D2.1b - Summary of policies and incentives relevant to retrofit in the EU-27

Development of Systemic Packages for Deep Energy Renovation of Residential and Tertiary Buildings including Envelope and Systems

iNSPiRe

Project Title: Development of Systemic Packages for Deep Energy Renovation of Residential and Tertiary Buildings including Envelope and Systems

Project Acronym: iNSPiRe

Deliverable Title: D 2.1b Summary of Policies and incentives relevant to retrofit in the EU-27

Dissemination Level: PU

Lead beneficiary: BSRIA

Main author, Institution Helen Bedford, BSRIA Sarah Birchall, BSRIA David Bleicher, BSRIA Ian Wallis, BSRIA Emmanuelle Causse, UIPI

Date: 24 March 2014

This document has been produced in the context of the iNSPiRe Project. The research leading to these results has received funding from the European Community's Seventh Framework Programme (FP7/2007-2013) under grant agreement n° 314461. All information in this document is provided "as is" and no guarantee or warranty is given that the information is fit for any particular purpose. The user thereof uses the information at its sole risk and liability. For the avoidance of all doubts, the European Commission has no liability in respect of this document, which is merely representing the authors view.

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Table of Contents

Preface ...... 1 1 Executive Summary ...... 2 2 Overall policy landscape...... 3 3 Overarching EU directives ...... 5 Energy Performance of Buildings Directive (EPBD) ...... 5 Energy Efficiency Directive (EED) ...... 7 EU Financial instruments ...... 7 Eco-design Directive ...... 8 F-Gas Regulation ...... 9 Energy End-Use Efficiency and Energy Services Directive...... 9 Cogeneration Directive ...... 10 Renewables Directive ...... 10 Sources of information ...... 10 4 Incentives for energy efficiency and retrofit ...... 11 National and regional incentive schemes ...... 11 Legal obstacles to renovation ...... 12 5 ...... 17 National policy ...... 17 Financial Incentives ...... 21 Summary on the effects of HVAC and renewables - Austria ...... 30 Sources of information ...... 31 6 ...... 32 National policy and financial incentives ...... 32 Summary on the effects of HVAC and renewables - Belgium ...... 41 Sources of information ...... 42 7 ...... 43 National policy and financial incentives ...... 43 Summary on the effects of HVAC and renewables - Bulgaria ...... 49 Sources of information ...... 51 8 ...... 52 National policy and financial incentives ...... 52

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Summary on the effects of HVAC and renewables - Cyprus...... 54 Sources of information ...... 55 9 ...... 56 National policy ...... 56 Financial incentives ...... 58 Summary on the effects of HVAC and renewables – Czech Republic ...... 62 Sources of information ...... 63 10 ...... 64 National policy and financial incentives ...... 64 Summary on the effects of HVAC and renewables - Denmark ...... 69 Sources of information ...... 70 11 ...... 70 National policy ...... 70 Financian incentives ...... 72 Summary on the effects of HVAC and renewables - Estonia ...... 74 Sources of information ...... 75 12 ...... 76 National policy and financial incentives ...... 76 Summary on the effects of HVAC and renewables - Finland ...... 78 Sources of information ...... 79 13 ...... 80 National policy ...... 80 Financial incentives ...... 88 Summary on the effects of HVAC and renewables - France ...... 93 Sources of information ...... 95 14 ...... 96 National Policy ...... 96 Financial incentives ...... 103 Summary on the effects of HVAC and renewables - Germany ...... 112 Sources of Information ...... 113 15 ...... 114 National policy and financial incentives ...... 114 Summary on the effects of HVAC and renewables - Greece ...... 117 Sources of information ...... 118

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16 ...... 118 National policy and financial incentives ...... 118 Summary on the effects of HVAC and renewables - Hungary ...... 122 Sources of information ...... 123 17 Ireland ...... 124 National policy and financial incentives ...... 124 Summary on the effects of HVAC and renewables - Ireland ...... 129 Sources of information ...... 130 18 ...... 131 National policy ...... 131 Financial Incentives ...... 133 Summary on the effects of HVAC and renewable products - Italy...... 137 Sources of information ...... 138 19 ...... 139 National policy ...... 139 Financial Incentives ...... 140 Summary on the effects of HVAC and renewables - Latvia ...... 142 Sources of information ...... 143 20 ...... 144 National policy ...... 144 Financial incentives ...... 145 Summary on the effects of HVAC and renewables - Lithuania ...... 147 Sources of information ...... 148 21 ...... 149 National policy and financial incentives ...... 149 Summary on the effects of HVAC and renewables – Luxembourg ...... 152 Sources of information ...... 153 22 ...... 154 National policy and financial incentives ...... 154 Summary on the effects of HVAC and renewables - Malta ...... 156 Sources of information ...... 157 23 The Netherlands ...... 158 National policy ...... 158 Financial incentives ...... 162

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Summary on the effects of HVAC and renewables - Netherlands ...... 165 Sources of information – The Netherlands ...... 167 24 ...... 168 National policy ...... 168 Summary on the effects of HVAC and renewables - Poland ...... 175 Sources of information ...... 176 25 ...... 177 National policy ...... 177 Financial Incentives ...... 181 Summary on the effects of HVAC and renewables - Portugal ...... 184 Sources of information ...... 185 26 ...... 186 National policy and financial incentives ...... 186 Summary on the effects of HVAC and renewables - Romania ...... 190 Sources of information ...... 191 27 ...... 192 National policy and financial incentives ...... 192 Summary on the effects of HVAC and renewables - Slovakia ...... 198 Sources of information ...... 199 28 ...... 200 National policy and financial incentives ...... 200 Summary on the effects of HVAC and renewables - Slovenia ...... 205 Sources of information ...... 206 29 ...... 207 National policy ...... 207 Building codes ...... 208 Financial incentives ...... 215 Incentives for housing renovations ...... 216 Incentives for non-residential renovations ...... 219 Summary on the effects of HVAC and renewables - Spain ...... 221 Sources of information ...... 222 30 ...... 223 National policy ...... 223 Financial incentives ...... 225

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Summary on the effects of HVAC and renewables - Sweden ...... 227 Sources of information - Sweden...... 228 31 ...... 229 National policy and financial incentives ...... 229 Summary of the effects on HVAC and renewables - UK ...... 237 Sources of information ...... 238

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Preface

This report covers the policies and incentives aspects covered in Work Package 2 within the inspire project. Buildings and energy are covered in D2.1a and climate and modeling are covered in D2.1c. RES and climate conditions are covered in D2.3 a & b respectively due in M 24 and the auditing tool in D2.2 due in M36.

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1 Executive Summary

There are several relevant EU Directives that have been steering country-specific policy in relation to energy saving. The most wide-ranging of these in its effect on the building stock throughout the EU is the Energy Performance of Buildings Directive (EPBD). This Directive has required member states to implement methods to issue performance certificates for new buildings when they are constructed and for existing buildings when they are sold or let to tenants. Public buildings also have to display a certificate indicating their actual energy performance. EPBD and many of the other related directives are part of the EU roadmap towards ‘near zero energy buildings’ by 2020. All these directives and their resultant national legislation and policies should strengthen the demand for retrofit solutions that reduce energy consumption or carbon emissions associated with energy generation. Incentive schemes that have been established in various EU-27 countries are generally designed to support the policies introduced as a result of the EU directives. Although each country has its own approach to incentives, based on their existing regulatory system and cultural norms, as a whole these do fall into a number of broad categories: - Grants and subsidies for obtaining advice or carrying out audits - Grants and subsidies for upgrading building fabric or systems - Targeted subsidies for installation of renewable energy systems - Feed-in tariffs for renewable energy production - Sponsored loans for improving energy efficiency - Tax incentive schemes for energy efficient buildings. There are some widely observed obstacles that act to prevent the adoption of energy reducing retrofit measures. Some of these are to do with the rights of tenants and landlords, primarily restrictions on the amount that landlords can increase rents. This affects retrofit projects as it is usually only by increasing the rent that the landlord can recoup some of the capital investment required to install the retrofit measures. In theory, tenants should be willing to pay an increased rent since they are getting the direct benefit of lower energy bills. Other obstacles are related to the town planning and building control system in different countries, particularly where these regulations place restrictions on the changes to the external appearance of buildings.

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2 Overall policy landscape

On 27th March, 2013, the EU adopted the Green Paper framework on climate and energy efficiency for 2030, confirming the targets for each individual country in EU 27 for 2020 and 2030 on the road to achieving 20% primary energy reduction. The targets were revised or defined on the 30th of April, 2013, so that progress could be clearly tracked. It is envisioned that the 2020 targets will create around 400,000 jobs in the sector. Table 1 - EU-27 Targets 2020 – Primary Energy Savings in Mtoe (Million tonnes oil equivalent) - Source: Europe 2020 Targets: climate change and energy Country Saving Country Saving Country Saving (Mtoe) (Mtoe) (Mtoe) Austria 7.2 Germany 38.3 Netherlands n.a. Belgium 9.8 Greece 2.7 Poland 14 Bulgaria 3.2 Hungary 3 Portugal 6 Cyprus 0.5 Ireland 2.8 Romania 10 Czech Republic n.a. Italy 27.9 Slovenia n.a. Denmark 0.8 Latvia 1.1 Slovakia 1.6 Estonia 0.7 Lithuania 0.7 Spain 25.2 Finland 4.2 Luxembourg 0.2 Sweden 12.8 France 34 Malta 0.2 UK n.a.

Only four countries have not specified yet their targets: Slovenia, the Czech Republic, the Netherlands and the United Kingdom. Also countries like Luxembourg, Malta, Ireland, Belgium and Greece are the furthest away from reaching the targets, and, as such, might require additional policies to ensure that they will be able to comply with the set targets. The table below summarises the effects of EU, national and regional policies on HVAC and renewables markets. A detailed analysis can be found in the individual countries’ sections of this report.

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Table 2 – Policy effects on HVAC renewables and selected retrofit markets

27 27

R

–

ENMARK K

EU COUNTR Y AUSTRIA BELGIUM BULGARIA CYPRUS CZECH D ESTONIA FINLAND FRANCE GERMANY GREECE HUNGARY IRELAND ITALY LATVIA LITHUANIA LUXEMBOU RG MALTA NETHERLA NDS POLAND PORTUGAL ROMANIA SLOVAKIA SLOVENIA SPAIN SWEDEN U

District Heating + = – = – = + + + + = + = + = – + ● + + = – = + = = +

Domestic Boilers + + + + + – + + + + + + + + + + + + – = + + + + + + +

Commercial Boilers + + + + – – + + + + + + + + + + + + = = + + + + – + –

Biomass Boilers + = + + – + + + + + + + + + + + + + + + + + + + + + +

Heat pump + – + + + + + + + + + + + + – + – + = + + – + + + + +

Compression Heat Pumps ● ● ● + ● ● ● ● + + ● ● ● – – ● ● ● ● ● ● – ● + + + ●

Sorption/Gas Heat Pumps ● ● ● + ● ● ● ● + + ● ● ● + – ● ● ● ● ● ● – ● + + + ●

Small scale CHP + – + + + + + = + + + + + ● + + + ● = + + + + + + + +

Biomass CHP + = + + + + + = + + + + + ● + + + ● + + + + – + + + +

Electric heating ● – – – – – = + + – = – – + – – ● ● – – – – – – – – –

Heat recovery + ● + + + + = + + + = + + + + = + ● + + + + = + = + +

Air conditioning = ● + + = = = ● + = ● = = ● = = = ● = = + = = + + = =

Mechanical ventilation + ● + + + + = + + + = + + ● + = + ● + + + + + + = + +

Solar Thermal + + + + + + + = + + – = + – + + + + + + + + – + + + +

Lighting (incl daylighting) + = = = + + = + + + + + + + = ● ● ● + + + = + ● + = ●

PV + – – – – – + = + + – = – – = + + + + – + + – + – + –

Wall Insulation + + + + + + + + + + ● + + + + + + ● + + + + + + + + –

Loft Insulation + + + + + + + + – + ● + + + + + + ● + = + + + + + + –

Key: + Positive Effect – Negative Effect = No Impact White circles – Effect not known

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3 Overarching EU directives

Energy Performance of Buildings Directive (EPBD) In December 2002 the European Parliament ratified Directive 2002/91/EC on the energy performance of buildings, commonly known as the Energy Performance of Buildings Directive, or EPBD. This makes the implementation of an energy performance certification programme compulsory for all member states. The Directive argues “a common approach will contribute to a level playing field as regards efforts made in member states to energy saving in the building sector and will introduce transparency for prospective owners or users with regard to the energy performance in the Community property market.” This led to the introduction of more or less comparable energy performance certificates (EPCs) across the European Union. The energy performance certificates have to be included in all advertisements for selling or renting properties. The energy performance certificate has a common base in all member states and aims at increasing the transparency of the energy used in a specific building. It is based on the primary energy consumption of the building taking into account energy used by space heating (based on thermal insulation, ventilation, orientation and the installed heating system), sanitary hot water, auxiliary products for ventilation and cooling. The certificate contains a simple universal indicator of the energy consumption, measured by either actual energy consumption or by calculated energy consumption. The EPC is based on an energy index and ranges from A++, for exceptionally energy-efficient buildings, to G, for highly inefficient buildings. As different forms of energy can be delivered to a building, the indicator is a weighted sum of these delivered energies. The calculation method is defined in the Energy Performance of Building Directive. In addition to rating the building energy efficiency score, the certificate also contains specific advice on how to improve the thermal characteristics and reduce energy consumption of a building. In turn, one would expect the certificate to represent a certain economic value, as a higher rating represents a revenue stream stemming from future energy savings. In May 2010 the European Parliament and the Council adopted a recast of the EU Energy Performance of Buildings Directive (Directive 2010/31/EU) with the aim to strengthen the energy performance requirements and to clarify some points from the 2002 Directive it replaced. The recast also underlines the cost-optimal side to finance energy efficiency improvements with the emphasis on life-cycle cost. Member States are also required to establish financial support for energy saving investments with the aim of increasing energy efficiency in buildings, especially of existing buildings, by supporting the exchange of best practice between responsible national or regional authorities or bodies. The following points are extended in the recast:  All new and refurbished buildings are to have minimum energy performance requirements.  From 2021 all new and refurbished buildings will need to be nearly zero energy buildings (nZEB), for public owned buildings the earlier target of 2019 is set to reflect this. The actual definitions of nZEB are left for consideration of the individual Member States  Property listings should include the Energy Efficiency Certificate rating when advertised.  The 1,000 m2 floor area threshold was removed with regard to renovation requirements and feasibility checks for alternative energy systems.  Display Energy Certificates are to be issued and displayed in buildings larger than 500 m² (current threshold is 1,000 m²) that are occupied by a public authority and frequently

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visited by the public. This has been in force from 9th January, 2013. This threshold will fall to 250 m² from 9th January 2015. The lowering of the threshold to 500 m² is estimated to affect ~ 9,500 buildings, while the latter will affect further 12,000 buildings.  Energy Performance Certificates are to be displayed in commercial premises larger than 500 m² that are frequently visited by the public, and where one has previously been issued on the construction, sale or rent of the building.  Voluntary common EU certification for non-residential buildings is to be developed  Requirements for governments to introduce effective penalties for non-compliance, in response to the widespread lack of effective enforcement of energy certification and air conditioning inspections.  The regular inspection of air conditioning systems of 12 kW rated outputs from January 2013 and the inspection of heating systems (>20kW).  While boiler inspections were already specified in 2010, the EPBD recast introduced the requirement for the inspection of the overall heating system.

Energy Performance Certificates (EPC) and Displayed Energy Certificates (DEC) are different in their nature, with the operational rating being much lower. Even new buildings constructed in line with the latest regulations are not meeting their designed energy efficiency. There were practical issues with implementation of Air-conditioning Inspections due to weak compliance and the extensive number of service companies that are not in the official register. So the expectations of the air conditioning industry for new business did not materialise. The latest EPBD recast allows for the roll-out of the Nearly Zero Energy Building across the EU and states that from 2020 all new buildings have to be built at “nearly-zero energy level”. However, only a limited number of countries have to date preceded with the clear definition and roadmap up to 2020 for the nZEB buildings. The early implementation of Cost-optimal Regulation sets the beginning of assessing the energy levels and requirements from 2013 and allows for the transition to nZEB goals by 2020 Table 3.

Table 3 – Roadmap of targets in the recast EPBD - Source: REHVA Recast EPBD March 21 April 19 March 21 2015 Regular MS Dec 31 2018 Dec 31 2020 31/2010/EU 2012 2012 2013 MS reports to the All new All new Cost Guidelines MS first intermediate EU public buildings are optimality for Delegated report to the target for Commission buildings are nZEB Delegated Regulation EU nZEB on cost- nZEB Regulation No 244/2012 Commission optimality at No 244/2012 on cost- intervals optimality <5yrs

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

The EU general definition for nearly zero energy states that the energy requirements of the buildings should be primarily covered from the renewable sources of energy produced either in the vicinity or directly on-site. The exact understanding, definitions and applications of the types of nZEB buildings in each country are to be set at the national level by each Member State. The Directive requires Member States to report their results of the calculation of cost-optimal levels of minimum performance by 30th June 2012; to ensure that all new public buildings are

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nearly zero-energy buildings from 31st December 2018 and that all new buildings are nearly zero-energy from 31st December 2020.

Energy Efficiency Directive (EED) The Energy Efficiency Directive was agreed in October 2012 to be transposed in the Member states in 2013. In accordance with that, each member will have to set up an energy efficiency obligation scheme and assign the relevant regulating and monitoring authority. While the overall target across the EU is achieving 20% saving in the use of energy by 2020, the individual targets set by each country are decided and agreed at the national levels and will be set in 3 stages: by 2014, 2017 and 2020. In the UK, the Energy Efficiency Directive was officially adopted on 25th October 2012 and came into force on 4th December 2012. It will be implemented by 5th June 2014. The major milestones are: 1. 30th April 2013 – national targets 2. 30th April 2014 – EED NEEAPs 3. 30th June 2014 – targets assessed

The major focus is on the renovation of existing buildings and improvement of energy efficiency. Savings targets are to be achieved by policy measures on the national level. It will also require the commitment for the renovation of public buildings with the annual target of 3% of the total floor areas of heated/cooled buildings owned and occupied by central government. The other area of focus for the EED is improving efficiency of energy production utilising combined heat and power (CHP). In line with that by 2015, the Member States should provide information on the effective use of CHP in heating and cooling. The EED also sets the requirement for compulsory Energy Audits that should start in the period from 2012 till 2015 and be repeated every 4 years by qualified energy auditors.

EU Financial instruments The following instruments are in force across EU-27 and are considered and allocated on the national level: 1. Structural funds (European Regional Development Fund (ERDF) and European Social Fund (ESF)) and Cohesion funds: Current funds allocation will be doubled with the foreseen €17bn available 2. Horizon 2020 – €7bn for R&D projects 3. Intelligent Energy Europe (IEE) – part of the Competitiveness and Innovation Framework Programme (CIP). Also include the BUILD UP Skills programme. 4. The European Local Energy Assistance (ELENA) – financial and technical assistance to help local and regional authorities attract funding for sustainable energy projects. 5. Joint European Support for Sustainable Investment in City Areas (JESSICA) – supports sustainable urban development and regeneration through financial engineering mechanisms. 6. The European Investment Fund (EIF) – this was set up in 1994 to help small businesses.

Grants, subsidy schemes and additional financial mechanisms including involvement of the banks to provide the loans on favourable terms are the most important financial mechanisms

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for the residential and non-residential sector. The public sector across the EU will mostly favour third party financing mechanisms with involvement of ESCOs and public private partnerships (PPP). The main types of available financial incentives and subsidies are:  Direct subsidy to the building’s or property owners  Commercial loan to the building’s owner partially offset by the subsidy related with energy saving after renovation  Mixed schemes of direct subsidies and soft loans (JESSICA)  Special guarantee schemes  Energy performance contracting.

Eco-design Directive The Eco-design for Energy-related Products Directive (2009/125/EC recasting Directive 2005/32/EC) aims at establishing common requirements for the design of several groups of product used in the residential, tertiary and industrial sectors. It prevents disparate national legislation on the environmental performance of these products from becoming obstacles to intra-EU trade. This should benefit both businesses and consumers, by enhancing product quality and environmental protection and by facilitating free movement of goods across the EU. The original Directive (EuP Directive 2005/32/EC) aimed at reducing the environmental impact of energy-using products throughout their entire life cycle. The 2009 revision of the Directive extended its scope to energy-related products (ErP). Energy related products account for a large proportion of the energy consumption in the EU and include:  Energy-using products (EUPs), which use, generate, transfer or measure energy (electricity, gas, fossil fuel), such as boilers, computers, televisions, transformers, industrial fans and industrial furnaces  Other energy related products (ERPs) which do not use energy but have an impact on energy and can therefore contribute to saving energy, such as windows, insulation material, shower heads and taps.

The Eco-design Directive is a framework directive. It does not directly set minimum ecological design requirements - these are instead determined through specific preparatory studies. Country-specific and sensitivity analyses are carried out by taking into account climate peculiarities, building characteristics, local costs for labour, product price and energy. In this context, it is worth underlining that climate is much less important than generally assumed, because as a general rule it is compensated by the building characteristics. Gas, oil or electric boilers, combi-boilers and water heaters have been among the first fifteen product groups to be targeted under the EuP Directive. Some environmental lobby groups believe that since boilers and water heaters may last for more than a decade, only the most climate-friendly technologies should now be promoted (i.e., solar panels, biomass, condensing boilers or efficient heat pumps).

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F-Gas Regulation The European Union has adopted two legislative acts to control emissions from fluorinated greenhouse gases: the "MAC Directive" on mobile air conditioning systems used in motor vehicles, and the "F-gas Regulation" which covers all other key applications in which F-gases are used. In November 2012 the European Commission proposed to reduce F-gas emissions by two- thirds of today's levels by 2030 and ban the use of F-gases in some new equipment where viable climate-friendly alternatives are readily available. A report published in March 2013 proposes an even more ambitious target, overall 84% phase- down target by 2030 in CO2eq applicable to all HFC producers and importers, compared to the previously proposed 79% phase-down target by 2030 in CO2eq by the European Commission (in November 2012). In terms of impact onto the air-conditioning industry this would include: Refrigeration  Domestic refrigerators and freezers that contain HFCs - as of 2015  Refrigeration equipment that contain f-gases with GWP of 2150 or more - as of 2015  Hermetically sealed commercial refrigeration systems that contain HFCs with GWP of 2150 or more – as of 2015  Hermetically sealed commercial refrigeration systems that contain HFCs – as of 2018  Stationary refrigeration as of 2020  Mobile refrigeration except fishing vessels as of 2025.

Air conditioning  Movable room air-conditioning appliances (hermetically sealed equipment which is movable between rooms by the end user) that contain HFCs – as of 2020  Stationary air-conditioning equipment except centrifugal chillers that contain fluorinated greenhouse gases - as of 2020  Air-conditioning equipment in cargo ships that contain fluorinated greenhouse gases - as of 2020  Centrifugal chillers that contain fluorinated greenhouse gases - as of 2027.

The voting on the new Regulation took place on the 19th of June, 2013, and the new measures have been proposed for introduction. Among them is tracking imports and exports of HFCs in air-conditioning and heat pump equipment instead of previously suggested ban of pre-filling this equipment with HFC gases. Through 2014 further negotiations on exact implementation will be carried out and it is expected that the new proposals will be in force from January 2015.

Energy End-Use Efficiency and Energy Services Directive On 5th April 2006, the European Union adopted Directive 2006/32/EC on energy end-use efficiency and energy services. It included an indicative energy savings target for the Member States, obligations on national public authorities for energy savings and energy efficient procurement, and measures to promote energy efficiency and energy services.

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Cogeneration Directive On 11th February 2004, the EU issued Directive 2004/8/EC on the promotion of cogeneration based on a useful heat demand in the internal energy market. The purpose was to facilitate the installation and operation of electrical cogeneration plants (a technology allowing the production in one process of heat and electricity) in order to save energy and combat climate change.

Renewables Directive Directive 2009/28/EC aims to reduce final energy demand and greenhouse gas emissions; securing a long term, stable and increasingly independent energy supply. Targets for overall share of renewables in total energy consumption are set for each Member State. The Directive came into force in June 2009 and the deadline for transposition within Member States was 15th December 2010.

Sources of information  Cohesion Policy 2014-2020 http://ec.europa.eu/regional_policy/sources/docgener/informat/2014/simplification_en.pdf  Concerted Action EPBD http://www.epbd-ca.eu/  Odyssee-MURE Database http://www.odyssee-indicators.org  REHVA (Federation of European Heating, Ventilation and Air-conditioning Associations) www.rehva.eu  Build Up Programme www.buildup.eu  ENTRANZE www.entranze.eu.

