence of methodological guidance for the assessment of achieved energy standard. The result is a poor quality renovation and a twice bigger need of public money to renovate residential buildings than the New Green Savings Programme in Prague. Awarding subsidies in 2017 call is roughly CZK 1.9 billion, with a total expected under-investment of less than CZK 5 billion.
Evaluation and recommendations:
This programme has been facing the biggest challenges. Administrative conditions and processes are the same for the entire IROP and do not take into account the specificity and low capacity of applicants for the project preparation. We recommend to further simplify the administrative processes of Centre for Regional Development staff to applicants. In addition, a clear methodological environment for assessing the energy performance of the submitted projects should be adopted.
Recommendations for the period after 2020
The overview of Czech energy saving programmes is complete, but it needs to be improved (see the table at http://bit.ly/2nS9G4Z). Three government departments and the capital city of Prague are responsible for the programmes. Projects are prepared by the same group of designers and energy specialists, but each has its own specifics. For the preparation of the framework for the period after 2020, these programmes need to be concentrated. For the administration support for the renovation of family houses, apartment buildings and public buildings across the Czech Republic and the construction of new buildings in passive energy standard, the governmental departments of environment have the biggest capacity. The State Environmental Fund has an ongoing project evaluation and advisory system for applicants. Energy savings in the business sector, which are managed by other economic rules, are part of the industrial and commercial governmental department, but the declared support must be continuous.
Due to the expected lower allocation of sources from European funds and also due to the economic return of energy-efficient renovations of buildings, it will be important to prepare financial instruments to complement subsidy support. We need to start now so that the tools will be fully operational by 2020. A different type of support is appropriate for each building segment. Commercial credit guarantees, in some cases subordinated loans, should be used in greater extend. It is important that they complement available commercial financing.
The Ministry of Industry and Trade has launched Energy and Energy Savings programmes through the Czech-Moravian Guarantee and Development Bank, which appropriately supplement subsidy financing with subordinated loans, guarantees and subsidies for project preparation. Another suitable tool could be a state guarantee for commercial renovation loans for family houses for pre-financing and co-financing of a grant from the New Green Savings programme. State guarantees could be provided under conditions close to those for mortgages, but without collateral.
The use of the Czech-Moravian Guarantee and Development Bank for the central management of financial instruments for energy savings seems to be the most appropriate option.