Structuring and Implementing Schemes to Improve Energy Efficiency in the Residential Building Sector The Experiences of KfW Gudrun Gumb Senior Project Manager KfW Bankengruppe, Product Development Housing Programmes June, 19th 2009

KfW Bankengruppe in brief Promotional bank of the Federal Republic of Germany Founded in 1948 Shareholders: Federal Republic of Germany (80%), German federal states (20%) Headquarters: Frankfurt am Main; branch offices: Berlin and Bonn Representative offices: around 50 offices and representations worldwide Balance-sheet total at the end of 2008: EUR 395 billion Financing volume 2008: EUR 70,6 billion 4.228 employees in 2008 Rating: AAA/Aaa/AAA

KfW Bankengruppe Environmental and climate protection Environmental and climate protection is a major promotional priority! Total commitments in this sector in 2008: EUR 19.5 bn Förderbank and Mittelstandsbank EUR 14.5 bn KfW Entwicklungsbank EUR 1.7 bn KfW IPEX-Bank EUR 2.6 bn DEG EUR 0.7 bn Commitments in 2008 for: renewables EUR 5.3 bn energy efficiency EUR 8.1 bn KfW Bankengruppe is one of the world's biggest financing institution for energy efficiency and renewable energy

Energy Efficiency in the Residential Building Sector Agenda Basic facts Regulatory Framework Programme Details KfW-Efficieny House Standard Summary: Incentives and Factors of Succes

Energy Efficiency in the Residential Building Sector Basic Facts Capability of energetic renovation in Germany 39 mio housing units 75% built before 1979 potential of renovation 20 mio housing units Programme started in 2001 450.000 loans Commitment volume of roughly 24 billion euros 1,2 mio housing units Sponsored by federal funds Budget to fund programme incentives: 2008 through 2011 annually app. EUR 1.4 billion

(Energieeinsparverordnung – EnEV) Energy Efficiency in the Residential Building Sector Regulatory Framework „Information and Consulting“ „Promotional Programmes“ I N S T R U M E N T I N S T R U M E N T German Energy Conservation Ordinance (EnCO) (Energieeinsparverordnung – EnEV)  Energy efficiency requirements for new and existing buildings   and other regulations

Energy Efficiency in the Residential Building Sector Programme Details New building Building stock Energy-Efficient Construction Energy-Efficient Rehabilitation subsidised interest loans max. 75.000 EUR per housing unit additional repayment bonus possible KfW-Efficiency House standard or single measures grants as an alternative to loan max. 13.125 EUR per housing unit additional special support available subsidised interest loans max. 50.000 EUR per housing unit KfW-Efficiency House standard two promotional stages Higher energy efficiency means better conditions.

Primary Energy Demand (kWh/a) Energy Efficiency in the Residential Building Sector KfW-Efficiency House Standard Primary Energy Demand (kWh/a) 130-66 kWh/a = 100 % of NL 85-44 kWh/a = 70% of NL 65-33 kWh/a = 55 % of NL Abbreviations: NL = New Building Level according EnCO

Energy Efficiency in the Residential Building Sector KfW’s on-lending system Capital market refinancing loan (maturity e.g. 20 years) loan to homeowner (maturity e.g. 20 years) Funding Bank Individual homeowner Interest rate: 0.66%* Interest rate: 1.41%* Interest subsidy Margin for credit risk and handling 0.75%* German Government * p.a. eff.

Energy Efficiency in the Residential Building Sector Summary: incentives and factors of success Incentives for houseowners subsidised intrest loans additional repayment bonuses possible grants possible Higher efficiency means higher promotion Energy Efficiency Factors of success to reach broadscale impacts Transparency and Standardization KfW-Efficiency House as a successful brand for energy efficiency in Germany - confirmed by an energy consultant KfW‘s Onlending – System

Structuring and Implementing Schemes to Improve Energy Efficiency in the Residential Building Sector The Experiences of KfW Gudrun Gumb Senior Project Manager KfW Bankengruppe, Product Development Housing Programmes June, 19th 2009

Commitment Volume mio EUR Annex: Energy Efficient Construction and Rehabilitation budget and promotional effects V O L U M E Y E A R Budget p.a. mio EUR Commitment Volume mio EUR Investments mio EUR Housing Units number 2006 1.500 6.998 11.845 327.592 2007 850 4.970 10.739 204.184 2008 1.400 6.669 13.387 280.483 2009 1. quarter 1.500 1.466 2.673 63.084

Annex Energy Efficient Construction and Rehabilitation - Energy-efficient Construction Promotional goal/ target group: To finance the construction of KfW-Efficiency Houses/ all investors who construct a KfW-Efficiency House Construction or initial purchase of KfW Efficiency- Houses Eligible measures: Conditions: - Financing share Loan amount Loan term Disbursement amount Fixed-interest period Free of redemption Off-schedule repayment 100% of the construction/investment costs No more than EUR 50,000 per housing unit Up to 30 years 100% 10 years At least 1 year, no more than 5 years At no cost at any time during the fixed-interest period

possible dep. on degree of + addl. grants for special support Annex Energy Efficient Construction and Rehabilitation Energy-efficient Rehabilitation (Loan Variant) Promotional goal/ target group: save energy and reduce CO2 emissions in residential buildings / all investors in measures at resedential buildings all measures that contribute to achieve KfW-Efficiency House; individual measures thal fullfill the technical requirements of the program Eligible measures: Up to 100% of the eligible costs No more than EUR 75,000 or 50,000 per unit Up to 30 years 100% 10 years Up to 5 years At no cost at any time during the fixed-interest period Conditions: + addl. repayment bonus (5% or 12.5%) is possible dep. on degree of rehabilitation - Financing share Loan amount Loan term Disbursement amount Fixed-interest period Grace years Off-schedule repayment + addl. grants for special support

Annex Energy-efficient Rehabilitation program (Grant Variant) Promotional goal/ target group: To save energy and reduce CO2 emissions in residential buildings/ owners (natural persons) of single and two-family houses or apartments Eligible measures: all measures that contribute to achieve KfW-Efficiency House including planning and supervision, as well as secondary work; individual measures thal fullfill the technical requirements of the program Conditions: 5% of the eligible investment costs, no more than EUR 2,500 per housing unit - individual measures - KfW-Efficiency House 100 - KfW-Efficiency House 70 10% of the eligible investment costs, no more than EUR 7,500 per housing unit 17.5% of the eligible investment costs, no more than EUR 13,125 per housing unit + addl. grants for special support