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4 Incentives for energy efficiency and retrofit

Countries within the EU-27 have adopted a variety of approaches to encourage their citizens and property owners to improve energy efficiency. The report will go into the country-by- country incentive schemes in great detail later, this section will just summarise the most commonly-used approaches.

National and regional incentive schemes Most countries run a range of national incentive schemes for energy efficiency and retrofit. Some countries also run regional or even local schemes. The ratio of national to regional schemes largely seems to be affected by the level of regionalisation in each country. For example, Belgium and Austria are dominated by regional schemes administered through their strong regional administrations. Other countries, such as Bulgaria and UK, focus almost exclusively on national schemes. One exception to this is where EU development funding is targeted at economically disadvantaged regions within the member states. In addition to the national and regional incentive schemes that are covered in Report D2.1b, there are almost certain to be small local schemes administered by individual town or local councils but these have not been picked up in the research carried out in support of this work.

4.1.1 Incentive schemes for residential and commercial sectors The majority of incentive schemes listed in Report D2.1b are aimed at the residential sector. There are a number of reasons why this could be so:  In terms of numbers of buildings and also floor area, the residential sector is much larger than the commercial sector  Incentive schemes aimed at the residential sector have the most immediate impact on citizens and therefore voters  Incentive schemes are usually funded or supported through general taxation, and it is almost always the case that the largest proportion of taxes comes from individuals, in the form of income, consumptions and other taxes.

4.1.2 Broad types of incentive scheme Incentive schemes can be categorised into the following types. Of course, it is unlikely that each type will be adopted by each country as this will be influenced by the existing policy and legislative framework, the system of government and the culture within each country. Grants and subsidies for obtaining advice or carrying out audits Some countries provide grant schemes to reduce the costs to individual households or communities of seeking expert advice regarding their existing energy consumption and the options available to them to reduce their energy consumption. An example is the grant scheme available in Finland under the Housing Finance and Development Centre. Grants and subsidies for upgrading building fabric or systems

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These are very common throughout the EU-27. Most countries have some kind of grant scheme to reduce the cost to building owners of these kinds of improvements. The range of valid projects varies from country to country. The level of support also varies. Targeted subsidies for installation of renewable energy systems These schemes are also popular within the EU. The choice of which renewable technology received a subsidy enables national and local governments to focus on those technologies that are seen to be most beneficial, for example PV and solar-thermal systems in southern countries, biomass systems in countries with large woodland areas, etc. Feed-in-tariffs for renewable energy production These schemes are also widely used. They provide a revenue incentive rather than a capital incentive, so are easier for national governments to budget for. The rate of feed-in-tariff can also be altered to encourage certain renewables over others, and is usually implemented on a sliding scale over time. This is usually intended to reflect the reduction in capital installation cost of renewables as the technologies become more mature. Sponsored loans for improving energy efficiency These schemes provide a reduced interest rate loan for the capital investment required to improve the energy efficiency of a building. They are seen to be less expensive than subsidy schemes, and the repayment terms are usually over relatively long periods of time. For example, the UK’s Green Deal scheme provides capital for investment with the repayment being clawed back from the energy bills of the property for a fixed number of years thereafter. Tax incentives for energy efficient buildings These schemes reward the improved status of buildings once energy efficiency measures have been implemented. In countries like Bulgaria, the amount and duration of the tax benefit can be linked to the EPBD rating of the building.

4.1.3 Direct and indirect incentive schemes Governments have a choice whether to devise incentive schemes that provide assistance directly to the building owner or energy bill payer, or whether to devise schemes that are implemented via intermediate organisations such as energy companies. Although there is no direct evidence of which approach is more effective, some governments may find it easier to introduce and then regulate obligations on a few large corporations, such as energy providers, rather than a very large number of building owners or citizens.

Legal obstacles to renovation 4.2.1 Overview of legal obstacles There are a certain number of legal barriers that increase the difficulties for property owners to renovate their dwellings. Three of the main legal obstacles are identified below: 1. Tenancy law; 2. Building and planning legal requirements; 3. Law applying to condominium or multi-apartment buildings. Each of these legal impediments generates a certain type of consequence:

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 Tenancy law obligations results in the so-called split incentive;  Administrative requirements generates red tape;  Complex condominium law leads to decision-making difficulties. All these consequences can be further developed within WP8 of the project in the analysis of the (long list) of non-technical barriers to renovation. The first one and the last one in particular can be read from a legal point of view but also from a societal and economic point of view (i.e. the split incentive is clearly an economic issue). Tenancy law and the split incentive phenomenon In most EU countries, the initial amount of the rent can be freely agreed between the landlord and the tenant. However, the determination of future rent increases (or decreases) differs from country to country and is often restricted by legislation. There are a certain number of tenancy laws, which dis-incentivize or otherwise inhibit energy performance improvement. Examples of barriers linked to tenancy law and the split incentive are given in Section 6.4.2. These legal obstacles prevent the resolution of the so-called split incentive, i.e. one of the main barriers to renovation of buildings. It occurs when participants in an economic exchange have different goals or incentives. This can lead to less investment in energy efficiency that could be achieved if the participants had the same goals. The landlord-tenant dilemma is a classic example of this. Building and legal requirements – Red tape effect Institutional and administrative barriers are important legal obstacles to investment in energy efficiency that can effect on the rate and ambition of renovation. A variety of regulatory and planning obstacles have been identified. They include:  delays in the implementation of energy efficiency regulations, especially in decentralised countries where local and regional authorities have the capacity to transpose and adapt European and national legislation;  delays and complex patenting process in the recognition of new technologies;  the so-called “red-tape” effect due to complex administrative and legal requirements for buildings and planning. Administrative burdens can be very serious barriers. In many EU countries, property owners have to complete various legal and administrative obligations before being able to renovate their dwellings. These obligations constitute significant obstacles to energy efficient refurbishments and contribute to curbing the success EU objectives in this field. For deep renovations the obligations are often decoupled. These obligations also generate substantial costs. In addition, administrative obstacles also occur in the access to credit and access to financial incentives, impeding a smooth functioning of the market. For example in Spain, in order to proceed to refurbishment, the legal and administrative obligations require the client:  to make an architectural project, a basic study or a Safety and Health assessment  to apply for a work permit with payment of local fees and taxes  to get an environmental Activity Licence

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 to employ a technical director (surveyor or architect)  and to use the services of a technical Safety and Health Coordinator. These requirements might vary according to the scale of the work, but a work permit is always required. If the work is considered to be minor, the licence application process is quicker, at lower costs and without the intervention of technical director. For ‘deeper’ renovation the requirements are decoupled. All these legal obligations, studies and required supervisions generate substantial costs for the owners. In Greece the developer of a 20-unit building needs to fill more than 180 forms and administrative documents in order to benefit from the state renovation aid scheme. Condominium law and the decision-making difficulties Various barriers exist where there are multiple owners and/or occupiers of buildings. Ownership and responsibility can be opaque, while it can be very difficult to come to an agreement on energy saving investments in relation to decision-making process and financial contribution.

4.2.2 Split incentive and tenancy law By way of example, a more detailed analysis of the split incentive scenario covering some of the EU-27 countries is included here. This is based on information collected by the UIPI in the past as well as on research done within the Inspire project. Austria In Austria there are no legal possibilities to share tenants on the energy savings which are caused by renovations in accordance to the EPBD in Austria. Although there is a discussion about energy contracting and the maintenance of heating boilers in dwellings we are convinced that this is the wrong way to share tenants on the costs of a renovation. This situation is particularly problematic in the case of regulated rents or the so-called “protected tenancy” for buildings with a building permits before World War II with higher requirements on renovation. The national parties are not interested to solve the landlord tenant dilemma. Source: Zentralverband Haus und Eigentum France In France, rent increases during a tenancy cannot exceed the increase in the Rent Reference Index (IRL). However, parties can agree on a fixed date from which the indexation will be calculated or alternatively agree for it to take place at the end of each contractual year. Furthermore, there are two ways of increasing the rent when the tenancy contract is coming to an end. When the contract is renewed and the same tenant stays in the property, the rent is linked to the IRL and the only way for a landlord to avoid this limitation is to prove that the property is under-valued when compared with equivalent dwellings in the locality. Since 1 August 2012 the same rules apply even when a new set of tenants take over the property; but only in 38 specific urban areas. In 2009, the French government introduced a legal instrument in the so-called “Loi Boutin”1 in an attempt to resolve the landlord/tenant dilemma. This law establishes the legal conditions to

1 Article 119 Boutin Law 25 March 2009, Decree of 23 November 2009

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allow the redistribution between the landlord and the tenant of the savings made on energy costs following energy efficiency improvements. When energy saving renovations are undertaken by a landlord within the private and/or common parts of a dwelling, a contribution for sharing the saved energy costs can be asked of the tenant of the relevant dwelling, as from the end of the renovations, provided that the tenant directly benefits from the renovations made and these have been explained to him/her. The contribution is separate from the rent paid by the tenant. Source: Union Nationale de la Propriété Immobiliére, UIPI Landlords in Europe Report – September 2013 Germany The situation in Germany is considered strongly pro-tenant and has many regulations relating to the rent a landlord can charge. Although initial rents can be freely negotiated and agreed between the parties, landlords can face criminal charges for demanding a rent in excess of 20% above the rent charged for comparable premises2. A landlord is entitled to increase rent by 11% of the cost of the energy saving measures. The saving of energy in this case does not need to reduce the tenant's costs, only to reduce the demand for energy. Such energy savings must be substantial and in the general public interest. There are discussions concerning the extension of this to include, for example, the costs of measures related to renewable energy (such as wind and solar power). The landlord is not entitled to increase the rent to cover the cost of works if classed as maintenance. For example, it is not permitted to use boilers installed before 1 October 1978. Replacement of such a boiler would be considered as maintenance and no rent increase would be allowed. However, a voluntary measure such as the addition of thermal insulation would enable the landlord to increase the rent. The German Tenancy Law has been revised to allow landlords to capture benefits of investments currently lost due to split incentives. The new law should enter into force in the coming months. Source: Haus und Grund, UIPI Landlords in Europe Report – September 2013, Joint statement on the Landlord/Tenant Dilemma by CEPI and UIPI –December 2010 Netherlands In the Netherlands, agreement has been reached on a scheme aiming to achieve a 20% reduction of energy demand by social housing associations through refurbishment and stimulation of behavioural change by raising awareness amongst tenants4. According to this scheme the housing association and a tenant agree on energy saving package in which the rent increase is calculated based on the investment. The average energy saving is calculated and it is guaranteed that the increase in rent will be less than the decrease in energy costs. The results are monitored, allowing for the rent to be adjusted if the expected results are not achieved. Source: Joint statement on the Landlord/Tenant Dilemma by CEPI and UIPI –December 2010 Czech Republic No obstacle of that kind exists. If there is no agreement on the raising of the rent in the initial tenancy contract, the landlord may propose such raise of the rent in writing. The tenant may

2‘The Private Rented Sector in the New Century – A Comparative Approach,’ Med dansk sammenfatning, University of Cambridge, September 2012, p. 142

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agree or disagree. If he does agree on the new amount of the rent, the rent will increase as of third calendar month following the landlords’ proposal. If, however, the tenant does not agree with the proposed rent raise within two months, the landlord is entitled (starting from January 2013) to turn into the court within next three months, which will decide on the raise of the rent depending on the current market rent. In addition, there is a possibility for the court to determine raise of the rent even if the conditions where stipulated between the parties in the initial lease contract provided there is a significant change in the circumstances and the lease was set for an unspecified period of time. Source: UIPI Landlords in Europe Report – September 2013, UIPI Secretariat Ireland Rent is governed by the market and is freely agreed between landlord and tenant and is the rent which a willing tenant not already in occupation would give and a willing landlord would take for the dwelling. However the State assists 98,000 people living in the private rental market with their accommodation costs and has capped the amount of rent that tenants in receipt of the benefit are allowed to pay (effectively rent control) which has caused major difficulties for landlords and tenants, notably in relation to energy efficiency renovation. Source: Irish Property Owners Association – IPOA

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INDIVIDUAL COUNTRIES

5 Austria

Austria is one of the 13 richest countries in the world in terms of GDP (Gross domestic product) per capita. Although Austria's economy has survived the worst of the European recession so far and its exports and manufacturing remained strong, the country could not escape the external effect of reduced economic activity in its main trading partners, namely Germany, Italy and Hungary. GDP forecast for 2013 remain low at 1% before a more reasonable increase in 2014 of 2.3%. Austria has very high renewables use, with 68.6% of electricity generated from hydropower, and 16.4% of primary energy demand from biomass. A high proportion of Austria’s housing stock (about 30%) was built in the period 1961-1980. This is largely in the form of housing estates using reinforced concrete with brick or panel external walls. It wasn’t until the 1980s that insulation started to appear in the construction of dwellings.

National policy The new building regulations and the adopted EU program for development of renewable energy sources have encouraged the use of certain technologies and restricted others. However, this is a process which will continue its trend in the next few years. Austria, along with the other EU countries, has agreed to meet the target of reducing CO2 emissions by 20%, produce 20% of the energy demand from renewable sources and reduce the energy use by 20% by 2020. The country has also adopted the target of producing 34% of its energy from renewable energy sources (hydroelectric, wind, solar and biomass). The success of this ambitious programme will rely on the quick development of electricity production capacities based on hydroelectric, wind, biomass and photovoltaic sources. The target can only be met if residential and commercial heating systems are exchanged for renewable energy solutions. 5.1.1 Directive on the Energy Performance of Buildings In 2005, Austria implemented ‘The Energy Performance of Buildings Directive (EPBD-COM 2002/91/EC) to meet the target emissions as set out in the Kyoto Protocol. The agreement was to reduce emissions by at least 5% based on the 1990 level. Austria has contractually agreed to reduce its gases like carbon dioxide, methane, fluorinated hydrocarbon by 13% between 2008 and 2012.

Although targets for 2012 were not achieved in Austria, the building regulations set out the minimum standards affecting insulation, heating and heating requirements for new builds and refurbishment as well as led to the energy performance certificate.

With the Energy Performance of Buildings Directive updated in 2010 (EPBD- COM,2010/31/EU), Austria joined other EU members to introduce nearly-zero energy buildings for new and refurbished structures by 2020 with public institutions to achieve this standard by 2018.

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The Directive is foremost a measure that provides guidance for designers, architects, tenants, home owners and building experts on assessing buildings in terms of their energy consumption and emissions respectively.

The EPBD requirements for Inspection must be transposed by Member States in national regulations before 9th July 2012, and applied in practice by 9th January 2013 for public buildings and 9th July 2013 for all other buildings. It is also expected that the buildings and major renovations requirements will be changed to building code B during 2012 and to A+ sometime before 2020. 5.1.2 Austrian Energy Strategy The Austrian Energy Strategy was adopted in 2009 and presented in 2010. It is concentrating on 3 main areas:  Security of the supply  Energy efficiency  Renewable energy

The main goal of the strategy is creation of a sustainable energy system allowing implementation of the EU 2020 goals while also creating a balanced country system both for private individuals and businesses. The strategy also stated the target for final consumption of 1,100 PJ by 2020. The latest numbers published by the Austrian Office of Statistics highlight that 74% of energy production is covered by renewable sources, thus firmly placing Austria on the route of achieving the targets set out in the Energy Strategy. 5.1.3 Green Electricity Act From 2002, the Green Electricity Act has been the key instrument for supporting renewable energy sources in the electricity sector mainly through the provisions for feed-in tariffs covering all main sources of renewable energy (biomass, geothermal, photovoltaic, wind and waste gases).

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Transfer price small hydro Small hydro < 10 MW Transfer price Electricity trader “other” green power Investment grants for new small Balance hydro stations: 10-30% groups Similar for medium-sized hydro up to 20 MW up to 10% Green power Passed-on For black liquor: up to 30% settlement agent transfer price (licensed) Beyond 0.5% NPV: Feed-in tariff reimbursement (€500,000 de-minimis rule) “Other” green power System Wind, biomass, biogas, operator Consumer PV over 5kW etc Flat renewables PV up to 5 kW supported through KLI.EN charge Stable until 2012 Flow of “other” green power Flow of money Green Electricity Flow of small hydro power Flow of money from (Amendment) Act consumer to trader 2009 changes

Figure 1 - Implementation of Green Electricity Act - Source: E-control

The Green Electricity Act was updated in September 2012.Under a recent Green Electricity Amendment, investment grants will be awarded in place of feed-in tariffs in the future for small and medium-scale hydro-installations (up to 20 MWe) as well as plants based on waste liquid (in the paper industry). 5.1.4 Law for Expansion of District Heating and Cooling Networks (WKLG) Austria’s Heating and Cooling Network Expansion Act (WKLG, BGBl. I No113/2008) promotes the district heating (and cooling) infrastructure in the country. There are incentives for incorporating the renewable sources of energy and extending the district heating supply networks in the rural areas. 5.1.5 CHP-Law (KWK-Gesetz) This Law was adopted in 2009 with the aim of supporting CHP in public district heating plants and reimbursing a certain share of the operating costs, as well as funding new CHP plants. Operating costs cover fuel, maintenance costs, ROCE, pensions, administrative costs and taxes.

New plants for which permits are received by 30 September 2012 and are in operation by 31 December 2014 can receive investment subsidies up to 10% of the total funds needed:  <100 MW: €100/kW  100- 400 MW: €60/kW  >400 MW: €40/kW

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5.1.6 National Building Regulations The Austrian Standards Institute (Österreichiches Normungsinstitut) as part of the International Standards Organisation (ISO) and a member of the Central European Norms Committee (CEN) is responsible for developing and managing approximately 24,000 standards and rules for Austria. Some ÖNormen relevant to calculation of energy efficiency of buildings are:

. Önorm B 8110-1: Thermal protection in building construction - Part 1: Declaration for thermal protection of low energy buildings and lowest energy buildings - Heating demand and cooling demand . Önorm B 8110-3: Thermal protection in building construction – Part 3: Prevention of summerly overheating . Önorm B 8110-5: Thermal protection in building construction – Part 5: Model of Climate and User Profiles . Önorm B 8110-6: Thermal protection in building construction – Part 6: Principles and Verficiation Methods . Önorm H 5056: Energy Performance of Buildings – Energy use for heating systems . Önorm H 5057: Energy Performance of Buildings – Energy use for ventilation – systems of residential and non-residential buildings . Önorm H 5058: Energy Performance of Buildings – Energy use for cooling systems . Önorm H 5059: Energy Performance of Buildings – Energy use for lighting 5.1.7 Thermische Sanierung 2013 (Thermal rehabilitation 2013) - Austria In 2013, around €100m has been allocated for the programme of thermal renovation, and 70% of that will be directed at the segment of the housing building stock built prior to 1993. The funding will cover: . 20 % of the renovation costs . max of €5,000 for thermal rehabilitation . max of €2,000 for conversion of the heat generation system. If materials for insulation are renewable, a further premium of €500 will be given. The funding is mainly provided to the residential sector, and, as such, is directed at the owners of the houses or owners/tenants within multi-storey buildings. The grant is following the principle of “single allocations”, i.e. one grant per application and per applicant. The following projects can be funded (in line with NEEAP): . Insulation of exterior walls . Insulation of the basement ceiling and roof insulation . Insulation of the lowest floor slab or the basement floor . Refurbishment or replacement of windows and exterior doors . Conversion of the heat generation system (integration of a solar thermal system into the existing heating system, changing to biomass equipment, or installation of a heat pump) Source: https://www.help.gv.at

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Financial Incentives The Federal Government of Austria in cooperation with its Federal Provinces has developed a national climate strategy in order to meet the Kyoto agreement. For the commercial heating sector this resulted in a number of programs:  Subsidies schemes by the Federal Government 2011-2014:

 “De-minimis”-Beihilfe for businesses installing biomass boilers up to 400kW – max 30% of the installation costs.

 Installation of biomass boilers >400kW receive a subsidy of 20% of the installation cost; however, project installation costs have to be at least €10,000.

 “Heizen mit Oel” program will support the installation of new oil boilers (€ 2,000) until 2016.

 Klima Aktiv Programm raises awareness on energy consumption among end users.

 BEWAG Burgenländische Elektrizitätswirtschafts-Aktiengesellschaft is the youngest energy provider in Austria that delivers 100% CO2 clean energy and in 2011 offered subsidies for energy efficient renovation and an exchange of old heating systems for heat pumps.

 Funds for grants for all companies have been available since 2011, regardless of the companies’ size from the Austrian Federal Government for improvement of thermal insulation of buildings older than 10 years. The program will continue until 2014. € 30 million are available to be spent from 28 March 2011 for commercial buildings. The level of funding is based on the achieved reconstruction quality. The program includes the installation of solar systems, heat pumps, biomass boilers and LED systems.

 Funds are available for thermal insulation of farm buildings built before 01 January 1990. The program will support insulation of top floor ceilings and roofs, exterior walls, renovation or replacement of windows and exterior doors, installation of heat recovery in ventilation systems.

 “Energie-Effizienz-Scheck” program supported by the Klima- und Energiefonds includes consulting small and medium size businesses on identification, assessment and implementation of measures to increase energy efficiency and energy cost reduction. The cost for the initial consultation of maximum € 675is granted.

 Fund for new construction of commercial buildings in low energy design promoting € 0.20/kWh of goals difference of the heating demand for the total heated building volume.

 Fund for highly efficient cogeneration plants based on natural gas or liquefied petroleum gas for the combined production of electricity and heat for up to 2MW. The environmental investment cost must be at least € 10,000, 25% of which are available as grants.

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5.2.1 Feed-in Tariffs (FIT) Feed-In tariffs are determined by the Green Electricity Ordinance 2012, “Okostrom- Einspeisetarifverordnung 2012” which superseded the Green Electricity Ordinance 2010, FLG II and was published on 18 September 2012. It states the FITs in place during the period from September 2012 till December 2013.

For pohotovoltaics, no support is provided for arrays larger than 500kW in order to prevent a small number of utility-scale projects from using up most of the budget. To lower the impact of photovoltaics on the grid by allowing more solar power to be consumed directly, building integrated arrays receive feed-in tariffs along with an upfront investment bonus.

Biomass projects are only eligible for feed-in tariffs if used in CHP units. Depending on the specific system between €0.11/kWh and €0.18/kWh is paid for small units, and this increases to keep up with the rising cost of raw materials. In 2013, these rates dropped by 0.5%.

The following tariffs were set up in 2012:

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Table 4 - FITs tariffs in Austria / 2012 - Source: E-control Technology Range Feed-In Tariff (Cents/kWh) Geothermal 7.50 PV Up to 5kWp Investment subsidy 5-20kWp 25 > 20kWp 19 Building < 5kWp Investment subsidy integrated 5-20kWp 27.60 Photovoltaic (PV) >20kWp 23.00 Solid biomass < 500kW 14.98 500kW-1MW 13.54 1-1.5MW 13.10 1.5-2MW 12.97 2-5MW 14.93 5-10MW 12.06 >10MW 10.00 Waste with high SN 17, Tab 2, eg. cattle Minus 25% biogenic content SN 17, Tab 1, eg. Chipboard Minus 40% cuttings 5.00 Other Co-combustion Solid Biomass (wood chips, straw) 6.12 SN 17, Tab 2, eg. Cattle Minus 25% Other 5 digit SN in Tab 1 and 2 Minus 30% Liquid biomass €0.058/kWh plus supplement of 5.80 plus supplement €0.02/kWh for CHP of 2.00 for CHP Biogas from <250kW 18.50 agricultural 250-500kW 16.50 products (corn, manure) >500kW 13.00

5.2.2 Passive House Energy efficient housing is supported by the state governments’ subsidy schemes. For example in Styria, a single-family house must achieve the minimum requirement of 65kWh/m2 as a condition to receive social housing subsidy. In addition a house with a maximum use of 52kWh/m2 (low energy house) can receive additional €10,000, a house with a maximum use of 39kWh/m2 (super low energy house) can receive additional €15,000 and a passive house (maximum use of 15kWh/m2) can receive an additional €25,000.

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Passive houses are fitted with special ventilation systems with integrated heat recovery which recover the heat from so-called “internal returns”, i.e. heat from electrical appliances, body heat and solar energy, which is why they do not require any static heating systems. A comfortable indoor climate can be achieved in summer and in winter without needing a conventional heating or air conditioning system. A separate heating system is not necessary because heating energy can be distributed in the building by means of the existing ventilation system. Passive houses have maximum heating loads of 10W/m², total energy requirements of no more than 42 kWh/m², with peak energy requirements not exceeding more than 120 kWh/m². Assuming an average energy consumption of 15Wh/m², a passive house requires around 200 KWh per year for heating purposes. A conventional house requires six times that amount.

