LITHUANIA: MODERNIZATION OF MULTIFAMILY BUILDINGS USING THE JESSICA FINANCIAL INSTRUMENT ARŪNAS REMIGIJUS ZABULĖNAS VICE-MINISTER OF ENVIRONMENT, LITHUANIA

THE LITHUANIAN HOUSING STRATEGY Main goals: 1.Expand housing options for all social groups 2.Strengthen the capacity of the housing sector in the housing market 3.Ensure effective use of existing housing, maintenance, upgrading and modernization, including the rational use of energy resources approved at January 21, 2004 by the Lithuanian Government English version available on the internet site - Program for refurbishment of multifamily buildings (new version approved at 20 September, 2009) - Program for social housing development (approved at 5 July, 2008)

BASIC FACTS ABOUT LITHUANIAN HOUSING (I) population - 3,37 million more than 38,000 multi family buildings more than 800,000 apartments 66 % of population lives in multi family buildings built before 1993 The age structure of buildings 26 % built before % – % - after 1990

most in poor condition, lack of proper management inefficient heating systems and engineering equipment, bad quality windows, roofs, seals between panels more than 57 % of households are not satisfied with their houses During privatization, only apartments were privatized, but not the buildings as such 97% private, only 3 % municipal rental stock BASIC FACTS ABOUT LITHUANIAN HOUSING (II)

ENERGY LOSSES ZZ ZZZ Ventiliation Infiltration 23 % Roof 9 % Multi family buildings consume ~9,5 TWh energy per year Refurbished multi family buildings can save ~ 4,75 TWh Windows 18 % Walls 45 % Basement 5 % Average energy consumption ~ 130 kWh/m² per year

ENERGY SUPPLY 65 % of multifamily buildings are served by district heating systems Current energy consumption ~ 160 kWh/m 2

PREVIOUS EFFORTS TO CHANGE THE SITUATION World Bank Energy Efficiency & Housing Project Government sponsored assistance scheme for renovation of apartment buildings (“The Old Program”)

RATIONALE TO USE JESSICA INSTRUMENT (I) Need to continue renovation effort Need to revive the construction sector during the crisis Reduce the dependancy on imported fossil fuel supplies

DECISION TO USE JESSICA INSTRUMENT (II) Concept of a new support scheme developed by Government – February 2009 A number of laws were amended or newly adopted during the year by Parliament Holding Fund created to finance the Program EIB contacted to assume the management of Holding Fund – March 2009

DECISION TO USE JESSICA INSTRUMENT (III) Contract with EIB signed on June 11, 2009 EIB launched selection of financial intermediaries – October, 2009 Financial intermediaries selected – February 8, 2010 First contract with financial intermediary signed – June 1, 2010 Fast track process – more than a year

CHALLENGES Housing stock management is poorly organized People are afraid to borrow Role for housing and urban development agency: Public awareness campaign Preparation of boilerplate blueprints for renovation Endorsement of renovation designs in loan application process

JESSICA Holding Fund amounts to € 227 million: - € 127 million European Regional Development Fund - € 100 million National co-financing - Expected at later stage– some funds will be contributed by commercial banks JESSICA HOLDING FUND JESSICA

ELIGIBILITY Multi family houses built before 1993 Under consideration: University dormitories; The “Old Program” (for Applicants who were not granted support due to lack of funds) Public buildings (schools, kindergartens) are renovated under different schemes

long term (20 years) fixed interest rate (3%) loan for implementation all modernization measures 50% reimbursement of technical documentation preparation costs Additional incentives 15% of loan principal covered, provided kWh/m2 energy efficiency achieved 100 % support to low income families THE JESSICA PRODUCT JESSICA

Modernization of heating and hot water systems Replacement of windows and external doors Roof insulation Insulation of external walls Glazing of balconies Installation of alternative energy sources (solar, wind, etc.) Additionally, these measures are eligible: Replacement of elevators, renovation of electric wiring, and other works in shared areas of the multifamily building ENERGY EFFICIENCY MEASURES SUPPORTED BY JESSICA JESSICA

READINESS TO PROCEED Approximately 20 houseowner associations have expressed firm readiness to use JESSICA product as soon as EIB signs contracts with commercial banks

POSIBILITIES (I) ENERGY SAVINGS

EXPECTED OUTCOME It is planned to modernize houses, by the year 2020 After the modernization, one house would halve energy consumption and save 125 MWh a year This translates into ~€290 million

45 apartment multi family buildingInsulated external walls and roof Windows replaced Glazing of balconies Modernization of the heating substation and the heating systems Energy efficiency improvement – 60 % POSIBILITIES (II) SUCCESFULLY IMPLEMENTED PROJECTS ( TELŠIAI) BeforeAfter

Before After 120 apartment multi family buildingInsulation of external walls and roof Windows replacement Glazing of balconies Energy efficiency improvement – 40 % POSIBILITIES (III) SUCCESFULLY IMPLEMENTED PROJECTS (VILNIUS )

Reasons for modernizationModernization results Impact on loan repayment for family budget POSIBILITIES (IV) MONITORING RESULTS