The programme for the construction of passive houses in Austria called “klima:active house” is managed by the Austrian Society for Environment and Technology (Österreichische Gesellschaft für Umwelt und Technik). The passive house incentive program (part of Energy Efficiency Action Plan for Austria) has been in force since 2006. It is limited to 50 houses per year.

In 2006 the share of passive houses in the new built residential sector reached 4-5 % (around 2,000 houses) and according to the Austrian Association for Environment and Technology 20% of all newly built houses achieved the passive house standard in 2009. It has been reported that 68% of all passive houses were fitted with heat pump installations.

The City of Vienna is substantially adding to this development with a well-advanced project to build Europe’s biggest passive house estate in the 3rd district of Vienna, where around 1700 new passive houses should be built by 2016. In July 2013, it was reported that the world’s first passive office tower block was certified in Vienna (http://www.advantageaustria.org/us/oesterreich-in-united- states/news/lokal/World_s_first_Passive_House_office_tower_in_Vienna,_.en.html). 5.2.3 Other incentives  Fund for heat pump systems with a heat output > 400kW. The environmental investment cost must be at least €10,000, 15% of which is granted.

 Funds for heat pumps with a heat output < 400kW, max 30% of the investment costs are granted. For the implementation of energy consulting a surcharge of €300 is also granted.

 Sponsored are investments for the use of energy in existing buildings and exhaust heat recovery; however, the maximum amount is €5,000.

 The “Efficient Use of Energy” programme sponsors measures for the efficient use of energy from industrial waste heat, heat pumps, control engineering optimisation, change to alternative, and more energy efficient technologies.

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 A new Subsidy was allocated with total €36m for PV in 2013 for plants to be finished within 1 year from registration. It is expected that it will cover the developments of nearly 24,000 power plants (€300/kWp - rooftop or ground-mounted PV plants; €400/kWp - building integrated PV). The subsidy is only available to private individuals and the capacity of the plants is capped at 5kW.

 Each year, €100m is granted for thermal renovation in the housing (70%) and business sectors (30%). In 2011, 17,500 units received a subsidy for renovation. Additional subsidies are available for ecological insulation materials and for historic buildings as well as for switching to more ecological heating systems. By August 2012, around 50% of the funds had been utilized. For thermal renovation in the period 2012 to 2016, €500 million are set aside.

The government’s fund programmes are mostly carried out by the federal states, which results in most provinces having different levels and scopes of subsidies for different heating products. The length of the different funding programmes depends very much on the economic development of the country, the energy prices and supply. However, these influence the consumers’ awareness, habits and preferences regarding substitute products. 5.2.4 Federal Subsidies (residential sector) Heat recovery is primarily subsidised at federal level in relation to conserving energy in low- energy or zero-energy buildings. Whereas this refers primarily to homes or passive houses whether it is new built or refurbishment, dwellings and larger residential construction can receive financial incentives for heat recovery ventilation as well. Additional grants are available for special energy saving design and construction of buildings (e.g. higher thermal insulation) and the use of renewable energy sources (solar thermal heating, biomass, heat pumps and photovoltaic). 5.2.5 State-level incentives Upper Austria Subsidies for homes or extensions are either in the form of an annuity, regular contribution to the mortgage or a loan. The grant ranges from €37,000 up to €45,000 depending on the number of flats and the intended energy level. Approvals for the applications of subsidies are dependent on the energy standard (kWh/m²yr) for the project. A minimum of 75 kWh/m²yr is the minimum requirement. The calculation of the energy standards is based on EN 832.

Multiple dwellings need to achieve at least 30kWh/m²yr to be eligible for subsidies. If solar thermal or biomass systems are installed additionally, the grant is increased by €20 per kWh/m² yr each.

Provided the annual energy standard was no more than 80 kWh/m² yr, decentralised ventilation systems are entitled to €120 per unit if the envelope of the building is already sealed off and the residents have been living in their home for more than 3 years. Source: www.esv.or.at

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There is also a renewable heat subsidy - farmers receive an investment grant of 40% against the initial investment cost of biomass district heating systems. Styria Funding in Styria is determined by the annual heating requirement per building and the accumulated collection of eco-points.

Minimum requirements to be eligible for the eco-bonus incentive scheme are to achieve 36 kWh/m² yr as of 1st January 2012, have a solar thermal system installed to support the hot water demand and no use of fossil fuels, for example. The concept applies to multi-storey buildings, homes and the scope of the refurbishment.

Centralised ventilation systems with heat recovery units are subsidised (2 Eco-Points) with an efficiency of at least 60% which is to be calculated based on ÖNORM 8110-6 and accredited by an authorised third party independently. Decentralised single units (1 Eco-Point) with a minimum of 50m²/hr and a three-level control are also covered by this incentive. Source: www.steiermark.at Burgenland For refurbishing residential homes, adding an extension or multi-storey buildings, the targeted heat loss is the determining factor of achieving a grant in order to improve the thermal quality of a building. Replacement of the heating system to connect to district heating, sanitary hot water, electricity and gas network improvements as well as improvements of sound and thermal insulation are funded in Burgenland.

The funding for larger flats / multi-storey building in excess of two units follow the same scheme, except that the awarded points per level of shortfall are less than for residential homes. Source: www.burgenland.at Tyrol Tyrol offers loans, contributions and allowances to fund both new buildings and refurbishments. Besides, a one-off non-refundable check per project (Wohnbauscheck) can be issued to the applicant provided that he/ she has been the resident of the building for at least 10 years.

Energy-efficient measures such as improvement of the heat load, biomass heating or the installation of a heat pump are rewarded with points that can be used in addition to the basic funding. For example, comfort ventilation with heat recovery earns about 2 points for buildings in excess of 300m² and 3 points for a smaller area. Source: www.tirol.gv.at

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Vorarlberg In Vorarlberg only a loan and contribution to the total investment for buying the first home, refurbishing homes or apartments as well as care homes are possible. Extensions or improvements of homes are also covered under this financial scheme in Vorarlberg.

In order for a new building to be funded, the number of flats may not exceed 25 and up to 5 residents per flat are allowed to use no more than 150m² useful floor space. Semi-detached houses are covered up to 200m² useful space. If a basement or roof space for storage is not available, an outdoor area of up to 30m² can be funded as well. Eco-Points are defined based on the heat load per energy-efficient home. For example, a passive house standard can achieve more than 200 points. The number of eco-points is determined based on the energy performance certificate of the building and can be seen as the additional funding available to the base rate which is also determined based on the energy-efficiency level per home. The base rate can vary from €350/m² up to €1,060/m².

Refurbishments follow the same principle; however, the funding rates depend on the scope of the energy improvement. Only loans or one-off payments are possible. The funding primarily applies to a total investment of €50,000 with differing rates as a percentage for one-off payments and loans.

The funding for comfort ventilation with heat recovery expired at the end of 2012. Until then it had to be installed in the building to receive a non-refundable contribution of €2,000 per home or €1,000 per flat. Multi-storey buildings containing more than 20 flats can receive only €900 per flat. Source: www.vorarlberg.at Vienna Improving the envelope of the building in order to reduce the heat load is funded provided the building is more than 20 years old, the residents own and occupy the flat or home perennially and the useful living space is at least 22m². Improvements are to be carried out within 3 years after approval and only environmentally friendly material is to be used.

For new buildings and refurbishment projects, it is mandatory not only to use environmentally friendly material, but also to have a current energy performance certificate available in order to become eligible for funding. Ventilation systems, for example, need to achieve an airflow of at least 1.5 air changes per hour. Depending on the type of heat exchanger, efficiencies between 50-85% are to be realised in order to receive a financial support on the project.

Comfort ventilation with heat recovery is only supported in low-energy or passive houses. However, this support expired at the end of 2011. By then a one-off payment of €8,000 was possible. Source: www.wien.gv.at

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Lower Austria Funding in Lower Austria is based on the energy key data as calculated according to the Guidelines v. 6 of the Austrian Construction Institute (Österreichisches Institut für Bautechnik). The total funds are calculated from the combination of total number of residents, points-based system for sustainable building and a bonus points scheme derived from the location of the building. A loan will be made available for 27.5 years at an interest rate of 1% pa.

Comfort ventilation systems with heat recovery can score up to 20 points provided a combination with sanitary hot water is made possible. If heat recovery is used in combination with both sanitary hot water and underfloor heating, a total score of 30 points is awarded. A basic system without any combination achieves 10 points.

A passive house with an annual heat demand of 10 kW/m² yr is entitled to €50,000. A photovoltaic system can contribute an additional €10,000. However, the points gained from installing energy-efficient systems in new buildings do not apply for the passive house.

When refurbishing existing buildings, the subsidies are based on the total of points between the energy performance certificate and the sustainable measures. Thereby, each point represents 1% of the investment. Comfort ventilation systems with heat recovery can therefore contribute up to 10% of the total sum. In combination with sanitary hot water and underfloor heating a further 20 points are possible. Source: www.noel.gv.at Carinthia New build homes with a useful area space between 130m² and 150m² for up to five residents are subsidised in the form of a loan or a contribution to the remainder of other loans at the end of the year, e.g. home purchasing savings. The basis of the loan can vary from €37,000 up to €63,000 .

Heat recovery systems, for example, are subsidised with €5,000 if the building can achieve an airtightness between 0.9 and 1.0 air changes per hour.

For multi-storey buildings a loan of 35% and contributions of 65% of the total investment are possible. Up to 50% funding is possible if the building’s thermal and energy efficient condition is improved. 70% of the total investment for sanitary hot water in combination with solar thermal systems is possible. Provided the building is completely refurbished in order to improve the thermal insulation and the existing ductwork, up to 100% of the project can be funded. In this case up to €500 per m² are available with a total limit of €60,000 per project. Source: www.ktn.gv.at Salzburg In Salzburg the funds are determined based on the useful area space. For new buildings, for example, the base rate is between €1,000 and €1,550 depending on the type of family, i.e.

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with or without children or single parent. Depending on the score of the eco-points an additional €15 per m² can be gained for sustainable systems such as a heat recovery system.

For refurbishments, the base rate is €500 times the useful floor area. Primarily the building is to be insulated, the total refurbishment costs cannot exceed 8% of the costs for new build, the building is to be at least 10 years old and the final improvement has to be presented in the form of the energy performance certificate.

Biomass or central heating is funded with €7,000 per flat and the installation of a solar thermal system receives €3,000. Source: www.salzburger-wohnbaufoerderung.att

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Summary on the effects of HVAC and renewables - Austria Products Policies and Incentives Map Possible effects

HEATING Austrian Energy Strategy Expansion of District Heating Systems 2009 Combined Heat District Heating and Power Law + CHP-Gesetz Rural developments in biomass district heating Upper Austria grant Domestic Boilers Efficient Use of Energy + Commercial Boilers Efficient Use of Energy + “De-minimis”-Beihilfe Biomass is supported at both federal and local Biomass Boilers Provincal grants + level, but on a lesser scale and limited to CHP. NREAP Cautious growth mainly in retrofit, but dependant Heat pump Efficient Use of Energy + on social housing investments

Compression Heat

Pumps ●

Sorption/Gas Heat

Pumps ● Small scale CHP CHP-Law + Prices for gas stall further growth Austrian Energy Strategy Market is likely to be pushed into further growth, Environmental Support especially in urban areas, but prices for gas still Biomass CHP Scheme(UFI) + affect the speed and the rate of growth CHP-Law Support for co-generation biomass through FITs FITs Electric heating ● Growing as part of the overall package Heat recovery Passive House + application Renovation Segment will also drive growth AIR-CONDITIONING Air conditioning Passive House + Tightening of standards encourage Mechanical ventilation Province subsidies + As part of overall renovation package HOT WATER Solar Thermal Province subsidies + Growth potential especially in some provinces ELECTRICITY

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Shading segment potential as part of passive Daylighting systems Passive House + houses/offices Market is supported and expected to grow, PV FITs, Subsidies + especially in private small scale sector INSULATION Positive stimulation of the market for buildings Wall Insulation Thermische Sanierung + over 10 years old and farm buildings Positive stimulation of the market for buildings Loft Insulation Thermische Sanierung + over 10 years old and farm buildings

+ Positive Effect – Negative Effect = No Impact

Sources of information . BSRIA Ltd Austria Country Reports on Energy Services, Heat Pumps, Solar Thermal and Boilers www.bsria.co.uk . Odyssee-MURE Database http://www.odyssee-indicators.org/publications/PDF . Austrian Energy Agency http://www.energyagency.at/ . RES-Legal . PV-Magazine . Austrian Energy Strategy http://www.energiestrategie.at/, http://www.bmwfj.gv.at/Ministerium/Staatspreise/Documents/energiestrategie_oesterreich .pdf . Energie-control Austria http://www.e-control.at/en/home_en . Electricity Act http://www.e- control.at/portal/page/portal/medienbibliothek/strom/dokumente/pdfs/ElWOG%202010_e n.pdf . Federal Ministry of Agriculture, Forestry, Environment and Water Management http://www.lebensministerium.at/en/ministry.html . Austrian Photovoltaic Association http://www.pvaustria.at/ . EREF www.eref-europe.org

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6 Belgium

Belgium has a GDP per capita of $38,100 (2012 est.), comparable to Germany and the United Kingdom. Total GDP is $419.6 billion (2012 est.). In 2011, the Belgian GDP increased by 2.0%, higher than the European average (1.4%). This was followed by near stagnation in 2012. Over half of Belgium’s electricity is generated by , with most of the remainder from fossil fuels. Renewable energy plays a small, but increasing part. Belgium has a relatively old building stock, with approximately 41% build before 1946, and approximately 17% built before 1900.

National policy and financial incentives 6.1.1 EU Directives in Belgium The Renewable Energy Directive, approved in December 2008, is targeting to source 13% of the final energy consumption in Belgium from renewables.

From January 2009 the Belgian legislation has incorporated the EPB directive and all new houses have to be designed in a way that conforms to the European norms of energy efficiency. There were expectations that the law would make it obligatory to install renewable solutions for the production of sanitary hot water in all new buildings, but the appropriate regulations have not materialised yet.

Energy performance certificates have to be included in all advertisements for selling or renting existing properties in Belgium as from 30th December 2010. Existing property is defined as a building that the first demand of building permit was made before 1st May 2010.

As part of the Belgian Efficiency Building Policy the global energy consumption in dwellings – called Ew- must not exceed a certain level. Ew takes into account the energy used for space and water heating, cooling and auxiliaries (such as fans and motors). Since 1st January 2009 all new dwellings had to have an Ew equal or lower than 100. The level has been revised downward and from September 2011 Ew should be 80 or below.

Meanwhile the level of insulation of housing needs to be improved to avoid heat losses. Known as K, it should be 45 or lower in Belgium. The table below recapitulates the requirements set by the EBPD in terms of insulation and energy consumption in all three regions in Belgium.

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Table 5 - Summary of building efficiency policy requirements in Flanders, Wallonia and Brussels-Capital Region, 2011-2012 - Source: BSRIA EPBD requirements Flanders Wallonia Brussels-Capital Region Max. K 1 K40 from 01/2012 K45 K40 (residential) K45 (non-residential)

2 Max. E/Ew E70 from 01/2012 Ew80 E70 (residential) E60 from 2014 E75 (non- residential) Ventilation standards Mandatory Mandatory Mandatory NBN D50-001 Note: 1- where K is the maximum total thermal insulation factor of the building

2 -where E/Ew is the building’s maximum total primary energy consumption level

The Walloon Building Energy Performance regulation (Performance Energétique des Bâtiments, PEB) came into force in May 2010. It applies to all new housing and buildings including schools, hospitals, commercial buildings, offices.

As of 1st May 2012 the rules have been tightened regarding heat losses and insulation level notably.

Meanwhile the Flemish Government focuses on improving energy efficiency. On 17th June 2011, the Government of Flanders took note of the second Flemish Energy Efficiency Action Plan, in which the progress and modifications of the measures from the first Flemish Energy Efficiency Action Plan (2007) are described. Regarding the reduction of the energy consumption, Flanders is aiming at least at saving 9% of energy in 2016 on the basis of the average final energy consumption (2001-2005), in accordance with the objective of the energy efficiency directive.

In 2011, the Government of Flanders determined the energy performance standards for new buildings that apply as of 1st January 2012 (E70) and 1st January 2014 (E60). In 2012, a proposal for stricter rules of the EPB requirements was developed with actions up to 2021. Within the framework of the transposition of the revised EPBD, a modification of the Energy Parliament Act was introduced on 18th November 2011, stipulating that at the latest on 1st January 2021, the EPB requirements for all new buildings correspond to the EPB requirements for nearly zero-energy buildings and that as of 2019 new public buildings be nearly zero-energy buildings. The Energy Renovation Programme 2020 for existing houses will be implemented; in this context special attention is also paid to the implementation as of 2012 of the streamlined energy grants and the realisation of the social roof insulation projects. Furthermore, the publicity and quality of the energy performance certificate for existing residential buildings will be increased and the first preparations will be made in order to extend its scope to non- residential buildings. At the same time, preparations are also made to increase the quality of energy experts through a streamlining of the recognition regulations. The final step is a strong

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enforcement of the regulations regarding the energy performance and energy certification of buildings.

Within this framework, the Green Heat Action Plan was adopted by the Government of Flanders on 15 July 2011. This action plan provides, among other things, a support mechanism for large industrial installations for green heat production from biomass and waste heat recovery. In 2012, the implementation of a minimum share of renewable energy in buildings was also prepared, the Wind Plan Flanders was made concrete and preparations were made to realise in one of the following years a regulation of the certification of training courses for the installers of small-scale renewable energy applications. 6.1.2 European and federal legislation in buildings In Belgium the implementation of the Energy Performance of Buildings Directive falls to regional governments. Various decrees and dates therefore apply as stated below.

 In Wallonia In April 2008, the Walloon government adopted the decree that works out the calculation method, the requirements, the agreements and the penalties applied in terms of energy performances and indoor climate in buildings.

Article 534 came into force in September 2008 and states that all dwellings, office and tertiary buildings to be built must have a total thermal insulation factor K under or equal to 45. N0ew industrial buildings must fulfil a K factor less than or equal to 55.

According to Art.539 as of 1st May 2010, new residential, office and tertiary buildings and education buildings must have a primary energy consumption level Ew equal or below 100. The annual primary energy consumption in residential buildings is set at 170kWh per square metre of the total heated area.

Last but not least as from 1st September 2011 the global energy performance level will have to be under or equal to 80. The consumption of primary energy in residential buildings must be less than 130kWh/m2 per year.

 In Flanders In the Flemish region a series of decrees has been adopted regarding the improvement of building energy performance. A decree on Energy Performance of Buildings (EPB) was approved in December 2006 and cancels the decree of May 2004. The decree that came into force in April 2007 sets the requirements for EPB and the legal framework of the implementation of the energy performance certificate.

In April 2007 the Flemish Minister approved the decree that relates to technologies and innovating processes to improve building energy performance.

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In March 2009 the decrees of December 2006 and March 2005 were modified. The two modifications came into force in July 2009 and strengthen the requirements regarding the levels of performance E and U.

Energy performance regulation is now set in the decrees on energy of 8 May 2009 and of 19 November 2010. The Energy Decree of 8 May 2009 concerns the framework for transposition of the EU Directive and the measures for implementation. The decree on energy of 19 November 2010 works out the calculation method, the requirements in terms of energy performances and indoor climate in buildings, the possible derogations for buildings or works, and the effective date of EPB regulation.

 Brussels area In June 2007 the government of the Brussels Capital region signed off the order describing the energy performance and indoor climate of buildings that transposes the Directive 2002/91/EC into the regional regulation.

In December 2007 the government of Brussels signed off a decree that works out the requirements in terms of energy performance and indoor climate of buildings. The decree came into force in July 2008. It sets the primary energy consumption level E and the thermal insulation factor K respectively up to 70 and 40 in the residential sector and E ≤75 and K≤45 in office, tertiary and education buildings.

The decree of June 2010 sets the requirements to install and run heating systems in buildings. More details can be found on the following link: www.bbri.be/antenne_norm/energie/pdf/EPB_RB_MB20100709_frnl.pdf

Even though regulation varies for each region in Belgium, the requirements will get tighter in the entire territory.

Regulation regarding installation A new quality label was introduced by the Royal Association of Gas Belgian Supplier (ARGB) during Batibouw 2009, the annual fair for the construction industry in Belgium. Known as Cerga, the quality label for gas installers aims at certifying the quality of works carried out by professionals of the sector. It also benefits to installers that can set up new gas connection in the absence of a certified organisation, ask for the ARGB’s expertise, get promoted through marketing campaigns and be informed of the latest norms and standards entered into force.

Moreover, incentives allocated by ARGB for gas radiators are available to Cerga installer only. The introduction of the new label also aims to inform population about the risks of do-it-yourself gas installation and the need for intervention of qualified professionals.

The quality label is available to any company in charge of installations of central heating, air conditioning, gas and sanitary systems according to A.R of 29/1/2007. It is delivered to employees having successfully completed the training course, based on security instructions

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of indoors gas installations. To keep the quality label over the following years, installer must get extra training course once a year to be kept informed of new regulation.

Product substitutes and new technologies As a result of stricter regulation in the energy performance of buildings and the decreasing need in heating load, the sales of large output boilers have slid over the last decade and are expected to follow a similar trend in the future given the strong penetration of technologies able to substitute conventional boilers. This is notably the case of electric heat pumps – air to water units to the largest extent – that are becoming more and more popular in new housing, albeit sold in a limited number. In Wallonia the heat pump market has been supported by the allocation of specific subsidies since 2010, based on the level of performance of the dwelling.

Other renewable technologies are also mentioned as substitution products of standard heating products such as solar thermal systems and micro-cogeneration (micro-CHP) units. The latter can supply both heat and power. However, it is unlikely that the market for these types of products will record a strong growth in the coming years, because of technical obstacles and the installation aspect. The high cost of each system remains another issue, even though Flanders recently announced it would increase the allocated subsidy for solar thermal systems from €200 to €550 per square metre.

As regards solar thermal, combined systems do not cover a household’s demand in space heating and sanitary hot water without any backup. Regarding micro-CHP, the stage of mass- commercialisation has been postponed since products developed by the major players in the heating industry are still in the field-trial. Moreover, in absence of financial incentives from the government it is unlikely to see a sharp penetration rate. The price of a heat and power unit for domestic application is over three times as high as a standard gas condensing boiler.

Environmental issues and regional habits Rising awareness of environmental issues has influenced the market and boosted sales of condensing units even though some argue that financial incentives plays a significant role.

Moreover, influence from neighbouring countries also has an impact on the development of the boiler market, particularly in the Flemish region where the Dutch and German customs have pushed for more energy efficient systems. The proximity with the Netherlands is also said to have an impact on the installation customs. Indeed, heating installers in the north are more used to work with copper whilst in the south, which is closer to Germany, copper is seen as harmful for health and heating installers generally speaking prefer handling stainless steel.

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Table 6 - Feed-in Tariffs (FIT) - Source: EREF Report 2012-2013 Support scheme Feed-in Tariffs, since 2010 direct investment subsidies for SHP Current applicable law § Green Electricity Act of 2002 and following amendments of 2006, 2008, 2009 (BGB1.1 No 149/2002 as amended by BGBI.1 No 104/2009 § Green Electricity Act of 2010 (BGBI II Nr. 42/2010 dated 2.2.2010) Decree of December 30 2011 Particularities Payable for 13 years, biomass for 15 years

Capacity / Amount (GWh/a) / (MW) Hydro 1st GWh the next 4 The next The next >25 GWh GWh 10 GWh 10 GWh Cent/kWh New plant or increase of average annual production of min. 50% 6.25 5.01 4.17 3.94 3.78 by modernisation until 31/12/2007 New plant or increase of average annual production of min. 50% 6.24 5.0 4.16 3.93 3.77 by modernisation until 31/12/2008 New plant or increase of average annual production of min. 50% 6.23 4.99 4.15 3.92 3.76 by modernisation until 31/12/2009 Increase of average annual production of min. 15% by 5.96 4.58 3.81 3.44 3.31 modernisation until 31/12/2007 Increase of average annual production of min. 15% by 5.95 4.57 3.8 3.43 3.3 modernisation until 31/12/2008 Increase of average annual production of min. 15% by 5.94 4.56 3.79 3.42 3.29 modernisation until 31/12/2009

Capacity / Amount (GWh/a) / (MW) Biomass After expiration of mandatory power purchase agreements Up to 500kW to 1MW to 1.5MW 2MW to 5MW to Above Up to 2 to Above Solid 50kW 1MW 1.5MW to 2MW 5MW 10MW 10MW 2MW 10 10MW biomass MW Cent/kWh 14.98 13.54 13.1 12.97 12.26 12.06 10.0 8.5 7.5 7.0 For systems with a bottleneck After expiration of Confermation from waste capacity mandatory power products reduction of 20% purchase Biogas agreements To 250kW More than More Up to Above Landfillgas Sewage Liquid 250 to than 250kW 250kW gas biomass 500kW 500kW Cent/kWh 18.5 16.5 13.0 9.5 8.0 6.0 5.0 5.8

Photovoltaic Capacity / Amount (GWh/a) / (MW) Cent/kWh From 5 kW peak to 20 Over 20kWpeak kW peak Energy from photovoltaic systems which are on a building or a noise barrier 27.6 23.0 Energy from free standing photovoltaic systems 25.0 19.0

Geothermal Cent/kWh 7.5

Wind Cent/kWh 9.5 6.1.3 The end of federal incentives in 2012 The federal tax credit that used to be allocated to homeowners and tenants in all the territory was cut off in 2012. Only support for roof insulation works has been maintained in 2012.

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Actions carried over the fiscal year 2012 (installation of heat pump between January and December 2012) could benefit from 40% tax rebate up to €2,830. 6.1.4 Reduced tax rate The tax rate is lowered from 21% to 6% in the case of renovation works carried out in homes completed five or more years ago. This advantage applies to labour and materials in all three regions. 6.1.5 Wallonia provides most generous support The Walloon government has been the most generous of the three Belgian regions as they offer particular loans, tax rebate and subsidies for renewable technologies notably. A brief summary is listed below. 6.1.6 Zero-percent-interest-rate loan: the EcoPack A new financial incentive has come into force since May 2012 to boost green works in existing housing. It applies to owners of dwellings completed before 1st December 1996. The Social Credit Society (la Société wallonne du crédit social, SWCS) and the Housing Funds for large families in Wallonia (le Fonds du logement des familles nombreuses de Wallonie, FLW) are the two organisations in charge of allocating the 0%-rate named Ecopack. Since 1st May 2012 households living in Wallonia can be granted a special loan to improve the energy performance of their house by undertaking a combination of works that reduce energy consumption. It can cover the insulation of the roof, fitting double-glazing, installing condensing boiler or a heat pump, combined with the installation of thermostatic valves, the insulation of piping systems or the replacement of flooring for instance.

The combination of works in the amount between €2,500 and €30,000 including VAT can be considered for the Ecopack. The conditions of the loan can be found on http://www.flw.be/images/FLW/Ecoprets_Ecopacks/arrete_ecopacks.pdf 6.1.7 Tax rebate on energy saving investments

Energy saving investments carried out in dwellings older than 5 years had been granted a tax rebate by the government of Wallonia up to 28th November 2011. Investments taken into account include the replacement of existing boilers, the installation of solar thermal systems, photovoltaic panels, double glazed windows, geothermal heat pumps, central heating regulation systems as well as roof insulation. From 28th November 2011, roof insulation is only granted a tax rebate.

6.1.8 Green technology support scheme

The allocation of subsidy to install heat pumps in Wallonia is granted under several conditions (full details on the website of the energy portal of Wallonia: http://energie.wallonie.be)

The major amendment from 2011 to 2012 is that all homeowners of new single dwellings and new flats that obtained their building permit after 30th April 2010 can be granted subsidies.

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Incentives are available to companies and independent workers and buildings in the educational sector too.

The type of heat pumps qualified for the scheme remains unchanged from the previous year except that the norm for testing has been reviewed; the new norm NBN EN 16147 applies from 31 July 2011.

For all heat pump types, the bill produced by the installation company – between 1st January 2012 and 31st December 2012 – had to be sent up to 4 months from reception to the Sustainable Building and Energy department of Wallonia.

The allocation of subsides for the installation of combined space heating and hot water heat pumps to new single dwellings implies that the dwelling has obtained the certificate “Building with Energy” between 1st January and 31st December 2012 or has a thermal insulation level K lower than 45.

The certificate named “Building with Energy” (“Construire avec l’énergie” or CALE in French) is a programme that aims at supporting sustainable building. Launched in 2004 the Building with Energy action has rewarded house builders and architects who achieve low-energy projects (insulation level≤ 35, energy consumption ≤120kWh/m2.year…). However, the building regulation having been tightened, the programme came to an end late December 2011. It has been replaced by a new type of incentive in the form of a contest between architects, designers and builders to limit further building’s energy consumption and improve its performance. The best projects – new and renovation - will get a support of €100 per square metre, free technical support and be promoted within the industry.

Reversible heat pumps are still out of the scope of financial incentives. 6.1.9 Low-energy and zero-energy housing tax rebate

Low energy/passive houses in the sense of the European Commission consume 15kWh/m2.year of primary energy for heating and cooling.

Air leakage must not exceed 60% of the dwelling volume per hour (n50≤0.6/h) when tested in accordance with NBN EN 13829.

The tax cut amounts to €850 per dwelling for the 2011 fiscal year.

In zero-energy housing the total amount of energy required for heating and cooling is produced by in-house renewable energy sources. The amount of the rebate is €1,700 per dwelling for the 2011 fiscal year. 6.1.10 Brussels capital aiming to boost green actions

The Brussels government allocated an additional €18m for the 2012 programme of sustainable development. On 19 July 2012 the amount of incentives for a number of works was upgraded to counterbalance the end of the tax rebate scheme previously allocated at federal level. This

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applies to the insulation of walls, double/triple glazing, the installation of efficient heating system (heat pumps and solar thermal) provided that the works were completed after 19 July 2012.

The amount of subsidies varies according to the type of works carried out and household income as detailed below: Table 7 - Subsidies available - Source: bruxellesenvironnement.be Income cap for single person Income cap per couple

Basic income Over €60k Over €75k Average income Between €30k and €60k Between €45k and €750k Low income Below €30k Below €45k

The subsidy amount per heat pump is capped to 50% of the amount billed and up to:

 €4,250 /dwelling for household in the basic income range;  €4,500 /dwelling for household in the average income range;  €4,750 / dwelling for household in the low income range.

Such incentives exist in the non-residential sector alike but the amount is lower. For heat pumps the amount of subsidies is equivalent to 25% of the bill. The material and labour costs for the installation of the heat pump only are taken into consideration for the calculation of the subsidy amount. The heat pump must meet certain technical criteria as described in the table below. Table 8 - Heat pumps performance conditions to be subsidised, Brussels area, 2012 - Source:http://www.bruxellesenvironnement.be/uploadedFiles/Contenu_du_site/Particuliers/01_Gestes/09_Mes_pr imes/Primes_énergie_2012/FR_C4_2012_20111212.pdf?langtype=2060 Heat pump type Outdoor unit temperature (˚C) Indoor unit temperature (˚C) COP minimum

Entry Temperature: 30 3.10 Exit Temperature: 35 Air-water 2 Entry Temperature: 40 2.60 Exit Temperature: 45 Entry Temperature: 30 4.30 Entry Temperature: 0 Exit Temperature: 35 Brine-water Exit Temperature: -3 Entry Temperature: 40 3.50 Exit Temperature: 45 Entry Temperature: 30 5.10 Entry Temperature: 10 Exit Temperature: 35 Water-water Exit Temperature:7 Entry Temperature: 40 4.20 Exit Temperature: 45

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Summary on the effects of HVAC and renewables - Belgium Products Policies and Incentives Map Possible effects

HEATING DH segment is negligible; not part of current District Heating - = policy due to high level of investment and low coverage Positive; non-condensing boilers market trends Directive on Building counteracting negative heat pumps investments Domestic Boilers Energy Efficiency + Tax rebates removals affecting downwards Tax Rebates ended residential boiler sector Directive on Building Commercial Boilers Directive mainly targets new build; Energy Efficiency + Biomass Boilers - = Niche market, no specific policy impact Subsidies tightened Confidence is shaken resulting in the sluggish Heat pump Green Technology – market Support Scheme

Compression Heat

Pumps ●

Sorption/Gas Heat

Pumps ● Absence of financial Small scale CHP Growth is impeded incentives – Absence of financial Marginal effect from alternative renewables Biomass CHP incentives = utilisied due to the cost Electric heating High electricity costs – Segment is suffering Heat recovery - + Growing importance AIR-CONDITIONING Air conditioning - + Growing importance Mechanical ventilation - + Growing importance HOT WATER Solar Thermal Subsidies + Boost in the market from 2012 ELECTRICITY Daylighting systems = No specific impact Reduction in Subsidies negatively affects the PV PV Subsidies Reduction – market INSULATION Wall Insulation Tightened rules + Segment is positively stimulated Loft Insulation Tightened rules + Segment is positively stimulated

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EcoPack

+ Positive Effect – Negative Effect = No Impact

Sources of information . BSRIA Ltd Belgium Country Reports on Energy Services, Heat Pumps, Solar Thermal and Boilers www.bsria.co.uk . Odyssee-MURE Database http://www.odyssee-indicators.org . http://www.bruxellesenvironnement.be . http://energie.wallonie.be . EREF www.eref-europe.org

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7 Bulgaria

After the transition from communism to democracy in 1990, Bulgaris suffered economic decline, not recovering until the 2000s. Bulgaria joined the EU in 2007, although it has not adopted the Euro. Bulgaria suffered in the global financial crisis, although not as heavily as other countries, and the economy has since grown. Per capita GDP, at $6,903 (2012) is still considerably lower than Western European countries, and unemployment remains consistently high at around 10%.

Bulgaria relies on imported oil and natural gas, together with domestic generation of electricity from coal-powered and hydro plants, and one nuclear plant. District heating from thermal power stations provides a significant amount of energy.

National policy and financial incentives Bulgaria has set to achieve 16% target share of renewable energy sources in gross final energy consumption by 2020.

Bulgaria is also actively working towards definition and developments regarding Nearly Zero Energy Buildings. 7.1.1 Energy Efficiency and Renewable Energy Programme A new programme has just been approved in Bulgaria with allocated funds of €13.3m and was developed in collaboration with the Norwegian Water Resources and Energy Administration. The Energy Efficiency Act also introduced the recast of the EPBD (Directive 2010/31/EC). 7.1.2 Energy Efficiency Fund The Energy Efficiency Fund was established under the remit to implement EPBD measures in Bulgaria that allocated €10m to Bulgarian Energetics and Energy Saving Fund. The fund will be used to effectively engage ESCOs in the process of energy efficiency developments.

The main engineering company, Enemona, who fulfilled a lot of contracts across the public sector will be fulfilling the Energy Performance Contracts that could be funded under the EEF on municipal and local level allowing the public sector to cut their energy consumption in half.

The projects will range from installing energy efficient public lighting and introducing combined heat and power generation plants to boiler updates and thermal insulation of walls and windows replacement in the municipal sector.

7.1.3 Operational Programme “Regional Development” 2007-2013 – Credit line The program started in July 2012 and is meant to distribute available EU funds subsidising up to 50% of the renovation project packages in Bulgaria. It was launched under scheme BG161PO001/1.2-01/2011 “Support for energy efficiency in residential buildings”.

The other 50% of the renovation project costs is covered by the owner’s or housing associations.

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In 2012 the amount of total investment under the scheme together with the funds of Corporate Commercial Bank, who also participated in the projects and provided the financial assistance, was around €13.5m while the total investment for residential sector renovation reached €63m (Source: http:/ / www.corpbank.bg/news_421.html).

The subsidy is provided by the Corporate Commercial bank in the form of low-interest loans, thus effectively turning the subsidy into a repayable amount for the homeowners.

The scheme should cover basic operations as a part of the renovation package: insulation improvements, façade works, window replacements, etc. As the majority of the multi-tenant housing sector consists of apartment blocks, the opportunities for heating systems replacements are more limited, as they are mainly heated through District Heating networks. 7.1.4 National programme for housing renovation in Bulgaria 2007-2013 This programme was approved in 2005 and projected that by 2020 nearly 685,000 buildings will be renovated, with 50% of that being panel housing, another 25% - ferroconcrete and another 25% - mass concrete. The subsidy is provided for 20% of the renovation package.

The main activities eligible for financing are:  woodwork replacement  exterior insulation including wall and roof  refurbishment or replacement of local heating source  installations of systems with renewables including solar systems in residential sector  interior heating/cooling/ventilation installation replacements  energy saving lighting and electric installations  automatic buiding management systems  gasification of buildings It is financed under the Regional Development Fund. 7.1.5 National Policy for insulation of buildings in Bulgaria 2006-2020 The policy provides for thermal insulation of public buildings during the period from 2006 to 2020 and it is expected that around 4,000 state and municipal buildings will be able to get provisions under the scheme until its end. It is expected that the policy will save on average around 490,000 MWh/year for municipal and around 120,000 MWh/year for state owned buildings. 7.1.6 Subsidy for renovation of multifamily buildings The subsidy covers the following areas:  Replacement roof waterproofing and drainage repair the roof;  Thermal insulation (wall, roof, floor slab)  Exterior windows replacement  Treatment of the joints of the façade panels;  Replacing the vertical pipes of water supply and sanitation

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7.1.7 Residential Energy Efficiency Credit Line (REECL) The range of the incentives of 20%, 30% and 35% towards the overall cost of the project is linked to the energy efficiency achieved as part of the energy saving renovation or new project and covers the following areas:  Wall, Roof and Floor insulation  Gas Boilers  Biomass Fuelled Room Heaters, Stoves and Boiler Systems  Solar Thermal Systems  Cooling and Heating Heat Pump Systems  Building-Integrated Photovoltaic Systems  Heat-Exchanger Stations and Building Installations  Mechanical Ventilation with Heat Recovery The REECL allows the provision of funds through KIDSF and will be working till mid 2014. Bulgarian home owners tend not to apply for it as the conditions for the loan are not reasonable and/or heavy bureaucratic procedures put off end users for applying. 7.1.8 Bulgaria Energy Efficiency Competitive Industry Financing Facility (BEECIFF) The facility is also provided under the remit of EPBD and opens opportunity to get private lending from the major 6 commercial banks to cover remaining 20% of the projects. The businesses applying under the scheme should ensure that they fully secured the provision for the first part of the investment needed, namely 80% of the investment cost. 7.1.9 Residential Energy Efficienct Credit Line (REECL) The Programme was designed in 2006 to provide personal loans to Bulgarian households through Procredit and Raiffeisen Bank in order to save energy and reduce energy bills by installing new or replacing existing inefficient heating systems. The programme is supported by the European Commission, the European Bank for Reconstruction and Development, and the Bulgarian Energy Efficiency Agency and shows a budget of €40 million.

However, Bulgarian households tend not to utilise this scheme due to bureaucracy in the country. Due to the negative attitude towards taking loans in general and, particularly, towards the conditions offered by REECL programme, it is recommended to assess the opportunities to simplify its procedures, to provide a grant without the requirement to take a loan, and to improve the stimuli for renovation of existing buildings. In addition to REECL, there is a need of other national and local support schemes to be established. 7.1.10 Bulgarian Energy Efficiency and Renewable energy Credit Line (BEERECL) This was established to support industrial energy efficiency and small renewable projects. Until 30th June 2011 loans were provided to private industrial companies in Bulgaria to finance energy efficiency projects. Discussion is currently taking place with potential banks to participate in extended credit line. 7.1.11 Building Tax Exemption The provision for building tax exemption is included in the Local Taxes and Fees Act (last amendment from 6 July 2007). The owners of buildings with the energy certificate category A do not pay the Building Tax: . for 7 years after the year of certificate

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. for 10 years, after the year of certificate if renewables are utilised for production of the energy in the building The owners of buildings with Energy certificates category B do not pay the Building Tax: . for 3 years after the year of certificate . for the duration of 5 years if renewables are utilised for production of the energy in the building 7.1.12 Property Tax exemption This is applicable to buildings with energy certificates (classes A and B) and is both a popular and a well perceived stimulus, but the following should be also taken into consideration:

 This measure does not solve the problem, connected with the lack of initial capital to initiate renovation, so additional financial stimuli need to be provided (low-cost loan and/or grant);

 This stimulus is unfair, because, depending on the location of the building, its property tax may vary several times and therefore the stimulus for identical buildings and identical renovation activities (and respectively energy savings) may be quite different. A solution to this problem may be to set a fixed amount of tax exemption (e.g. €10/m²) and no property tax to be paid for several years until this amount is reached.

 The renovation results in increased taxable value of the property. This increases not only the property tax, which is to be paid after the tax exemption period, but also the waste disposal charge, as the latter is also calculated as a percentage of the taxable value. In long term, this removes a part of the stimulus (tax exemption) and contradicts to the Government’s desire to support improvement of the energy performance of buildings. Therefore, it is recommended that the renovation does not result in increased taxable value of the property.

7.1.13 Kozloduy International Decommissioning Support Fund (KIDSF) The fund was initially established in June 2001. The KIDSF is currently in a position to consider new projects for grant funding to support off-site decommissioning infrastructure works and promote new end-consumer efficiency measures in the residential and other sectors. The fund was initially set up to decommission the Units 1 - 4 of the Kozloduy (NPP). However, later on the fund was also alocated to help out with non-nuclear projects and the proposals were submitted in 2011-2012 for these projects. Till now the International Fund Kozloduy approved grant agreements worth 811.268 million euro of which 390.638 million for the "non- nuclear" window and 420.630 million for the "nuclear". Some of the examples of the projects included new excavators for the largest coal mining company, energy management system for electricity system operator and additional support for the energy efficient measures in public and municipal sector. 7.1.14 Partnership with Norwegian Water Resources and Energy Administration (NWREA) A new scheme has been recently been announced in Bulgaria in 2013 that will be implemented in partnership with NWREA and received an allocation of €13.3m for 2013. Source: http://eeagrants.org/News/2013/New-programme-approvals-in-2013

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7.1.15 Feed-In Tariffs (FITs) On 29th June 2012 the new Feed-In Tariffs were announced in Bulgaria effective for the period from 2012 till July 2013. The Feed-In Tarifs are regulated by the Bulgarian State Regulatory Energy and Water Commission www.dker.bg

The new feed-in tariff is calculated by the Regulator on the basis of a set of criteria including 2 % inflation forecast for correction of the operation costs for the term of the power purchase agreement of projects, commissioned after 1 July 2012 and 7 % target rate of return for such projects.

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Table 9 - FITs in Bulgaria

Renewable energy source Feed-in tariff after the Feed-in tariff prior to the update update per MWh (net VAT) per MWh (net VAT) Solar power plants (on the BGN 237.05 ground) with capacity from (approx. €121.20) BGN 485.60 200 kW to 10 MW (approx. €248.28) Solar power plants (on the BGN 236.26 ground) with capacity (approx. €120.79) exceeding 10 MW Wind power plants with up BGN 148.71 BGN 191 to 2,250 hours of operation (approx. €76.03) (approx. €97.66) Wind power plants with BGN 132.71 BGN 173.06 more than 2,250 hours of (approx. €67.85) (approx. €88.48) operation Biomass plants, producing BGN 234.09 BGN 253.03 energy from indirect use of (approx. €119.69) (approx. €129.37) energy from household waste from 150 kW to 500 kW Biomass plants, producing BGN 226.14 BGN 243.86 energy from indirect use of (approx. €115.62) (approx. €124.68) energy from household waste from 500 kW to 5 MW

The imbalance of connections of plants using renewable sources to the grid, caused the Regulator to reconsider the levels of allowances and set them at “zero” level for 2012-2013, as the capacity has been already exceeded. It does not concern small-scale projects, such as rooftop solar up to 200kW or biogas up to 1.5MW.

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Summary on the effects of HVAC and renewables - Bulgaria Products Policies and Incentives Map Possible effects

HEATING Direction for market contraction towards individual boilers due to high inefficiency and District Heating No schemes in place – expense of current district heating systems Current DH is mainly in the capital Individual boiler’s installations following possible Domestic Boilers REECL + disconnections from DH network Rural segment growth as well Commercial Boilers REECL + Positive impact REECL Biomass Boilers + Rural segment FITs Effect is still marginal due to high cost of the Heat pump REECL + systems

Compression Heat

Pumps ●

Sorption/Gas Heat

Pumps ● REECL Small scale CHP FITs + Positive Impact EEF REECL Biomass CHP FITs + Positive Impact EEF Electric heating High electricity prices – Less favourable segment REECL Heat recovery + Positive Impact nZEB AIR-CONDITIONING Air conditioning + Growth due to climatic conditions Mechanical ventilation REECL + Positive impact HOT WATER FITs Solar Thermal Regulator caps + Small systems <200kW might grow

ELECTRICITY Daylighting systems - ● No direct policy impact

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Retroactive grid access payments (1%-39%) PV 20% tax on turnover of – Hinder the segment PV plants introduced from 2014* INSULATION REECL National Policy for Promoted through renovation grants especially in Wall Insulation Insulation + multi-tenant buildings EEF

REECL Promoted through renovation grants especially in National Policy for multi-tenant buildings Loft Insulation + Insulation Roof insulation is more preferable as can achieve EEF higher savings + Positive Effect – Negative Effect ● No Impact *Source: EPIA, Bulgaria

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Sources of information . Odyssee-MURE Database http://www.odyssee-indicators.org/publications/ . Bulgarian Photovoltaic Association http://www.bpva.org/ . Residential Energy Efficiency Credit Facility (REECL) http://www.reecl.org/indexen.php . Sustainable Energy Development Agency (SEDA) http://www.seea.government.bg/ . National Policy for renovation and insulation http://www.mee.government.bg/ind/doc_inov/STRATEGIA-IZOLACIA.doc . Feed-In Tariffs http://www.dker.bg/ . Housing Renovation http://www.obnovendom.com/?cat=10 . http://eeagrants.org/News/2013/New-programme-approvals-in-2013 . EEA, Energy Efficiency Measures and Policies in Bulgaria, 2009 . KIDSF http://www.mi.government.bg/en/themes/kozloduy-international-decommissioning- support-fund-kidsf-905-348.html . http://www.pv-magazine.com/news/details/beitrag/eu-solar-industry-calls-for-action- against-retroactive-subsidy-changes_100009663/#axzz2bkKYgSs4* . http://www.mrrb.government.bg/en/?controller=category&catid=5

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8 Cyprus

Cyprus joined the EU in 2004 and the Eurozone in 2008. Although the global financial crisis did not have as large an immediate effect on Cyprus as other countries, the Cypriot financial crisis on 2012-2013 led to further decline. In 2008, approximately 97% of Cyprus’s primary energy use was imported.

National policy and financial incentives 8.1.1 National policy In line with the Directive 2009/28/EC Cyprus adopted a plan to reach 13% share of renewables in the overall by 2020. Cyprus has got very high solar potential and the targeted share could be reached by further developments of solar thermal plants in the country to produce electricity. Main Directives in the area of energy Efficiency are Energy Saving Directive 2006/32/EC and Buildings Directive 2010/31/EU and 2002/91/EC regulating the energy performance of buildings. 8.1.2 2nd National Efficiency Action Plan for Cyprus – 2011

The Plan was presented for adoption on 19th July 2013 and also foresees measures to tackle inefficient insulation in Cyprus that was not properly regulated in Building requirements and has huge potential for energy savings, allowing to achieve nearly 50% energy cut after improved insulation installations. It also sets requirements for compulsory maintenance and inspections of boilers, air-conditioning systems with output greater than 12kW and outlines requirements for buildings undergoing renovation and covers both residential and non- residential sector provisions. 8.1.3 Grand Schemes for Energy Efficiency and Renewable Energy Sources 2011-2020 The Plan aims to provide financial incentives in the form of government subsidy for investment in the production of electricity by utilizing wind, solar, biomass and biogas, which is released from landfill waste. The plan covers investments for the purchase and installation of new equipment and materials. All investments must be made by purchase and installation of new equipment and materials and involve mature technologies rather than technologies currently under research and development. A subsidy will be granted in the form of public aid on the kWh generated which will be channelled to the transmission / distribution grid restrictions mentioned in the Important Notices. The form of all public aid granted by the Scheme itself is environmental.

8.1.4 Feed-In Tariffs Feed in tariffs are guaranteed when electricity is sold to the national grid. The tariffs presently are €0.28/kWh for household PV up to 7 KWe, €0.25/kWh for PV installed on buildings or in agricultural land plots up to 20 KWe, and €0.25/kWh for PV installations on agricultural land

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up to 150 KWe. For larger systems of the order of 1.5-10 MWe a bidding procedure is followed. The main criterion is the lowest feed in tariff offered from bidders.

Autonomous (not grid connected) PV systems up to 7 KWe receive a 55% grant for the investment up to €33,000. Systems up to 20 KWe receive 40% of the investment cost up to €24,000. These systems are used for water pumping or isolated buildings. The electricity produced is, by law, fed into the national grid and purchased by the national utility company at subsidised prices. The cost for the grid connection of the PV system is shared between the producer (50%) and the utility company (50%). Authorisation procedures and permits from the energy regulators are issued easily and quickly for PV plants.

Particularly for existing houses the scheme provides grants of up to €2000 for the thermal insulation of walls, roofs, double glazing. Thermal insulation has a high energy conservation impact. Considering that a roof without insulation has a thermal value of U=3 and after the insulation this drops to U=0.5, overall energy savings of 30% are estimated.

Feed-in tariffs and subsidies are implemented by law N33(1)/2003 of 18th April 2003, on the promotion of the use of RES and Energy Conservation investments, as amended. Feed in tariffs are valid for 20 years.

Wind power receives a feed-in tariff of €0.166/kWh, with a reduction of €0.005/kWh every 4 years. .

Energy from landfill biogas receives a feed-in tariff of €0.1145/kWh.

Photovoltaics receive a feed-in tariff of €0.36/kWh for systems up to 20 kW, and €0.34/kWh for systems from 21 to 150 kW.

Concentrating solar collectors receive a subsidy of €0.16/kWh.

Source: EREF 2011-2012 Report 8.1.5 Scheme for subsidising CFL lamps The scheme allows the free distribution of fluorescent lamps.

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Summary on the effects of HVAC and renewables - Cyprus Products Policies and Incentives Map Possible effects

HEATING District Heating - = Negligible presence Domestic Boilers Boilers inspection/NEAP + Driving replacements Commercial Boilers Boilers inspection/NEAP + Driving replacements Biomass Boilers + More widespread in the mountain regions

National Action Plan Encouraging the market, especially ground Heat pump + Energy geothermal heat pumps Compression Heat

Pumps ● Sorption/Gas Heat

Pumps ● Small scale CHP FITs + Growth

Feed-In Tariff Not enough to considerably push the market, Biomass CHP = FITs effect is minor Electric heating High energy prices – Negative, preference for other sources Heat recovery - + Growing importance AIR-CONDITIONING Maintenance and Air conditioning Especially for systems >12kW inspection + Mechanical ventilation - + Growing importance HOT WATER

“Technical Guide of High potential for solar Solar Systems” – Solar Thermal installations are + The market shift continues with the effect on new mandatory from 1st built and retrofit market, but is already quite January 2010 saturated with 91.6 % using solar water heaters ELECTRICITY Daylighting systems CFL Lamps Subsidy + Fluorescent lamps segment Building energy High potential for solar PV performance regulations + Retrofit market is more stimulated Feed-In Tariffs INSULATION

Grants Segment is supported, as insulation was not Wall Insulation + regulated and was inefficient, high energy Directive/NEAAP savings could be achieved

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Grants Segment is supported, as insulation was not Loft Insulation + regulated and was inefficient, high energy Directive/NEAAP savings could be achieved

+ Positive Effect – Negative Effect = No Impact

Sources of information . EREF www.eref-europe.org . Odyssee-MURE Database http://www.odyssee-indicators.org/publications/ . Grand Scheme for Energy Efficiency and Renewable Energy Sources http://www.cie.org.cy . Ecofys

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9 Czech Republic

The Czech Republic was formed in 1993 when Czechoslovakia split, and joined the European Union in 2004. It is one of the most stable and prosperous of the post-Communist states.

During the period 1945 to 1960, standardised building types were developed. The most common wall was solid masonry brick wall with a thickness of 450mm. Reports suggest approximately one third of the population live in large panel buildings.

Power stations in the Czech Republic traditionally relied on domestically-mined lignite (brown coal) however this has very high CO2 emissions and is thus being phased out in favour of nuclear power and natural gas. Natural gas is mostly imported from and , although there is some domestic production.

National policy

Czech Republic Government energy policy was updated on the 8th of November, 2012, however, there has not been any dramatic changes in relation to the previous policy. Grants are offered by the Czech government through the Green Savings Program for the insulation of houses and apartment non-panel buildings, for passive house buildings, for the replacement of environmentally unfriendly heating or new installation using RES (such as low-emission biomass fired sources, efficient heat pumps and solar thermal collectors) for heating and Sanitary Hot Water. These are provided to residential buildings (one-family houses, apartment buildings, multi-dwellings), and also to businesses and municipalities.

The main funding is provided under the NEEAP or Operational Investment Environment Policy with the funds allocated from the EU and sale of Assigned Amount Units (AAU) under the Kyoto Protocol.

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Figure 2 – Czech republic – National legislation overview – Source BSRIA

9.1.1 National Energy Efficiency Action Plan (NEEAP) and State Energy Policy – 2012 Update NEEAP outlines the goal to reach 9% energy saving by 2016 and transpires the country goals through the State Energy Policy.

The original 2004 Czech State Energy Policy was updated on 8 November, 2012. The main areas and priorities of the policy are:  Removing the dependency on imported energy sources and reach for the goal of 80% domestic sources of energy by 2040  Nuclear energy is given a preferential role with the planned completion of the third and fourth units of Temelin plant and fifth unit of Dukovany nuclear power station  Focus on the mix of different energy sources by 2040 , stating 18-25% for the renewable sources of energy for electricity, 50-60% from nuclear, 15-25% from coal sources and the remaining 5% from gas. At the same time, the policy highlights that coal sources will be mainly utilised for CHP.  The government envisages that renewable energy sources will become fully economically independent and state support will be gradually withdrawn

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 Smart energy networks are expected to be built to strengthen the distribution of electricity; off-grid systems will be also supported to manage any possible peaks of demand in the grid or any unforeseen circumstances  In the area of buildings, passive energy building houses are given priority and are foreseen to become the new construction type of buildings after 2020 9.1.2 EPBD and Energy Management Act - 2012 The Ministry of Industry and Trade of the Czech Republic is overseeing the implementation of the EPBD in the country.

The Energy Management Act 406/2000 considered the recent recast of EPBD and strived to harmonise the requirements with the overall objectives. The changes introduced by the Act are effective as of January 2013.

The main amendments require new buildings to reach relatively low energy consumption and impose the energy certificates for all buildings to be presented at the sale or lease of the property. The Act also stated that the amendments apply to renovation and reconstruction projects and stipulates the update of the EPC after the renovation is ended.

The Energy Act also imposed the requirement for remote control in PV systems, scoping the range from 100kW to 2MW of power from June 2013. 9.1.3 Energy Performance Certificates Issuing of energy performance certificates in the Czech Republic has been in place since 2001, making energy audits compulsory for all buildings consuming more than 1,500 GJ yearly. The certificate represents visually the characteristics of the main parts of the building.

Financial incentives 9.2.1 EFEKT2013 The Czech Government introduced an energy efficiency programme that comes in effect in 2013 pursuant to Act No. 406/2000 Coll. It is run by the Ministry of Industry and Trade. The Budget allocated for the implementation of the programme is roughly €1.2m, while the program itself is mainly directed at smaller and medium sized companies and local councils. It supports small investment projects focussed on achieving energy savings and provides for financing in Prague. The programme promotes CHP plants running on landfill gas or municipal waste gas. 9.2.2 Nova Zelena Usporam 2013 (Green Savings Programme) The government of Czech Republic has announced the new green investment scheme for the projects commencing from January 2013.

The budget allocated within the programmes is around €55m. The source of the funds is coming from the trade of CO2 emissions and is dependent on the results of the auctions. Both private householders and the public service institutions are allowed to apply within the scheme.

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The current provisions allow a funding increase of 5% available to the public sector compared to its previous version, bringing the overall split to 70% / 30% - private vs. public.

The scheme provides financial support for: . thermal insulation . new passive houses . renewables for heating and hot water production, including biomass boilers, solar panels and solar thermal

The government foresees that the majority of the funding will be going into insulation projects of family homes. The programme is also ensuring support for heating installations utilising renewable technologies in both retrofit and new built markets.

The subsidy is exclusively provided for residential sector installations, covering both multi- family dwelling houses and individual homes.

The programme is eligible for projects starting in August 2013 and will be running until 31st December 2013. It covers the following areas: 1. Public Sector energy savings in buildings 2. Energy efficient heating: complex insulation and partial thermal insulation 3. Passive Energy Standard 4. Renewables: heating and hot water  Replacement of environment unfriendly heating for low-emission biomass-fired sources and efficient heat pumps  Installation of low-emission biomass-fired sources and efficient heat pumps in new buildings  Installation of solar-thermal collectors 5. Subsidy bonus allocated at maximum of one per building 9.2.3 “Nový Panel” Programme The main aim of this programme is to modernise panel housing, according to standardised maximum energy consumption ratios, i.e. max 83-120 KWh/m2 for housing constructed after 1990 and max 150-250 KWh/m2 for housing that was constructed in the period from 1945 to 1990. In terms of the number of the flats, it comes nearly to 1.2 million, with 25% of these having been already renovated.

On average the programme aims to achieve nearly 22% decrease in energy consumption in simple projects and up to 64% decrease following very complex renovation and modernisation of flats.

The program is provided through the availability of loan facility of the sum up to €12,000 per flat either to housing cooperatives or communities of housing owners. At the same time they also receive interest bonification from CMZRB (development bank, administrating the “Nový Panel” Programme).

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9.2.4 Loan for construction of rental housing Although the programme is mainly directed at the construction of new housing, it also allows for extension on the projects requiring renovation of existing building stock that was not originally designed for living or not eligible for housing flats. The implementation of the programme started in August 2012 with the allocated fund under the amended Government Regulation No. 284/2011 Col.

It sets more favourable and affordable conditions for investors to ensure the availability of smaller apartments from 25m2 to 90 m2 and can be paid on loan. The loan is available to both physical and legal entities including municipalities and, as mentioned above, also covers refurbishment of commercial premises into residential buildings, extensions, etc.

Depending on the target group giving rise to the rental, the interest for the loan will be calculated. The program is directed at both socially vulnerable groups (people with disabilities, over 70, etc.) and any individual wishing to rent a property. The loan will be covering 70% of the total cash cost investment and can be provided over the period of 30 years with the fixed interest rate. 9.2.5 Feed-in Tariffs (FIT) In September 2013, lower Czech government passed the Bill that ended feed-in-tariffs for all types of renewable energies and extended the levy tax on solar plants with the allocated payment of 10% levy. In November 2013. The Energy Regulatory Office approved and published decree no. 4/2013 setting out feed-in-tariffs effective from 1 January 2014. The majority of new commencing renewable energies will no longer be supported from January 2014, including small roof’s solar panels. 9.2.6 Other Considerations 9.2.7 Solar Tax The tax was initially introduced in December 2010 as a reaction to the fall in prices of PV systems and was further extended in 2013 through 2014. However, the extension of the tax carried some good news and will result in 16% reduction of the tax, bringing it to the level of 10% from the start of 2014 for feed-in-tariffs and from 28% to 11% for green bonuses. It was applied as a retrospective tax, and, in spite of the numerous complaints about the nature of it, it was considered to stay in place by Czech Constitutional Court. 9.2.8 Carbon Tax The proposed carbon tax effective from 2014 will make heating with coal, as well as natural gas substantially expensive. It will further indirectly promote the utilisation of biomass and other renewable energy sources available. 9.2.9 VAT Tax Changes VAT for residential construction rose in 2012, from 10% to 14% and further hike was scheduled to come in 2013, from 14% to 15%, at the time of preparation of the report. The lower VAT bracket of 14% applies to residential end users provided that the system is supplied including installation. Otherwise the VAT rate is 20%, if the system is purchased without installation or for non-residential installations.

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As a result, purchase power would be undermined as the planned VAT hike also hits food, transportation, books, pharmaceutical products, etc.

There is a potential for upgrade of around 400,000 – 450,000 heating systems in households that currently heat with low-quality coal or logwood in universal manual fed boiler. These are expected to gradually switch to biomass boilers or automatic coal boilers in the coming years, given the new Law on air quality (passed by the Parliament in May 2012). No solid fuel boilers of below Class 3 should be allowed on the market from 2014.

In accordance with CSN EN 303-5 the CO limits are assigned to the different classes of boilers: Table 10 – boiler emmissions classification CO emissions 1 Class 25,000 mg/m3 – excessive smoking – classic boilers 2 Class 8,000 mg/m3 3 Class 5,000 mg/m3 – gasifying boilers – smoke not visible

In new family houses, the use of air-to-water heat pumps for heating has been growing dynamically. The market has seen substantial increases recently due to subsidies. However it seems that in new low-energy housing, heat pumps will be a popular choice even without subsidies. Around 6,100 heat pumps were sold in the country in 2011, out of which 3,600 were air-to-water units.

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Summary on the effects of HVAC and renewables – Czech Republic Products Policies and Incentives Map Possible effects

HEATING No additional tax District Heating incentives for District – Discouraged projects expansion Heating Solid fuel boilers market will be in decline in the expectation of availability of subsidies Domestic Boilers Carbon Tax + Gas boilers market is driven by replacements and renovations Solid fuel boilers market will be in decline in the expectation of availability of subsidies Commercial Boilers Carbon Tax – Gas boilers market is driven by replacements and renovations Phasing out of subsidies Biomass Boilers Nova Zelena Usporam – Negatively affected, but could be offset by NZU (NZU) Especially air-to-water heat pumps will be in Heat pump Subsidies + growing demand; phasing out of subsidies might affect that segment only slightly Compression Heat

Pumps ● Sorption/Gas Heat

Pumps ● Small scale CHP Subsidies + Supported sector EFEKT2013 Biomass CHP + Supported Sector Carbon Tax Electric heating - – Less attractive option in the market Heat recovery - + Growing importance AIR-CONDITIONING Air conditioning - = No specific impact Mechanical ventilation - + Growing importance HOT WATER Solar Thermal Nova Zelena Usporam + Growth in the sector ELECTRICITY Daylighting systems - = No specific impact Subsidies will be withdrawn at the end of Negative effect, market will be struggling to PV 2013 – sustain growth on its own Solar Tax

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INSULATION Wall Insulation Nova Zelena Usporam + Growth in the insulation as subsidies materialise Loft Insulation Nova Zelena Usporam + Growth in the insulation as subsidies materialise

+ Positive Effect – Negative Effect = No Impact

Sources of information . BSRIA Ltd Czech Republic Country Reports on Energy Services, Heat Pumps, Solar Thermal and Boilers www.bsria.co.uk . Ministry of Industry and Trade (EFEKT programme and energy auditors programme) - www.mpo.cz . Energy Regulatory Office - administrative authority for energy sector regulation, responsible for heat price control (in district heating systems) and price control of distribution and transmission fees of electricity and gas networks, see the law 458/2000 Coll. - www.eru.cz . State Energy Inspection is enforcing provisions under the Energy Act, Energy Management Act as well as accompanying decrees, as well as checking contents of energy audits to be compliant with decree 213/2001 Coll. - www.cr-sei.cz . Agency Czechinvest (Eco-ENERGY) - www.czechinvest.org . Ministry for Environment (Green Light for Savings Programme) - www.env.cz, www.sfzp.cz . Ministry of Regional Development - www.strukturalni-fondy.cz/en . Centre for Energy Efficiency - www.managenergy.net/ . New Green Investment Programme - www.nova-zelenausporam.cz . Operational Programme Environment Grants www.opzp.cz/soubor-ke-stazeni/16/4931- opzp_obecny_aj_16_02_2009.pdf . Odyssee-MURE Database http://www.odyssee-indicators.org/publications/PDF . Ministry of Environment http://www.mzp.cz/en/ . State Housing Development Fund www.sfrb.cz/programy/uvery-na-opravy-a- modernizace-domu/ . Ministry of Industry and Trade http://www.mpo.cz/default_en.html . Czech Photovoltaic Industry Association http://www.czepho.cz/index.php

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10 Denmark

Denmark has considerable oil and natural gas reserves, and is a net exported of energy. It also has highly developed wind energy industry, providing 30% of the country’s electricity needs. Denmark has set a target of reaching 35% share of renewable energy sources in the overall mix of energy by 2020 and committing to 50% of electricity to be supplied by wind power. Denmark has also decided to completely remove its dependency on fossil fuels by 2050.

National policy and financial incentives 10.1.1 Renewable Energy Directive The Renewable Energy Directive was adopted in 2010 and established the goal to reach 30% of renewable sources in the overall energy mix, including 39.8% for heating and cooling and 51.9% for renewable share for electricity production. The Directive outlined the funds for the scrappage of oil-fired boilers and provision of subsidies for: • Geothermal heating (liquid/water heat pumps) • Air/water heat pumps • Connection to the district heating system (i.e. partial renewable energy) • Solar heating (can be combined with a new boiler 10.1.2 Danish Energy Agreement - 2012 The Danish Energy Agreement was introduced on 22nd March 2012 and set the route for the Danish government to achieve strategic objectives in energy efficiency and upgrades of the existing building stock. It will be around assessing the current building stock and identifying the most cost-effective measures to improve the energy efficiency.

The shift from coal to biomass at large-scale power plants will be made more attractive with an amendment to the Heating Supply Act.

The following areas are forming part of the agreement:  Allocation of DKK 250m (approx. €33m) in 2013 and then increasing it to the annual level of 500DKK for the period 2014-2020. The measure is directed at promoting efficient renewable energy across enterprise sector  Allocation of DKK 30m (approx. €4m) per year from 2013 to 2020 to CHP in the industrial sector  A total of DKK 35m (approx. €5m) has been allocated to the promotion of renewable technologies in district heating, and especially, using geothermal energy and large heat pumps.  Existing funding for the use of biogas for CHP will be increased.  Alternative uses of biogas, i.e. in the natural-gas grid, in industrial processes or in the transport sector, will be made more financially attractive with a series of new funding schemes.

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 An overall strategy will be prepared for the establishment of smart electricity grids in Denmark  More renewable energy in buildings  A ban from 2013 on installation of oil and natural gas heating installations in new buildings.  From 2016, it will no longer be possible to install oil-fired installations in existing buildings in areas where district heating or natural gas are alternatives.  For the period 2012-2015, an annual pool of DKK 42 million has been set aside to support the conversion from oil and natural-gas installations to renewable energy in existing buildings. The main accent in the agreement falls on the growing importance of the wind power and further expansion of wind power to enhance the capacity with 2,000 MW of wind power by 2020. It will allow to achieve 50% share of the energy mix coming from wind sources. The Agreement also suggests investments into biomass and biogas. 10.1.3 EPBD and Nearly Zero Energy Buildings in Denmark The EPBD is getting implemented in Denmark through changes in certification, the nZEB buildings scheme, new Building regulations , as well as a strategy for new buildings and the existing buildings stock. Energy Performance Certificates (EPC) assign an energy rating to existing buildings and provide for improvements in energy performance. The implementation of the EPC lies with the Danish Energy Agency. The overall EPC schemed was already substantially changed back in 2011 and prolonged the life of the issued certificates from 5 to 7-10 years, as well as removed the requirements for onsite visits for buildings less than 25 years old. It also allows for the imposition of a fine if the owner of the building does not have or is not displaying the EPC.

Denmark is also in the forefront of many other EU countries in terms of application and implementation of the NZEB and is one of the 2 countries that clearly defined the application and implementation route for nearly-zero energy buildings.

Developments in the area of the Nearly Zero Energy Buildings in Denmark are given a clear roadmap until 2020 with the view of gradual increased requirements in building regulations through 2015 and up to 2020. The requirements differ for residential and non-residential sectors with a separate area for lighting to be included in the non-residential sector. The main areas of improvements and reaching the energy efficiency will be through insulation and expectation of utilising onsite sources of energy in addition to the general positive steps taken in electricity and district heating systems. However, the questions of economic feasibility to implement all the measures towards achieving NZEB requirements remains in place for the moment.

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Table 11 - Overview of NZEB Requirements to Buildings in Denmark to 2020 - Source: REHVA

Characteristic Energy frame Energy frame Energy frame values 2010 2015 2020 Maximum of Residential buildings (houses, hotels, 52.5 30 +1000/A in 20 kWh/m2a delivered energy to etc) +1650/A* kWh/m2a in kWh/m2a Non residential buildings (offices, 71.3 +1650/A 41 +1000/A in 25 kWh/m2a schools, institutions and other in kWh/m2a kWh/m2a buildings) *Heated gross floor area There are also additional requirements for thermal losses and U-values for windows, pipe insulation, low temperature heating, automatic controls and minimum requirements for boiler efficiency. 10.1.4 Building Regulations 2010 (Bygningsreglement 2010) The building regulations introduced in 2010 tightened the requirements for new and existing buildings for all building types and also the rules for renovations. The regulations provided new requirements to the building insulation. The installation of new systems as part of the renovation process has to meet the requirements of the regulation irrerspective of the financial investment and payback involved. 10.1.5 Heat Supply Act The Heat Supply Act was first introduced in Denmark back in 1979 and was extensively revised in 1990, 2000 and 2005. It banned electric heating from being installed in areas with district heating available. CHP is integrated within the Heat Suply Act and it ensured that Denmark has the most extensive district heating and electricity cogeneration network utilising all energy power sources available and promoting the use of CHP. 10.1.6 District Heating Subsidies The Danish market is nearly completely saturated in terms of district heating with most of installations already carried out. At the moment there are no subsidies available for any district heating projects, however there is an expectation that district heating should have higher level of importance by 2020.

At the same time, the use of biomass has been promoted in district heating plants through exemption from energy tax, as CHP has better priority over single heating, thus leading to preference of gas-fired CHP over biomass heat production. 10.1.7 Feed-In Tariffs (FITs) The Energy generated by way of Wind turbines is given priority in terms of the feed-in tariffs implemented in Denmark. The list with the FITs tariffs for Denmark is presented in the table below:

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Table 12 – FITs tariffs for Denmark - Source: EREF Support scheme Feed-in Tariffs, i.e. premiums + market price for electricity Net metering Current applicable law Renewable Energy Law dated December 27 2008; Act on Energy Supply 2003 (as amended) BEK 804/2010, entered into force 1 July 2010, last amended 15 December 2010 Particularities *Exchange rate 1DKK = 0.1343 € *The following systems are exempt from the PSO tariff Solar energy systems up to 50kW Wind energy plants up to 25kW Other technologies up to 11kW (§ 4 par. 2 BEK 804/2010) The following systems are exempt from the PSO for the support of renewable energy: Solar energy systems > 50kW Wind energy plants > 25kW Other technologies >11kW (§ 3 par. 2 BEK 804/2010)

Capacity / Amount (GWh/a) / (MW) Cent/kWh Existing plants: (for 20 years from the date of the grid connection and for at 8.045 least 15 years as from 1/01/2004) Hydro For 10 years 8.045 New plants For the following 10 years 5.336

Premium price for 22,000 full load hours 3.36 Turbines connected to the grid after Additional allowance in the entire lifetime of the 0.31 February 2008* turbine to compensate for the cost of balancing Wind Private wind turbines below 25kW 8.06

Turbines connected to the grid from Premium for 20 years 1.341 January 2005 Allowance for offset costs etc 0.308

Connection to the grid after February 2008 2.01 For the following 10 years 5.363 Biomass Biomass Connection to the grid before 21/04/2004 for 20 years from date of grid connection and for at least 8.044 15 years as from 1/01/2004

Connection to the grid after February For 10 years 8.06 2008 For the following 10 years 5.37 For 10 years 8.044 Photovoltaic Connection to the grid between 21/04/2004 and February 2008* For the following 10 years 5.363 Connection to the grid before For 20 years from date of grid connection and for at 8.044 21/04/2004 least 15 years as from 1/01/2004

Wave Wave power (and other special renewable technologies)

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Connection to the grid after February For 10 years 8.06 2008* For the following 10 years 5.37

Connection to the grid between For 10 years 8.044 21/04/2004 and February 2008 For the following 10 years 5.363 Connection to the grid before For 20 years from date of grid connection and for at 8.044 21/04/2004 least 15 years as from 1/01/2004

10.1.8 Net Metering Net Metering provides PV customers with opportunity to have a zero charge against their electricity consumption if it is offset by the PV generation; in case they produce and export to the grid more energy than they consume, they will receive the relevant remuneration or, alternatively, will be charged for the excess consumption, if it exceeds the level of PV generation.

Denmark underestimated the potential for PV installations in the country and the installations by the end of 2011 were 20 times more than in the beginning of the year. In the fall of 2012, the government needed to suspend the net metering scheme due to the rapidly falling electricity taxes inflow. In November 2012 the scheme underwent some major changes:  The time window is set to 1 hour (in comparison to 1 year previously).  Electricity sold back to the grid will have a tariff of 1.30 DKK/kWh (approx. €0.17/kWh) for 2013 with gradual reduction reaching 0.60 DKK/kWh (approx. €0.08/kWh) by 2018  Systems registered before 2012 will have the right to stay on the old net metering scheme for 15 years, after which the tariff will be in line with the lowest limit set at the moment at 0.60 DKK/kWh (approx. €0.08/kWh).  If the system was registered before 20 November 2012, the time for the system to stay will be only 10 years and then reduced to the limit mentioned above  The net-metering scheme is open to anyone including the commercial sector; but there are limits for large-scale systems and further caps can be in place to allow participation in the new scheme

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Summary on the effects of HVAC and renewables - Denmark Products Policies and Incentives Map Possible effects

HEATING Market is saturated and will be largely unaffected, District Heating No Subsidies = preference of CHP over biomass for DH projects Oil and gas-fired boilers and natural gas heating Domestic Boilers Energy Agreement 2012 – market negatively affected Oil and gas-fired boilers and natural gas heating Commercial Boilers Energy Agreement 2012 – market negatively affected Biomass Boilers +

Heating Supply Act Promotion of geothermal energy and large-scale heat pumps, but the uptake is predicted to be Heat pump Energy Efficiency + cautious due to geographic conditions and Directive limitations for geothermal Compression Heat

Pumps ● Sorption/Gas Heat

Pumps ● Energy Agreement Small scale CHP + Market potential

Energy Agreement Preferred over pure biomass; positive market for Biomass CHP + large scale CHP power plants Energy Agreement Electric heating – Less encouraged in Denmark Heat Supply Act Heat recovery + Growing importance AIR-CONDITIONING Air conditioning = No specific impact Mechanical ventilation + Growing importance HOT WATER

Solar Thermal + Growing importance

ELECTRICITY Gradual market increase could be foreseen Daylighting systems NZEB/EPBD + especially in non-residential sector While new scheme is undergoing approval, the PV FITs, Net Metering – market is on hold and is severely affected after boom in 2012 INSULATION As requirements increase to buildings up to 2020, Wall Insulation NZEB/EPBD + the segment will see the positive effect

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As requirements increase to buildings up to 2020, Loft Insulation NZEB/EPBD + the segment will see the positive effect

+ Positive Effect – Negative Effect = No Impact

Sources of information . Odyssee-MURE Database http://www.odyssee-indicators.org . Danish Energy Agency www.ens.dk . Danish Energy Association http://www.danishenergyassociation.com/ . Danish Ministry of Climate, Energy and Building http://www.kebmin.dk/ . Danish Ministry of the Environment http://www.mim.dk/eng/ . NZEB in Denmark http://www.rehva.eu/index.php?id=173 . Danish National Reform Programme – 2013 http://ec.europa.eu/europe2020/pdf/nd/nrp2013_denmark_en.pdf

11 Estonia

Estonia became independent in 1991 and joined the EU in 2004 along with 9 other countries. It adopted the Euro in 2011.

The bulk of the residential stock in Estonia (59%) was built in 1960-1990s as part of the major construction “wave”, with the share of buildings built 1960-1980 at 39%. These are typically apartment buildings built with prefabricated concrete panels. According to KredEx, the average annual heating energy used in the buildings is 200-400 kWh/m² compared to the figure in industrial nations with a similar climate which is only 150-230 kWh/m². So most residential buildings are highly inefficient and in need of renovation.

The country relies heavily on district heating, much of which is obtained from older, more inefficient power plants.

National policy One of the major sources of is natural gas. However, Estonia is dedicated to cut the dependency on fossil fuels and set out the target to reach 25% share of renewables in the overall energy mix by 2020. 11.1.1 National Development Plan for the Energy Sector – 2020 This is a strategic document outlining the development of the country for the forthcoming period in reaching the objectives set out in the EU agenda by 2020. It was adopted in 2009.

The plan confirms the overall targets:  25% of renewable energy in final consumption  18% of renewable energy in heating and cooling demand  5% of electricity demand from RES  And 3% share of RES in transport sector

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The Estonian government also pointed out the measures on route to targets:  Feed-in tariff  Certificate of origin  Excise duty exemption for biofuels  Investment support for RES projects  National Energy Technology Programme – ETP 11.1.2 Development Plan of the Estonian Electricity Sector – 2018 The Plan is regulated by the Estonian Electricity Market Act that was adopted in 2003. In broad terms, it promotes free access to electricity and establishes subsidies for utilising CHP in the production of electricity. It also allowed eligible customers to buy the electricity at established and regulated prices. 11.1.3 EE Grants for technical inspections and energy audits in residential buildings (under the National Development Plan for Housing Sector 2008-2013)

 Support for energy audits for apartment buildings started in 2005. 50% of the total cost is covered with an upper limit of €700 (Implementing the energy Performance of Buildings Directive, 2010).  Energy certification support was launched in 2009 by City of Tallinn – €96 per each certificate issued. More than 1,500 buildings benefited from that (Implementing the energy Performance of the Buildings Directive, 2010).  In 2010 the green programme for state-owned public buildings was launched, with a €35m grant (Implementing the energy Performance of the Buildings Directive, 2010)  BEEN or Baltic Energy Efficiency Network for the building stock project occurred within the framework of the European Union programme INTERREG IIIB. The duration of the project was 2.5 years. There were 6 partners involved from Estonia: KredEx, TTÜ, EKÜL, EKHHL, MKM and Tallinna LV. (www.kredex.ee)  From 2010 the Estonian state has been supporting the residents with percentage grant of total reconstruction cost: 15% - energy rating E for apartment, energy saving achieved 20%; 25% - energy rating D, roof insulation and energy efficient windows, energy saving achieved 40%; 35% - in addition ventilation system with heat recovery, energy saving 50% and energy rating C. It will accompany the renovation loan of KredEx. (http://www.been-online.org/State-grants-for-the-renovation-of-apartment- buildings-in-Estonia.507.0.html)  Renovation grants to support the refurbishment of multifamily buildings were launched in Estonia. The financial means are obtained from the sale of unused pollution quotas of the Republic of Estonia to Luxembourg. The goal of the renovation grant is to motivate people to reconstruct their existing apartment buildings. The grant will accompany the renovation loan of KredEx (issued by Swedbank and SEB Bank) in order to decrease the required share of self-financing.  The Estonian state provides support to the residents with 15%, 25% or 35% of the total project costs, grant. To obtain a 15% grant, an apartment building must achieve E class (according to Energy Performance Certification classification) as well as energy savings of at least 20% in a building smaller than 2000 m2, at least 30% in a building over 2000 m2. To obtain a grant of 25%, in addition to the fulfilment of the above mentioned terms, an apartment building must reconstruct the heating system so that it is locally adjustable, and install devices that make it possible to divide and measure heating costs individually by apartments, partly or fully insulate and

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reconstruct the façade, exchange all windows for energy-saving ones, insulate and reconstruct the roof, exchange all windows for energy efficient one, achieve an energy saving of at least 40% by reconstruction, and achieve energy class D. To obtain a grant of 35%, in addition to the fulfillment of all above terms, the applicant for the grant must install a ventilation system with heat recovery; achieve at least 50% of energy saving from consumption of heating energy, and achieve energy class C. 11.1.4 District Heating Act The District Heating Act secures connections to District Heating Networks and obliges people living in areas covered by district heating networks to use them irrespective of pricing currently in the market for such heating. But to limit the monopolistic influence, the Estonian Competition Authority will monitor the prices.

Financian incentives Recently the topic of renewable energy subsidies in Estonia has been the subject of heated discussions and opposing opinions. However, as the result the government made a decision to reduce the amount of subsidies for renewables available by 20% by late 2012. 11.2.1 Subsidy I (Investment support for the reconstruction of CHP plants) This scheme is run by the Ministry of Economic Affairs and Communications in cooperation with the Environmental Investment Centre. Investment supports reconstruction of infrastructure and to encourage the use of renewables and the construction of CHP plants, as well as reconstruction of boiler houses and district heating networks. The exact amount of funds is allocated by the Environmental Investment Centre. At the same time, the scheme disallows the allocation of the funds to boiler-houses with capacity of over 4 MW or projects with costs exceeding €50m. 11.2.2 Subsidy II (Investment conditions for the reconstruction of private houses and apartment buildings) - KREDEX Investment support is provided under the Green Investment Scheme and covers geo, hydro and solar thermal energy applications. The programme has received a high level of interest from the private sector and no more applications are currently being accepted. The programme is run by the Ministry of Economic Affairs and Communications in cooperation with the Investment and Exportation foundation Kredex. 11.2.3 Feed-In Tariffs ( FITs) After decoupling of the Energy strategy in Estonia the Feed-In Tariffs are regulated by the Electricity Market Act 2007. The Feed-In Tariffs are assigned for different types of renewable energy technologies. In January 2012 the Feed-In Tariffs were reviewed and the government imposed retroactive cuts in Feed-In tariffs including existing renewable energy plants.

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Table 13 – FITs tariffs for Estonia - Source: EREF 2011-2012 Report Support scheme Feed-in premiums Current applicable law Art. 57-59 of Electricity Market Act 2007 (including amendments through May 2011) Particularities The premium scheme will be suspended for the current calendar year as soon as a total of 600 GWh of electricity from wind energy has already been supported (§ 59.1 par, 5ES)

Capacity / Amount (GWh/a) / (MW) Cent/kWh Hydro Premium 5.37

Premium 5.37 Wind Electricity generated by a wind power plant is not eligible if the plant operator has received other investment subsidies (§ 59.1 par. 2 ES)

Biomass Premium 5.37

Photovoltaic Premium 5.37

Premium 5.37 Geothermal Electricity generated by conventional thermal power stations is not eligible (§ 59.1 par. 2 ES)

CSP / Waste / Wave Premium 5.37

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Summary on the effects of HVAC and renewables - Estonia Products Policies and Incentives Map Possible effects

HEATING Expansion of renovation projects in District Subsidy I Heating District Heating + District Heating Act CHP in DH of small-scale projects is possible Disconnections disallowed Especially in rural areas not covered by District Heating Inspection of boilers and Domestic Boilers Inspections have low impact efficiency requirements + District Heating Act might hinder expansion of alternative boilers Inspection of boilers and Commercial Boilers Inspections have low impact efficiency requirements + Growing segment, but hindered by the retroactive Biomass Boilers FITs + cuts in Fits effective from 1 Jan 2013 Air-to-air heat pump segment growth more extensive due to affordability Heat pump Subsidies + Ground Heat pumps through subsidies in geothermal

Compression Heat

Pumps ●

Sorption/Gas Heat

Pumps ● Transfer to cogeneration is supported through FITs FITs Small scale CHP + Electricity Market Act but hindered by the retroactive cuts in Fits effective from 1 Jan 2013

Subsidy I Promotes the market Biomass CHP FITs + Transfer to cogeneration is supported through FITs, but hindered by the retroactive cuts in Fits Electricity Market Act effective from 1 Jan 2013 No specific impact but can be used alongside Electric heating - = heat pumps Growing importance, but no key specific policy Heat recovery nZEB = impact AIR-CONDITIONING Air conditioning = No specific impact Growing importance, but no key specific policy Mechanical ventilation nZEB = impact HOT WATER Solar Thermal Subsidies + Growing sector

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Investment Grants nZEB ELECTRICITY Daylighting systems - = No key specific policy impact Green Bonus PV + Growing sector Investment Grants INSULATION Growth as effective measure, especially in Wall Insulation KREDEX + residential multi-tenant sector Growth as effective measure, especially in Loft Insulation KREDEX + residential multi-tenant sector

+ Positive Effect – Negative Effect = No Impact

Sources of information . Odyssee-MURE Database http://www.odyssee-indicators.org/publications/PDF/ . Keskkonnainvesteeringute Keskus (KIK) – Environmental Investment Centre www.kik.ee . Majandus- ja Kommunikatsiooniministeerium (MKM) – Ministry of Economic Affairs and Communications www.mkm.ee . KREDEX www.kredex.ee . European Photovoltaic Association Report . Electricity Market Act www.riigiteataja.ee/akt/13275361 ; http://www.konkurentsiamet.ee/?id=19475

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12 Finland

Finland joined the EU in 1995, and the Eurozone at its inception in 1999. It has a per capita GDP of $36,395, comparable with France and the UK.

The building stock in Finland is relatively young in comparison to many of the other EU27 countries. In Finland most of the external walls are solid wall, cavity is extremely rare. Finland’s cold climate means that over 90% of single family houses and 98% of multi-family houses are insulated. The un-insulated single family houses are mostly pre-1919 dwellings. The predominant fuel use in Finland in 2011 was electricity at 21,964 GWh. This represents 35% of the energy consumption in households. District heating was used the second most at 28%, followed by wood at 23%.

Finland lacks domestic sources of fossil energy and must import substantial amounts of petroleum, natural gas, and other energy resources, including uranium for nuclear power.

National policy and financial incentives

Finland has announced plans to reach an ambitious 38% share of energy from renewables in gross final consumption by 2020 and has allocated several mechanisms to ensure the country is en-route to achieve this share. In the longer period Finland strives to increase this share to 60% by 2050. 12.1.1 Implementation of EPBD in Finland EPBD has brought to Finland the updates to the Buildings requirements and Finnish Building Code:  Thermal Insulation - 2003  Interior Climate and Ventilation – 2010,2012  Energy Performance – 2010  Energy Certificates Act 2013 (introduced compulsory energy certificates for buildings with area >500 m2. for buildings built, sold or rented. It sets 2 stages of implementation and a 3 year transition period for all buildings built prior to 1960. The Old certificates are applicable until date of expiry). 12.1.2 Long-term Climate and Energy Strategy

Following the 2008 release, the Strategy was further updated in 2013 and strived to set up the targets beyond 2020. It was submitted as a report to the Parliament on 20 March 2013 and sets out the guidelines for roadmap to 2050. As part of this, the Finnish government stated the goals of cutting carbon emissions in line with the overall EU targets and, at the same time, achieving 38% of energy coming from renewable sources by 2020.

It also highlighted the need to meet the indicative objective to enhance the energy efficiency by 9% by 2015 that has been included into the Energy Efficiency Directive and came into force at the very end of 2012. The strategy also discusses whether Finland can support the tighter EU target to achieve 30% reduction instead of 20% by 2020.

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12.1.3 Finnish National Renewable Energy Action Plan This was adopted in 2010 and sets the target for the use of biomass in heating in power at 25 TWh for 2020 alongside the replacement of coal-based energy sources with biomass. 12.1.4 Energy Grants for Residential Buildings These grants are awarded by the respective municipalities and authorised under the State Budget to be released by Housing Finance and Development Centre. The grant covers 25% of the investment project cost. The main areas covered by the provisions of the grants are:  Energy audits  External renovations  Ventilation and Heating systems renovations and replacements Overall there are some expressed concerns that investments into renovating and installation of energy efficient systems is much more expensive than the return achieved by the cost savings in running costs. This could provide a barrier to the extent of renovations and installations under current economic conditions in Finland. 12.1.5 Feed-in Tariffs (FIT) Table 14 – FITs Tariffs for Finland - Source: EREF Support scheme State Subsidy Scheme and Feed-in Tariff scheme as of 2011, funded through State Budget Current applicable law Electricity Market Act 1995: Energy Aid Law; Feed-in Tariff Scheme Particularities Guaranteed Price through Energy Taxation System and FIT price that is the difference between guaranteed price and market price for electricity 123.50 €/MWh for households, excluding tax, but including transmission and distribution

Capacity / Amount (GWh/a) / (MW) Cent/kWh Support through energy taxation system Now applicable for installations up to 10MW 0.42 Hydro Support through energy taxation system 0.69 FIT target price 8.35 Through 2015, FIT target price (paid for a maximum of three years) 10.53

Wind

Support through energy taxation system Biomass Forestry waste 0.69 Recycled fuels 0.25

Photovoltaic Not eligible but do qualify for investment subsidy

Geothermal Not eligible but do qualify for investment subsidy

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Summary on the effects of HVAC and renewables - Finland Products Policies and Incentives Map Possible effects

HEATING Strong market position; further growth envisaged No need for specific + District Heating utilising different alternative sources, incl policy biomass (peat is a bit difficult to source) Oil boilers are also popular in domestic sector; Domestic Boilers Large-scale subsidies + subsidies are mainly in residential retrofit sector Commercial Boilers + Oil systems are promoted Biomass Boilers NREAP + Biomass is promoted + Popular energy source, especially in single Heat pump NREAP houses, can have a hindering impact on district heating

Compression Heat

Pumps ●

Sorption/Gas Heat

Pumps ● Limited subsidies for Small scale CHP = No specific impact CHP Limited subsidies for Biomass CHP = No specific impact CHP Low electricity prices in Electric heating Positive effect 2012 + Heat recovery Energy Grants + Positive effect on segment AIR-CONDITIONING Air conditioning ● Mechanical ventilation Energy Grants + Positive effect on segment HOT WATER

Solar Thermal = No specific impact; Market is small No Subsidies ELECTRICITY Daylighting systems Efficient Lighting + Promotes efficient lighting No Subsidies PV Some regional grants in = No specific impact; Market is small Satakunta available INSULATION Tighter requirements for insulation and funding Wall Insulation Energy Grants + available under EPBD

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Tighter requirements for insulation and funding Loft Insulation Energy Grants + available under EPBD

+ Positive Effect – Negative Effect = No Impact

Sources of information . Odyssee-MURE Database http://www.odyssee-indicators.org/publications/PDF . Ministry of Employment and Economy www.tem.fi . Housing Finance and Development Centre www.ara.fi . EREF . Ecofys . District Heating Overview Report . http://solarthermalworld.org/content/finland-most-them-think-we-dont-have-enough- sunshine

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13 France

France has the fifth-largest national economy in the world, and the second-largest in the European Union. The global financial crisis did not affect France as badly as other countries, and there were only four successive quarters of contraction. After +1.7% in 2011 and +0.1% in 2012, GDP is forecast to stagnate though to 2015, with very low growth rates - only +0.4% in 2013, then +0.8 and +1% in 2014 and 2015 respectively.

Of all European countries, France has the highest proportion of electricity generated from nuclear power – around 75%. It also has a growing renewable energy sector, in particular, wind farms.

National policy 13.1.1 National Efficiency Action Plan

France is among the industrialised countries where CO2 emissions are the lowest. Around 50% of the energy mix is represented by energy sources with no CO2 emissions such as nuclear and clean renewable energy.

Nevertheless, the French government has set ambitious targets to reduce energy consumption, with an overall aim of reducing GHG emissions by a factor of 4 by 2050. The first French National Energy Efficiency Action Plan (NEEAP) describes the energy efficiency improvement measures that are aimed at achieving the following objectives, with an overall aim of reducing GHG emissions by a factor of 4 by 2020. In addition to it the French government set the following objectives:

 Achieving a minimum of 9% energy savings over the period 2008-16;  Decreasing energy intensity by 2% per year by 2015 and by 2.5% per year by 2030;  Reducing energy consumption by approximately 20% in service-sector construction and 12% in residential construction within 5 years, and by more than a third by 2020 (see Thermal Regulation).

The main measures are demand-side management in the buildings, transportation, service and industrial sectors, and a white certificate scheme.The system of white certificates required by the Energy End-Use Efficiency and Energy Services Directive is established by the POPE law (art. 14 and 17) and it is accompanied by an objective corresponding to specific energy saving requirements placed on energy suppliers, the obligations under the proportion of energy sales, by type of energy, taking into account the physical quantity of sales (in kWh) and their estimated monetary value.

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2010 2015 2020 2025 2030

POPE law Grenelle G23% GHG 27.5% GHG 2 law RT2012 fully RT2005 (150 applying to 2 kWh/m /year) new multi- Grenelle 1 law dwellings RT2012 applying to 23% RES in final new public consumption and tertiary buildings 38% energy consumption for RT2012 applying existing buildings to new housing (50kWh/m2/year + Renewable energy min 5kWh/m2/year 2 min electric or hybrid cars

Figure 3 French roadmap to better efficiency -Source: BSRIA 13.1.2 French Building Regulation – Grenelle de l’Environnement round-table Held in October 2007 the Grenelle de l’Environnement round-table aimed to define the key points of government policy for the next five years on environmental and sustainable development issues. From 2007 to 2009, The “Grenelle de l’Environnement” number 1 and 2 revisited and reinforced the goals of controlling energy demand, exploring new measures and developing existing ones.

In the Law No. 2005-781 of 13 July 2005 laying down guidelines for the program to energy policy ("POPE law"), France was legally set the objective of controlling energy demand.

New buildings The standard “Low Energy Building” (BBC) will be mandatory for all public and commercial buildings from October 2011, with variation depending on the carbon content of energy used, the geographical location and the use of buildings.

As of January 2013 all new residential individual dwellings have had to meet the requirements stated in the new Thermal regulation (RT2012). New residential collective buildings will have until 1st January 2015 to implement the new regulation. From then, the average consumption in all new residential buildings will be 50 kWh/m2.year. The next target to come afterwards will be the “Positive Energy Building” label in 2020.

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Existing buildings The Grenelle Act encourages local governments to initiate the renovation of their estate of buildings by 2011. An energy audit will mandatory for all public buildings from the beginning of 2011. In practice, there is an important lack of skilled workers able to carry out audits and a large share of dwellings offered for rent or sale to the market still has not been assessed. Comments among industry experts indicate that the DPE (Diagnosis of Energy Performance) are very subjective and do not give reliable information.

Moreover, the Grenelle act implies a greater importance will be given to the reduction of greenhouses gas emission. This is linked to:  Obligation to provide a certificate stating that the Thermal Regulation was taken into account at the deposit of the Building Permit and at the end of works  Definition of a label based on future environmental requirements on the entire lifecycle of the building.  A local government can “classify” a network of district heating network if more than 50% of energy comes from renewables.  Obligation to connect a building (new and existing) to an existing district heating network if the heating demand is equal to or greater than 30 kW and it is located in a “priority development area”.  Obligation to do works in order to improve the energy performance of existing buildings within a period of 5 years from 2012, in the form of categories of “package of work” or “overall performance” to reach.  Local Government will produce Energy Saving Certificates (ESC) covering its own building estate.  Training and education about Saving Energy Practices (“Maitrise de la Demande d’Energie) will give rights to achieve ESC (Energy Saving Certificates), Certificats d’Economies d’Energie CEE.  Existing dwellings ought to be refurbished at least to the F standard of the French Energy Performance Certificate (DPE) by 2012, i.e. an annual energy consumption of 331 to 450 2 2 kWh/m and annual CO2 emissions of 56 to 80 kg of CO2/m .  Reduction of 38 % of the average energy consumption of the whole existing stock to 150kWh/m2.year by 2020.  Reduction of the energy consumption of all dwellings by at least 30% every 10 years. This would give an average energy consumption of the existing stock of around 100 kWh/m2 in 2030, around 70 kWh/m2 in 2040 and around 50 kWh/m2 in 2050.

13.1.3 2012 Thermal Regulation The French thermal regulation is divided into three parts which are called RT-2005, RT-2012 and RTex. The Thermal Regulation 2012, better known as RT2012, has been the regulation in force since 1st January 2013 and replaces the former RT2005. It applies to all new buildings – residential, commercial and tertiary, where the building permit was laid down after 1st January 2013.

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The RT2012 aims at reducing carbon footprint and energy consumption in buildings notably by enhancing the performance of systems including space and water heating, air-conditioning, lighting and auxiliary products for ventilation and cooling devices.

A part of the RT 2012 focuses on existing buildings and is known as RTex in reference to Thermal Regulation in existing buildings. Although there is no current obligation to renovate existing buildings, those that have undergone major refurbishment works as of 31st March 2008 (date of permit) must comply with energy efficiency measures as stated in the articles L. 111- 10 and R.131-25 to R.131-28 of the French Construction Code. In terms of energy efficiency it means that once renovated the total energy consumption of the building – covering heating, sanitary hot water, cooling, lighting and auxiliaries- should be between 80 kWh/m2.year and 165 kWh/m2.year of primary energy in the residential sector. In the non-residential sector, renovated building should have an average consumption 30% lower than the one estimated before renovation works.

The RT2012 applies to existing residential and non-residential buildings: - over 1000 m2 floor area - completed after 1 January 1948 - the cost of the thermal renovation works must exceed a quarter of the building value or €322/m2 excl. VAT in the case of residential building and €275/sqm in the case of non- residential buildings. - When a building does not meet the criteria mentioned above, the regulation “element by element” has been in force since 1st November 2007. It is in fact criteria of performance for amenities that must be requested. The amenities concerned are: mechanical ventilation, opaque walls (as opposed to windows), sanitary hot water, glass walls (windows, doors etc.), air conditioning, lighting, heating, and renewable energies use.

Figure 4 Regulation applying to existing buildings according to surface area - Source: BSRIA The following are not concerned by the different regulations (RT 2012 “Global” and RTex): - Buildings in which the usual temperature of use is under 12°C;

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- Temporary buildings (life time of use under two years); - Farming buildings

The calculation method of energy consumption has been defined in the calculation method Th- BCE. 13.1.4 The calculation method Th-BCE On 10th August 2011 a decree approving the calculation method Th- BCE 2012 was published in the Official Bulletin of the Department of Ecology. The method initially allows verifying the compliance of the building with the three major requirements set by the new thermal regulation 2012, which are:  the bioclimatic need (BBio), which corresponds to energy losses (natural losses and user needs);  the maximum indoor temperature (Tic) that sets a limit on the temperature inside the building in the hot summer days;  the consumption of primary energy (Cep) needed in the building for heating, cooling, hot water, auxiliary and lighting. The complete description of the calculation method can be found on http://www.bulletin-officiel.developpement- durable.gouv.fr/fiches/BO201114/met_20110014_0100_0007%20annexe.pdf

Whenever a product or system has not been taken into consideration in the method of calculation Th-BCE, the articles 49 and 50 of Titre V of the decree of 26th October 26 2010 and the articles 39 and 40 of Titre V of the decree of 28th December 2012 present the details of processing these cases. Numbers of HVAC products have been agreed Titre V so far, among which:  combination electrical heat pump providing both space and water heating (decree of 3rd March 2013);  “TwinR” heat recovery system for heat recovery ventilation, heating, cooling and hot water (decree of 30th January 2013)  hybrid heat pump-boiler (decree of 29th October 2012);  “Solar pump” combining unglazed solar collectors with glycol/water heat pump for hot water provision (decree of 5th October 2012);  “Heliopac” combining unglazed solar collectors with water/water heat pump for hot water provision (decree of 5th October 2012);  “T Zen 400/4000” heat recovery system for heat recovery ventilation, heating, cooling and hot water (decree of 19th March 2012)  Centralized solar thermal system for sanitary hot water supply with individual backup system (decree of 13th December 2011)  Gas absorption heat pump for heating and/or cooling and hot water supply (decree of 13th May 2011)  Gas or liquid micro-cogeneration boiler (decree of 11th March 2009)

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Of note, there has been a huge debate between the different buildings organisations in France regarding the coefficients of conversion of various energies. Indeed, the one for electricity is strongly in disfavour of electric heating as for 1kWh of final energy consumed the equivalent in primary energy is equal to 2.58kWh (see below). Table 15 - Conventional coefficients of conversion into primary energy per energy types- Source: BSRIA

Energy type Final energy Primary energy

Biomass 1kWh 0.6kWh

Gas/Oil 1kWh 1kWh

Electricity 1kWh 2.58kWh The calculation method that applies to residential building is the same in non-residential buildings. The following coefficients apply to calculate gross floor surface area in tertiary buildings. Coefficient applying to non-residential buildings in RT 2012 calculation method Regarding the coefficient applying to non-residential building it has been defined by law R112- 2 of Construction Code. It is dedicated to assess the net floor area (SHON = the living space area multiplied by the coefficients mentioned). The net floor area does not include exterior wall thickness and aims to contribute to the goal of improving the energy performance of buildings by allowing thicker insulation. Parking areas, basements or cellars and attics are excluded from the calculation of the surface.

The calculation method that applies to residential building is the same in non-residential buildings. However, the following coefficients apply to calculate gross floor surface area in tertiary buildings. Table 16 – Coefficients appied to gross floor area Building types Coefficient Office 1.1 Primary education building 1.1 Secondary education building (day-time occupation) 1.2 Secondary education building (night-time occupation) 1.2 Nursery School 1.2

Calculation engines designed by software editors must be assessed by the Building Scientific and Technical Centre (CSTB) to prove the conformity of the project with the requirements of the building regulation.

The assessment procedure started over the second half of 2012 and was not finalised at the end of 2012.

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The mandatory use of software certified by the Ministry of Sustainable Development was postponed till 1st July 2013. 13.1.5 Night Lighting in non- residential building As part of its engagement to reduce energy consumption in building, the French government signed off on 25th January 2013 a decree aiming at restricting night lighting in non-residential buildings. This includes both indoor and facade lighting. The law will come into force as of 1st July 2013.

Lighting in non-residential buildings must be turned off one hour after the end of building occupation and one hour before activity starts.

Shop window and facade lighting must be turn off at 1o’clock in the morning at the latest. 13.1.6 Lease agreement of commercial building Article 8 of the Act 2 of the Grenelle de l’Environnement round-table describing the environmental lease agreement – or green lease- was signed off on 31st December 2011. It stipulates that any lease agreement of office building over 2000 m2 signed off or renewed as from 1st January 2013 should include an environmental clause. Currently running lease agreements have had to meet that requirement since 14 July 2013.

The environmental clause aims at:  providing information on the energy consumption of the office building to be let including annual energy and water consumption notably;  granting access to the leaser to undertake renovation works to improve energy efficiency of the building;  defining a strategy for both parties to improve the energy labelling of the building.

The last point comes in relation to the Energy Performance of Buildings Directive, which includes the energy performance certification of all buildings to be put on the sale and rental market.

9.1.1 Energy Performance Certificates A decree signed off on 27th January 2012 stipulates that any residential building counting over 50 flats in co-ownership, with collective heating or cooling system, where the building permit was submitted before 1st January 2001 must have an energy performance certificate (Diagnostic of Energy Performance - DPE in French), within a 5-year period starting January 2012.

9.1.2 White certificate Under the French programme of White Certificates Trading, suppliers of energy (electricity, gas, heating oil, LPG, heat, refrigeration) must meet government-mandated targets for energy savings achieved through the suppliers of residential and tertiary customers. Suppliers are free to select the actions to meet their objectives, such as informing customers how to reduce

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energy consumption, running promotional programmes, providing incentives to customers and so on. Suppliers exceeding and undercutting their objectives can trade energy savings certificates as required for common compliance.

The first experimental phase of the scheme ran for three years from 1st July 2006 to 30th June 2009. Energy suppliers who did not meet their obligation over the period had to pay a penalty of €0.02/kWh. During that first period 65.2TWh were saved; this is 20.7% more that the initial target savings. A great majority of the savings was performed in the building sector: 550,000 improvements of the heating installation (boilers, heat pumps), and 340,000 improvement work on the insulation of the building.

The second period of the White Certificate Trading Programme has been running from 1st January 2011 to 31st December 2013. The current saving requirement is 345TWh cumulated, of which 90TWh should be the obligation of the new suppliers of fuel. Penalties are fixed at €0.02/kWh over the period 2011-2013.

9.1.3 National Urban Redevelopment Plan Set by the decree n° 2003-710 of 1st August 2003 the National Plan of Urban Renovation scheme aims to refurbish neighbourhoods in sensitive areas. The implementation of the programme is managed by the National Agency of Urban Renovation (ANRU in French).

The Programme includes a 12-billion-euro envelope to be allocated over the period 2004-2013 from the government, social and housing organisations.

The programme allows accelerating and launching over 1,200 projects of renovation in 235 municipalities: among which 12,000 construction projects of social housing, 29,000 refurbishment projects, 150 public equipment, 20 commercial sites and 90 engineering works.

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Figure 5 - Projects supported through ANRU Programme, April 2013 - Source: ANRU.fr

Financial incentives

9.1.4 Sustainable development tax rebate The 2005 finance law led to a complete recasting of the income tax credit for expenditure on building equipment for main residences, intended to refocus this system on more efficient equipment in energy terms and on equipment using renewable energies.

Created in 2005, the tax credit was initially conceived to run until 2009 but has been extended till 31st December 2015. The benefit of the tax credit is granted to tax payers, physical persons, who pay expenditure for equipment for their main residence. The tax advantage applies to tax payers who are owners, tenant and non-paying occupants of their main residence completed two or more years ago.

The sustainable development tax credit targets a range of energy efficient products. The products concerned are heating regulation and programming appliances for heating equipment, thermal insulation materials, appliances for heating and domestic hot water production from renewable energies and appliances for renewable electricity production.

In order to boost energy efficient measures the French government has granted higher tax rebates (10 extra points of percentage) when a series of refurbishment works are carried out together and includes at least two of the following measures in the same dwelling: - Roof insulation - Wall insulation - Windows replacement - Biomass boiler/stove installation - Renewable sanitary hot water product installation - Condensing, gas micro CHP and heat pump installation.

Table 17 - Tax rebates towards sustainable building, January 2013 Single work As part of cluster

Gas condensing boiler 10% 18%

Biomass unit - first time installation 15% 23%

Biomass unit – replacement 26% 34%

Solar thermal - hot water supply 32% 40%

Air-to-water heat pump 15% 23%

Ground-to-water heat pump 26% 34%

Ground collectors 26% 34%

Sanitary hot water heat pump 32% 40%

Photovoltaic panel 11%

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Gas microgeneration boiler 17% 26%

Heating regulation system 15%

Rain water storage 15%

Double glazed windows 10%* 18%

Doors and shutter 10%* 10%

Wall insulation 15% 23%

Energy certificate 32%

Note: available in collective housing only

9.1.5 Reduced tax rate A VAT rate reduced to 7% from 19.6% has been allocated for the purchase of energy-efficient units as the ones mentioned above since January 2013. It applies to material and labour works carried out by specialists in any main dwelling completed before 1st January 1977 or older than 2 years.

An increase from 7% to 10% as of January 2014 has been announced. The measure applies to refurbishment and renovation works. The standard 19.6% rate applies to labour and material in new buildings.

9.1.6 Oil boiler replacement premium From 1st July till 31st December 2013 the replacement of an oil boiler over 15 years old can be allocated a premium.

The amount varies as follows: - €120 for the replacement by a non-condensing boiler; - €350 for a condensing boiler; - €400 for the replacement of an oil boiler by a biomass boiler. The premium also applies for the replacement of a biomass heating unit over 15 years old by a new biomass heat generator. The premium amounts to €400 in that case alike.

9.1.7 Heat funds As part of its commitment to reduce carbon footprints and produce energy from renewable sources the French government committed itself to allocate €1.2bn over the 2009-2013 and then €800,000 per year over the following period ending 2020 to support companies and local authorities investing in sustainable solutions.

The Heat Fund (Fonds Chaleur) aims at supporting industrial, agricultural and private tertiary projects based on renewable energy technologies (deep geothermal, biomass, solar thermal

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systems, waste incineration plants, biogas and district heating network). The objective is to raise heat production from renewable sources over15Mtoe per annum by 2020.

Under certain conditions the Heat funds can be allocated for cooling and heat recovery applications. Installations to new and existing buildings are eligible to the Heat Funds support scheme. The National Environment and Energy Management Agency is responsible for the financing of the programme www2.ademe.fr/servlet/KBaseShow?sort=-1&cid=96&m=3&catid=14570

9.1.8 Feed in Tariffs for electricity generating system The article 10 of decree 2000-108 dated 10th February 2000 establishes the principles of the obligation to purchase electricity from renewable energy sources. It states that the tariffs are intended to ensure normal profitability investment production of renewable electricity; the price level at which the energy distributor must buy electricity is fixed by decree a level above the market price.

Each energy sector is subject to a specific tariff issued by the Ministers of Economy and Energy, after consultation with the Higher Energy and Regulatory Commission Energy Council.

The table below shows the latest prices in place according to the energy source

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Table 18 - Feed-in-tariffs allocated to units generating power up to 36kVA - Source: developpement- durable.gouv.f Energy Decree issue Length Example of prices per installation date of contract

st Hydropower 1 March 2007 20 years - €0.0607/kWh + bonus between €0.005 and €0.025/kWh for small installation + energy efficiency bonus between 0 and €0.0168/kWh in winter

Geothermal 23rd July 2010 15 years - Metropolitan France: €0.20/kWh + energy efficiency bonus between 0 and €0.08/kWh - Overseas: €0.13/kWh + energy efficiency bonus between 0 and €0.03/kWh

Wind power 17th November - Onshore wind: €0.082/kWh for 10 years, then between

2008 €0.028 and €0.082/kWh for 5 years depending on site - Offshore wind: €0.13/kWh for 10 years, and between €0.03 and €0.13/kWh for 10 years depending on the site.

Photovoltaic* 7 January 2013 20 years Tariffs are revised quarterly. They vary according to the type of building and installation, the amount of energy produced and the number of projects submitted per quarter. The updated tariffs are available at http://www.developpement- durable.gouv.fr/Quels-sont-les-tarifs-d-achats.html. The Q1 2013 prices were: - €0.31/kWh for roof integrated PV systems generating between 0 and 9 kW - €0.27/kWh for roof integrated PV systems generating between 9 and 36 kW in the residential sector - €0.1817/kWh for on-roof PV systems generating between 0 and 36 kW in the residential sector - €0.2143/kWh for roof integrated PV systems generating between 0 and 36 kW in the educational or health sector - €0.1817/kWh for on-roof PV systems generating between 0 and 36 kW in the educational or health sector - €0.1858/kWh for roof integrated PV systems generating between 0 and 9 kW in other buildings - €0.1817/kWh for on-roof PV systems generating between 0 and 36 kW in other buildings;

st Cogeneration 31 July 2001 12 years €0.061 to €0.0915/kWh based on the price of gas, the operating time and the power output

nd Waste 2 October 2001 15 years €0.045 to €0.05/kWh + energy efficiency bonus between 0 incineration and €0.003/kWh

Biomass 27th January 20 years €0.0434/kWh plus a premium of between €0.0771 and

2011 €0.1253/kWh allocated according to criteria of power, resource use and energy efficiency. The level of the premium is calculated based on energy efficiency.

th Biogas 19 May 2011 15 years €0.08121 to €0.09745/kWh depending on power output plus an energy efficiency premium of between 0 and €0.04/kWh

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th Anaerobic 19 May 2011 15 years €0.1119 to €0.1337/kWh depending on power output plus an digestion energy efficiency premium of between 0 and €0.04/kWh and a premium for the treatment of livestock manure of between 0 and €0.026/kWh

* PV modules certified « Made in Europe » have been allocated 5 to 10% extra FIT since 7 January 2013. The amount is 5% if - all the operations of transformation of silicon photovoltaic cells to PV panels have been carried out within the European Economic Area; - all welding and assembly operations have been carried out within the European Economic Area; The amount is 10% if, in addition to the conditions stated above, the process of transforming silicon boules into silicon photovoltaic cells has been carried out within the European Economic Area.

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Summary on the effects of HVAC and renewables - France

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National Policies and Products Map Possible effects to existing building Incentives

HEATING

Extension and refurbishment of existing networks RT2012 District Heating + Penetration of network fuelled from renewable Heat Funds sources RT2012 Higher replacement rate of non-condensing units Tax rebate Gas-fuelled units favoured Domestic Boilers + Reduced VAT rate Penetration of condensing technology Oil boiler premium RT2012 Higher replacement rate Commercial Boilers Tax rebate + Reduced VAT rate Tax rebate Higher replacement rate; substitute to oil boiler Biomass Boilers Heat Funds + Stronger penetration Reduced VAT rate Reduced VAT rate Penetration of HP in replacement of electric heating systems Electric Heat Pump Tax rebate + RT2012 Hybrid Heat Pump RT2012 + Substitute to oil boiler Gas Ab/Adsorption heat Higher efficiency than electric HP RT2012 pumps + RT2012 High efficiency Small scale CHP + Tax rebate – FIT Substitute to existing boiler RT2012 Low environmental impact Biomass CHP + Heat Funds - FIT Electric heat emitters RT2012 – RT more in favour of water-based units Heat recovery RT2012 + Substitute to mechanical ventilation AIR CONDITIONING

RT2012 Push for higher-efficiency system Air conditioning + F-Gas Mechanical ventilation RT2012 + Growing importance HOT WATER

RT2012 Stronger penetration Solar Thermal Tax rebate + Replacement of electric water heaters Heat Funds

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RT more in favour of gas- fuelled units Electric Water Heaters RT2012 –

Gas Water Heaters RT2012 + Push for higher-efficient products ELECTRICITY

Restriction to 2.8 W/m2 Day time lighting RT2012 + Compulsory use of Energy Management System to lower energy consumption Night time lighting = RT2012 Better-efficient renovated building PV Feed-in-tariffs + Tax rebate Restriction of power generated considered in the PV RT2012 – calculation method (12 kWh/m2.year) INSULATION

RT2012 Higher building air-tightness Wall Insulation + Tax rebate Roof Insulation Tax rebate – Higher building air-tightness Source: BSRIA

+ Positive Effect – Negative Effect = No Impact

Sources of information . http://www.legrenelleenvironnement.fr . http://www.rt-batiment.fr/batiments-existants/rt-existant-dispositif-general/textes-de- reference.html . www.legifrance.gouv.fr . www2.ademe.fr . www.anru.fr . www.gdfsuez-cegibat.fr

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14 Germany

Germany is the largest economy in Europe and fourth largest in the world. In January 2013, the Bundesbank reforecast GDP for 2013 to be only 0.4% rising to 1.6% in 2014, should the situation in the Eurozone and the world economy ease. In 2009, Germany consumed energy from the following sources: Oil 34.6%, Natural gas 21.7%, Lignite 11.4%, Bituminous coal 11.1%, Nuclear power 11.0%, Hydro and wind power 1.5%, Others 9.0%. Following the crash of the Fukushima nuclear plant in Japan in March 2011, older nuclear plants were shut down and a general phase-out by 2020 or 2022 is now probable

The typical space heating system installed in office buildings in Germany are mainly gas and oil boilers. Occasionally offices use district heating and very occasionally biomass and CHP. Hot water systems are mainly decentralised electric water heating. Cooling needs are usually met by naturally ventilating offices and air conditioning is unusual. Lighting systems are mainly fluorescent.

National Policy 14.1.1 Energy Saving Regulation (ENEV) In order to implement the EU’s Energy Performance of Buildings Directive (EPBD) into national law, the German government passed the energy saving regulation, EnEV (Energieeinsparverordnung) in its first version, which came into effect on 1st February 2002. It replaced two previous regulations, the insulation regulation, Wärmeschutzverordnung (WSchV), and the heating system regulation, Heizungsanlagenverordnung (HeizAnlV) and was expected to help reduce Germany's carbon dioxide emissions by 10 million tonnes per year by 2005. The EnEV legislation requires buildings to conform to its stringent specifications, which generally favour the use of low energy heating systems (Niedrigenergiesysteme) such as solar thermal and heat pumps. The first EnEV law required stricter energy efficiency standards for new buildings and forced owners of older homes to replace heating systems that dated back to before October 1978.

The Federal Ministry of Traffic, Building and Urban Development, Bundesministerium für Verkehr, Bau und Stadtentwicklung (BMVBS), and the Ministry of Economy and Technology, Bundesministerium für Wirtschaft und Technologie (BMWi), were responsible for implementation of EPBD into German legislation. However, the Ministry of Environment, Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit (BMU), also influences the legislation process, with assistance from the German Energy Agency, Deutsche Energie Agentur (DENA), and the Federal Agency for Economics and Export Control, Bundesamt für Wirtschaft und Ausfuhrkontrolle (BAFA www.bafa.de).

The main provisions of the EnEV law are to: • enable a sustainable development of energy provision • reduce the economic costs of energy provision • save fossil fuels

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• promote development of technologies for the production of electricity from renewable sources

Another forerunner of the EnEV regulation was the law on the feed in of electricity from renewable energies, Gesetz über die Einspeisung von Strom aus erneuerbaren Energien in das öffentliche Netz, or, for short, Stromeinspeisungsgesetz, passed on 7 December 1990 and implemented in 1991.

Since 2002, there have been several revisions made to EnEV, including one introduced on 1st January 2009. This revision, EnEV 2009, regulated the CO2-emission targets by reducing the primary energy consumption of new buildings by 30%. According to the 2009 revision, renewable energy sources are now expressly mentioned in the energy passport. This is due to the renewable heat law, EEWärmeG (Erneuerbare Energien Wärmegesetz). Measures in accordance to this law are noted in the energy passport as soon as the energy demand falls by more than 15%.

German energy legislation is in some danger of over-regulation and overlapping as there are many existing regulations, especially in the heating area and for residential buildings. The 2009 EnEV amendment reflected the need to adjust and link directives and measures with EEWärmeG. There are also lots of new targets that industry has to achieve.

The emission protection regulations, Bundes-Immissionsschutzverordnungen (BImSchV), came into effect on 22 March 2010 and are very important for the heating sector. The performance of heating boilers and burners is determined by this regulation. Heating boilers must be tested by mandatory services at least every second year.

The later versions of EnEV, known as EnEV2007 and EnEV2009, which became effective in October 2007 and October 2009 respectively, govern the following issues:

 Energy certification for buildings  Minimum energy efficiency requirements for new buildings  Minimum energy efficiency requirements for existing buildings for refurbishments, extensions and alterations  Minimum energy efficiency requirements for heating, cooling and ventilation as well as domestic hot water supply  Inspection intervals for air conditioning plants

EnEV2009 contained even stricter energy efficiency requirements for new and existing buildings than EnEV2007. It required the total energy efficiency of building to increase by a further 30% compared to the EnEV2007 standards. An amendment to the existing legislation was approved by the cabinet of the German government on 6th February 2013 and is expected to come into force in early 2014. Standards for new buildings will be raised in relation to total

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energy efficiency, structure and primary energy use. The energy certificate requirements will also be much stricter and controlled. The certificate findings will also have to be displayed in adverts for renting and selling properties. A control system will also be introduced for inspection reports of air conditioning systems in all types of buildings.

German regulations and standards for building services are usually developed by the National Institute for Standards, Deutsches Institut für Normung (DIN), and the Association of Engineers, Verein Deutscher Ingenieure (VDI).

The EnEV legislation targets the reduction of primary energy use. Heat supply options are judged by primary energy factors reflecting the fossil-fuel content. The factor used for electricity is 3.0, natural gas boilers 1.3 and CHP 0.7, clearly favouring CHP installations. Combined heat and power generation (CHP) saves on fuel and eases the burden on the environment and is considered as one of the most effective ways of reducing CO2 emissions.

The costs of supporting renewable energies for electricity production in Germany are expected to amount to over €20 billion in 2013.

Table 19 - Estimated Apportioned Costs of EnEV levy in Germany in 2013 - Source: www.dena.de Costs Costs %

(€ million) (cents/kWh) Costs

Solar PV 8,528 2.207 41.8

Biomass 4,191 1.085 20.6

Wind - onshore 2,708 0.701 13.3

Wind - offshore 343 0.089 1.7

Hydroelectricity 171 0.044 0.8

Geothermal 41 0.011 0.2

Guarantee differential 2,589 0.67 12.7

Liquidity reserve (10%) 1,614 0.418 7.9

Solar PV upgrade costs 105 0.027 0.5

Green electricity effect 52 0.013 0.3

EnEV marketing 50 0.013 0.3

Total 20,393 100.0

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The so-called solar PV amendment, PV Novelle, came into effect at the end of June 2012, backdated to 1st April 2012. New categories of PV systems were defined, with a limit for support set at 10,000 kW. A limit was also set on total solar PV capacity in Germany at 52GW, compared to an actual capacity of 27 GW in mid-2012, with annual expansion of 2.5-3.5kW. For installations of 10-1,000 kW capacity, only 90% of the electricity output will receive support. Support was set at 13.5-19.5 cents/kWh. Accredited energy certification for buildings German energy certification for buildings, or the Energieausweis, comes under the auspices of EnEV. An energy performance certificate has been compulsory for new buildings and major refurbishments in Germany since 2002 and for existing buildings aimed for rent, sale or public use since 2009. From 2010, public buildings with a total floor space over 1,000 m2 also have to obtain energy certificates.

A standard Energieausweis consists of the following parts:  Page 1: General information about a building;  Page 2: Information on energy demand  Page 3: Information on energy consumption  Page 4: Explanation of definitions  Page 5: Advice on modernisation

German energy performance certificates are divided into two types, namely certificates based on real metering data for consumption (Verbrauchausweis) and those based on the demand estimate (Bedarfausweis). The demand certificate is more common. However, depending on the type of building, the easier, consumption-based performance certificate can be applied. The latter is especially common in non-residential buildings. Although energy certification is mandatory, energy certificates still have a recommending rather than a mandatory function. Table 20 - Use of energy demand and consumption certificates in different buildings in Germany - Source: www.dena.de Classification of buildings Residential buildings Non-residential buildings

Mandatory demand certificate since Certification in new buildings Demand certificate, mandatory 1st October 2007

Demand certificate, mandatory Mandatory demand or consumption Certification in existing buildings since 1st July 2008 certificate since 1st July 2009

Demand certificate, mandatory Construction year 1965 and earlier n/a since 1st July 2008

Demand certificate, mandatory Construction year 1966 and later n/a since 1st July 2009

Demand certificate, since 1st Buildings with up to 4 apartments, n/a construction year October 2008

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1977 and earlier

Buildings with up to 4 apartments, Demand certificate or construction year 1977 and earlier, n/a consumption certificate retrofitted to the level WSVO1977

Demand certificate or Every building starting from 1978 n/a consumption certificate

There is no regulatory body that controls energy certification in Germany. However, several government and non-government organisations contribute to and support the energy certification processes. The German Energy Agency (DENA), which developed the initial prototype of the German energy performance certificate, provides a databank of energy advisors, whilst the Federal Agency for Economics and Export Control (BAFA) supports the programme of local energy advisory services for residential buildings (VorOrt Energieberatung). Energy assessors (Energieberater), who are eligible to provide energy certification services, are represented by several specialised organisations, of which the biggest are DEN eV (German Network of Energy Advisors) and GIH Bundesverband eV.

The EPD certification was introduced to the market in order to advise landlords on their energy consumption and ways to improve energy efficiency. However, the energy certificate has not been properly integrated into the property market. Three major factors undermine energy certification in Germany. Due to the current legal status of the Energieausweis, sellers of existing buildings are required to display the certificate only when the purchaser requests it. The energy certificate displays the energy efficiency information by colour and in kWh/m2, which makes it rather difficult for a landlord and/or a purchaser to convert this information into expected utility costs. Energy efficiency is not currently considered to be a priority issue in the property market.

A 2011 survey by Climate Policy Initiative (CPI) shows that despite high awareness of energy certification, energy efficiency plays only a minor role in purchasing decisions in the property market in Germany. According to the survey, 81% of respondents were aware of the Energieausweis, and 78% used it at some point during their home research. However, only 35% of respondents reported that they considered the Energieausweis as valuable purchasing information. Energy efficiency is considered to be only a minor purchasing criterion, ranked 9th out of 13 criteria measured in the survey.

Another major issue in the market is the low quality of some energy assessment services. Many small agencies or freelancers offer cheap online certification. As energy certification is often regarded only as a formality to comply with legal requirements, customers are not really that interested in the quality of information delivered by the service. 14.1.2 Renewable Energies Heating Legislation Germany’s renewable energies heating law, Erneuerbare-EnergienWärmegesetz (EEWärmeG), aims to increase the share of renewable heat sources to 14% by 2020. The act requires all new buildings of over 50m2 in area in Germany to use renewable energies to cover

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a certain proportion of their annual heat load, or, alternatively, take other measures to save energy such as better insulation and better energy efficiency via improved energy controls and technology. Buildings which are supplied by high efficiency CHP systems are exempt from this particular obligation. With effect from 2015, existing buildings will also have to use some form of renewable energy.

Germany’s Ministry of the Environment, Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit (BMU), is responsible for the EEWärmeG legislation, assisted by the Ministry of Agriculture, Bundesministerium für Ernährung, Landwirtschaft und Verbraucherschutz (BMELV) and the Ministry of Economy and Technology, Bundesministerium für Wirtschaft und Technologie (BMWi). The law aims to generate a share of 12.5 % renewables in electricity production by 2012, 35% by 2020, 50% by 2030, 65% by 2030 and 80% by 2050, in line with the EU agreement signed at Meseberg in 2007.

The EEWärmeG regulates the feed-in tariff for electricity from renewable sources into the grid and guarantees producers a feed-in fee. The production of renewable energy out of the following sources is supported:

- Water power, including wave, tidal, salt gradients and water flow - Wind energy - Solar energy - Geothermal energy - Biomass energy, including biogas, biomethane, landfill gas, gas from purification plants and gas from waste tips

Other climate protection measures can also be taken: - Improve building insulation - Obtain heat from district heating system - Heat from combined heat and power generation (CHP)

The German government released its evaluation of the effects of its renewable energy heating legislation in December 2012. There was some doubt expressed as to whether the target of 14% of energy requirements being provided by renewable sources met by 2020 could be met, with 12.2% being a more likely figure under current conditions. Only with stricter laws and better incentives can the 14% target be met.

Since the start of 2009, new buildings have had to be provided with some form of renewable energy source or other energy savings measures such as insulation and heat recovery. In practice, in over 50% of cases, improved insulation has been fitted or use made of district heating, according to government figures. Heat pumps have proved to be the most popular renewable energy technology in the last few years, ahead of solar thermal and biomass.

The report identified no real need for major changes in German energy legislation, but did suggest that the efficiency of heat pumps should come under greater scrutiny. It recommended

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that they should be used to help stabilise the electricity grid once the smart grid and smart metering are a reality.

After the nuclear catastrophe in Fukushima, Japan, in March 2011, the German Government decided, in June 2011, to exit from nuclear energy. Eight of the seventeen nuclear power stations were closed immediately, with the rest due to be switched off by 2022. There has been a large German programme to increase wind energy plants, especially off-shore. However, the German electricity grid does not have the necessary infrastructure to transport large amounts of electricity from the North Sea to other parts of Germany.

14.1.3 German Energy Services Law The German Energy Services Law, Energiedienstleistungsgesetz (EDL-G), became effective on 12th November 2010. This law was intended to create an open market for energy services. It put into German law the European Union Directive 2006/32/EC

Energy suppliers and utilities are required, by this law, to inform clients and end users about energy services and to create more transparency with respect to energy delivery and prices. The law is not very strict or precise. There is a duty for the suppliers to provide information about energy efficiency. Institutions and associations, such as BDEW, Berlin (www.bdew.de) have taken on responsibility to generate such information, from which the energy suppliers and utilities can benefit.

Governmental bodies are also involved in publishing information and motivating companies to invest in energy performance improvement. The National Office of Energy Efficiency (BfEE) as well as the National Energy Agency, DENA, publishes lists of service providers for energy consulting and energy efficiency. DENA administers a campaign, called Good Practice Label, which informs about best-practice solutions in energy management. Price transparency has not been increased by this measure, but it is much better provided by independent internet price comparison services.

Many energy suppliers, especially city utilities, now offer ecological electricity produced from renewable sources, often at very competitive prices. Nevertheless, this has not been expressly promoted by the law and electricity prices have increased in general. 14.1.4 Combined Heat and Power Law The first German combined heat and power (CHP) law or Kraft-Wärme-Kopplungsgesetz, was passed in 2002 and formed the foundation of national policy in this area. It aimed to support CHP plants and systems through bonus payments. Up until 2010, a budget of €4.5 billion was allocated to help reduce CO2 emissions by modernising existing CHP plants, encouraging the use of new smaller CHP installations and fuel cell CHP systems. The first CHP law required electricity grid operators to connect CHP installations to their systems and to buy their electricity at the normal price as defined by the EEX (European Energy Exchange) in Leipzig.

CHP operators became eligible for a bonus for the electricity they provided to the public electricity networks. While this was certainly helpful for larger CHP systems, it did not offer

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support for CHP-generated electricity used within a property. Larger units export much more electricity to the grid and benefit more from support.

The on-site incentive was a compensation for electricity used on site without it having passed through the public network. This amounted to somewhere between €0.4-1.5/kWh depending on the location. The method of calculating this is shown in the electricity network tariff regulations (Stromnetzentgeltverordnung 2005). CHP operators were required to report each month to the network operators the amount of electricity from their plants which is fed into the network.

The second CHP law, part of the energy and climate protection legislative package, was approved in June 2008 and implemented in January 2009. Its main aim was to double the CHP share of electrical power generation to 25% by 2020. The new law continued to support CHP bonuses and brought the CHP law into line with European directive 2004/8/EC by giving a guarantee of origin for CHP electricity. It also included a definition of high efficiency CHP. The existing bonus system was extended to include modernised and new CHP plants starting operation between 2007 and 2016, regardless of capacity. Electricity for own use also became eligible for a self-consumption bonus payment. The extension and construction of new heat networks became eligible for support, if at least 60% of the heat came from CHP. An environmental tax is levied on all sales of natural gas, fuel oil, electricity and certain other fuels in Germany. However, fuel for micro-CHP units (under 50kW) is exempt from this tax.

The most recent 2012 CHP law introduced a binding target for CHP to reach a 25% share of total electricity production in Germany by 2020. Part of the driving force for this commitment has been the decision to phase out nuclear power plants in Germany by 2022. CHP plants generated approximately 90 TWh of electricity in Germany in 2010, which represented 15.4% of Germany’s total electricity production. CHP systems above 50kWe electricity accounted for the vast majority of this.

The 2012 Renewable Energy Law, EEWärmeG 2012, introduced an obligation on biomass electricity producers which enhances the opportunity for development of CHP. These measures, along with the micro-CHP incentive programme, are considered to positively contribute towards closing the gap between the current level in total power production and the 25% target to be attained by 2020. Progress towards achieving the binding 25% level is due to be evaluated in 2014 as part of the CHP Law review.

Financial incentives 14.2.1 German State Sponsored Loans The KfW (Kreditanstalt für Wiederaufbau) bank or credit institute was created with funding from the Marshall Plan after the end of World War II (www.kfw.de). It is now 80% owned by the German government, and 20% by the German regions or Länder. It has over 70 offices in Germany and abroad and plays a major role in loans for renewable energy installations.

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Since 1996, KfW has contributed to the refurbishment of more than one million dwellings through the provision of low interest loans. The KfW mechanism has proven very effective at overcoming financial barriers and creating an energy efficiency market. As for heating system refurbishments, KfW mainly offers low interest loans alongside its CO2 Building Modernisation Programme (CO2-Gebäudesanierungsprogramm).

The better the energy efficiency achieved the more attractive KfW’s support. The promotional programmes are aimed at everyone who invests in construction of a new building or renovation of residential buildings that are either owner-occupied or rented out. The low-interest loans are the main promotional instrument in financing major projects. Such loans are enabled partly through a reduced interest rate and stimulus packages using funds from the Federal Ministry of Transport, Building and Urban Affairs (Bundesministerium für Verkehr, Bau und Stadtentwicklung), and partly through favourable refinancing opportunities which KfW achieves on the capital markets thanks to Federal Government guarantees.

The loan application for domestic households is made firstly through their own bank, which then makes a transaction through KfW. KfW then distributes the loans via the investor’s own bank. This ensures that the promotional funds are granted to creditworthy investors and that they are used for economically viable projects. Private owners of single-family and two-family houses as well as homeowner associations may also apply for the grants directly from KfW.

In the case of flat or home owners, up to €75,000 (up to €50,000 for single installations) can be loaned by KfW at 2% interest currently (previously 1%) for renewable energy systems and improved windows and insulation, up to 100% of total project costs. Certain energy conditions have to be met. These relate to the KfZ “Efficiency House” standards, from the lowest, Effizienzhaus 115, with the most heat losses, through Effizienzhaus 100, Effizienzhaus 85, Effizienzhaus 70, Effizienzhaus 55 and Effizienzhaus 40, with the lowest heat losses. Bonuses are payable for the most energy-efficient projects. Typically, up to €15-20,000 might be lent for heating systems, including heat pumps.

For local heating networks of at least 500GWh output per year, and with a minimum of 50% solar heating and 20% solar PV inputs, very favourable loans of up to €1,500,000 are available from KfW. According to KfW estimates, annual investments of about €25 billion must be made in renewable energies, energy efficiency, extending the electricity network and constructing gas power stations in order for Germany to reach its renewable energy targets by 2020.

With effect from 1 March 2013, home owners who change their old heating systems to renewable energy systems can benefit from a low fixed interest loan (1% per annum) from KfW of up to €50,000, repayable over ten years. In contrast to other KfW programmes, this new scheme can be combined with a grant from BAFA. In Baden-Württemberg, the state government is also providing further subsidies to cut the loan interest rate to 0.75% per annum. Holiday homes and commercial premises do not qualify for the scheme (www.kfw.de/167).

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In January 2013, BMVBS, the German Ministry for Traffic, Building and City Development (Bundesministerium für Verkehr, Bau und Stadtentwicklung) announced plans to provide KfW with €300 million per annum for the support of energy-efficient renovation projects, in particular for private home owners:

 Increase in the investment grant from 7.5 % to 10% of the total loan, with a maximum of €5,000 per residential unit  KfW-Effizienzhaus 70 – increase in the investment grant from 17.5 % to 20% of the total loan, with a maximum of €15,000 per residential unit  KfW-Effizienzhaus 55 – increase in the investment grant subsidy from 20% to 25% of the total loan, with a maximum of €18,750 per residential unit.

In addition BMVBS has made further support available by improving the credit terms:

 KfW-Effizienzhaus 70 – increase in the repayment subsidy from 10% to 12.5% of the committed amount, with a maximum of €15,000 per residential unit  KfW-Effizienzhaus 55 – increase in the repayment subsidy from 12.5% to 17.5% of the total loan, with a maximum of €13,125 per residential unit http://www.kfw.de/kfw/de/Inlandsfoerderung/Aktuell_im_Fokus/Januar_2013/20130117_59764.jsp. 14.2.2 Financial Incentives and Subsidies for Heat pumps There are several financial incentives and subsidies for heat pumps, the most important of which is the MAP Market Incentive Programme (MarktAnreizProgramm). In January 2008, heat pumps were included in the German government’s MAP programme, which had previously been limited mostly to biomass and solar thermal applications.

The scheme is mainly run by the Federal Agency for Economics and Export Control (BAFA). Only efficient heat pumps are eligible under the criteria. In order to meet the efficiency criteria, heat pumps must reach a minimum annual coefficient of performance (power output divided by power input) or COP:

 An average annual COP (JAZ or Jahresarbeitszahlen) of at least 3.5 for air to water heat pumps (4.0 for non-residential buildings)  A COP of at least 3.8 for water to water and ground source heat pumps (4.0 for non- residential buildings)  A COP of at least 1.3 for gas-powered heat pumps.

BAFA produces a list of certified heat pumps which have the appropriate COP/JAZ ratings and which are therefore eligible for the subsidies. Over two thousand different models of heat pumps from over 100 companies are listed in the BAFA document.

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At the end of December 2012, the rules for inclusion of heat pumps in the MAP programme changed. Heat pumps that previously met the technical standard EN 255 qualified, but will no longer do so from 1 January 2013. From that date heat pumps will have to meet another standard, EN 14511, or an equivalent seal of approval from the European Heat Pump Association. This change will also be reflected in the BAFA list of approved heat pumps, Liste der Wärmepumpen mit Prüfzertifikat.

Subsidies are now only made for installations in existing buildings and new build installations are not funded anymore, except for a recent change for large heat pumps over 100kW. From January 2011 only heat pumps with a highly efficient circulator pump (efficiency class A) became eligible for funding.

With effect from 15 August 2012, the basic BAFA support grant for geothermal heat pumps up to 10kW capacity was raised by €400 to €2,800 per unit and for air/water heat pumps up to 10kW to €1,300 per unit. A new storage tank bonus of €500 (with at least 30 litres per kW heating capacity) and an efficiency bonus (50% of the basic grant) were also introduced. Support for large heat pumps in new build properties was also introduced.

According to industry estimates, some 13 million old heating systems in Germany need to be replaced on grounds of environmental protection. More money is also available for those insulating their houses, the efficiency bonus, if they meet the standards of the KfW- Effizienzhaus 55.

The technical requirements remained unchanged from the previous ruling in 2011. Air/water heat pumps must have a minimum COP of 3.5, geothermal heat pumps a minimum COP of 3.8 in residential properties and a minimum COP of 4.0 in non-residential properties. For large efficient heat pumps with over 100kW capacity from August 2012 for installation in new build properties, KfW will grant loans with very favourable interest rates and a redemption subsidy.

Table 21 - Heat pump market incentive programme (with effect from 15 August 2012) - Source: BAFA and BDH Combination Measure/Subsidy Basic subsidy bonus

€1,300 per installation up to 20kW Air to water heat pump (JAZ at least 3.5) €1,200 per installation ( 20kW-100kW) €600 €2,800 per installation up to 10kW (€500 from 1 Gas: JAZ 1.3 or higher €2,800 per installation over 10kW + January 2012) Ground-source: JAZ at least 3.8 (at least 4.0 for €120 per additional kW non-residential buildings €2,800 per installation over 20kW + €100 per additional kW

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In order to qualify for the heat pump subsidies, there has to be installation of electricity metering (or gas metering for gas driven heat pumps) and a heat metering device for heat pumps to calculate their seasonal performance factor (COP) according to VDI 4650. On top of the basic subsidy, house builders can also apply for a combination bonus if their heat pump system is combined with a solar thermal installation. The bonus subsidies can only be granted additionally if the respective requirements are met, while renewable combination and efficiency bonuses cannot both be granted. 14.2.3 Financial Subsidies for Solar Thermal There are financial incentives and subsidies for solar thermal, one of the most important of which is the MAP Market Incentive Programme (MarktAnreizProgramm). The scheme is run by Federal Agency for Economics and Export Control (BAFA).

On 15 March 2011, new funding guidelines for the market incentive programme came into force from the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU). For solar collectors, there was a temporary increase in basic funding for combined water heating and space heating to €120 to €180/m² on 30th December 2011. There was a new boiler replacement bonus (for the exchange of a boiler without condensing technology for a new condensing boiler). The bonus was set at €600 until 30th December 2011, after which it decreased to €500. The combination plus bonus for solar thermal and heat pump or solar and biomass was also €600 until 30th December 2011 and then that also decreased to €500.

With effect from 1st January 2012, the subsidy for solar collectors decreased to €90/m² collector surface area. However, for multi-family dwellings it remained at €180/m² for combined water heating and space heating systems. 14.2.4 Financial Subsidies for Biomass Boilers The market incentive programme, MAP (Marktanreizprogramm), is the main financial programme in Germany that is designed to promote energy saving and environmentally friendly products. It is run by the German federal government through the Federal Agency for Economics and Export Control (BAFA).

Gas and oil condensing boilers used to be in the MAP programme through a boiler replacement bonus in combination with solar thermal integration. However, condensing boilers are no longer covered by the programme. The MAP programme is now limited to renewable technologies, in particular biomass boilers (including those with automatic feeds), heat pumps and solar thermal panels.

For biomass boilers, the conditions are as follows, with effect from January 2012, with some slight changes from 2011:

Pellets stove with water tank: 5 kW up to a maximum of 100 kW Subsidy payment: €36/kW with a minimum of €1,000

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Pellet boiler: 5 kW up to a maximum of 100 kW Subsidy payment: €36/kW with a minimum of €2,000

Pellet boiler with new installed buffer tank of at least 30 l/kW: 5 kW up to maximum 100 kW Subsidy payment: €36/kW with a minimum of €2,500

Wood chip boiler with buffer tank of min. 30 l/kW: 5 kW up to a maximum of 100 kW Subsidy payment: €1000 per installation

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Log boiler with new installed buffer tank of at least 55 l/kW: 5 kW up to a maximum of 100 kW Subsidy payment: €1000 per installation

In addition there is a combination bonus of €500 per installation, which is payable when the biomass boiler is combined with a solar thermal system. There is also an efficiency bonus that can be payable in the case of residential buildings (but not for non-residential buildings) if the installation meets certain energy savings criteria. The combination bonus cannot be combined with the efficiency bonus. There is also an innovation incentive of €500 for measures which improve the heat performance of the boiler.

The German general election, which was held on 22 September 2013, resulted in a change in government in Germany, which may well result in a change in many energy subsidies. The liberal FDP party, which had been in a coalition government with the conservative CDU/CSU lost all its parliamentary seats in the election. The CDU/CSU union, under Chancellor Angela Markel, did not quite have a majority in the German parliament, and eventually formed a “grand coalition” government with the second-largest parliamentary party, the SDP (social democrats), at the end of 2013. In the new government, the head of the energy ministry is the SPD leader, Sigmar Gabriel. He has already indicated that there will be changes to energy legislation in Germany, with a definite reduction in subsidies for land-based wind energy installations and other reductions also likely. There is considerable discontent in all the major political parties about the high and rising renewable energy levy on the price of electricity and there is every likelihood that the mechanisms for this will be changed.

Biomass boilers are only subsidised in existing buildings. New installations are not covered by the programme. Conditions for the subsidy are strict. From 2011, only boilers with efficient circulator pumps have been subsidised.

There was a reintroduction of the promotion for low emission log gasification boilers in March 2011 from the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU). As a condition of eligibility, there was a limit for particulate emissions of 15 mg/m³. This value is based on 2017 emission limits. The funding amounts to €1,000. All the more recent funding for pellet stoves, pellet (including combination) boilers and wood chip systems remained unchanged.

The overall effect of the subsidies on the market is relatively limited. However, there is a psychological effect from the subsidies. Products receiving subsidies are seen as approved or officially desirable by end users. The fact that they are promoted by the government helps as a sales argument, independent from the actual extent and availability of the grant.

In some cases, there are additional promotional programmes in individual German states. The federal state of Sachsen introduced a short-term support programme for wood pellet boilers until 30 September 2012 with €2,500 per boiler, for capacities from 5-100 kW. The sum was in

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addition to any subsidies available from BAFA. BAFA itself has been trying to get individual cities and communes to help in promoting the MAP programme and has been paying them to do so from early 2012. Other Programmes Apart from the BAFA incentives, nearly all of the major utilities in Germany offer special subsidies for energy efficient heating installations, such as gas condensing boilers with or without solar thermal, electric heat pump installations with or without solar thermal and heat recovery integration. These can often be applied for on top of the subsidies and loans made available by the German KfW Bank or BAFA.

In total, there are several hundred different subsidy schemes available for the installation of energy efficient heating systems in Germany out of more than 5,700 different subsidies available for building energy efficiency measures. These are administered by cities, administrative districts, communities, utilities, individual German federal states and the German federal government. Further information on the subsidies is available from a special website that is dedicated to this subject (www.foerderdata.de). 14.2.5 Financial Subsidies for Combined Heat and Power (CHP) Germany is one of the few countries where CHP is very generously supported. The country has been following an energy transformation (Energiewende) strategy, aiming for a shift away from fossil fuels and nuclear power to more renewable energy in the energy mix.

German building and energy savings legislation (EnEV) targets the reduction of primary energy use. Heat supply options are judged by primary energy factors reflecting the fossil-fuel content. The factor used for electricity is currently 2.3 – 2.6 (1.8 from 01.01.2016 due to more renewables), natural gas boilers 1.1, wood boilers 0.2 and CHP 0.7, clearly favouring CHP installations. These factors are specific to Germany and are related to the costs of exploitation, transport and yield (energy at the point of use). There is also a political element involved in defining these factors. Combined heat and power generation (CHP) saves on fuel and eases the burden on the environment and is considered as one of the most effective ways of reducing CO2 emissions.

The German government's climate protection initiative is intended to support the intensive use of mini-CHP systems through the provision of grants for investment in new systems with a maximum output of 50 kWe. A bonus is also paid to CHP plants producing particularly low levels of harmful emissions. The scheme was introduced in September 2008 and is administered by the Federal Agency for Economics and Export Control (BAFA), subject to various conditions. The CHP system has to exceed the provisions of the EU directive applicable to small-scale CHP, with primary energy savings of at least 10% and an annual overall efficiency of at least 80%. The system has to have a full maintenance contract from the manufacturer and an integrated electricity meter. It has to comply with the relevant technical instructions on air quality control and must not be used in areas with district heating supplied mainly by CHP systems. The grant is only paid for systems that have not yet been installed and is not paid retrospectively.

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Although Germany’s renewable energies heating law, EEWärmeG, applies principally to renewables, small biogas CHP plants can take advantage of its benefits. This law guarantees an electricity feed in tariff of up to €0.27 per kWh, including a €0.03 CHP bonus for up to 20 years after the system became operational. Tariffs for new plant installations will get reduced by 1.5% per year for landfill gas and sewage gas and by 1.0% per year for agricultural biogas.

Under the latest CHP legislation, CHP and fuel cell systems which are installed from 18th July 2012 receive, for a period of ten years or 30,000 operating hours, €5.41 per kWh of electricity produced, whether fed into the grid or directly used.

Regional subsidies Special CHP subsidies are currently available from the regional government of Nordrhein- Westfalen for units up to 50kW. The regional government wants to increase the share of electricity coming from CHP to 25% by 2020. Grants of between €1,500- 17,000 are being offered to small and medium-sized enterprises. Some other German states are expected to follow the example of Nordrhein-Westfalen.

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Summary on the effects of HVAC and renewables - Germany Products Policies and Incentives Map Possible effects

HEATING Incentives and + requirement for use of General growth in district heating, with some District Heating CHP systems, cities such as Berlin and Dusseldorf growing geothermal and solar rapidly thermal Domestic Boilers Only for biomass boilers + Growth in usage of biomass boilers Biomass boiler Commercial Boilers + Growth in usage of biomass boilers incentives Biomass Boilers Renewable incentives + Growth in usage of biomass boilers Heat pump Incentives for retrofit + Increased usage Compression Heat Incentives for retrofit + Increased usage Pumps Sorption/Gas Heat Incentives for retrofit + Increased usage Pumps Various national and Small scale CHP + Increased usage local incentives Biomass CHP Specific incentives + Increased usage Declining in importance for heating, but growing Electric heating No incentives – in use for domestic/commercial hot water supply Heat recovery Incentives/cheap loans + Becoming increasingly important AIR-CONDITIONING Air conditioning No incentives = Growing general use of air conditioning systems Mechanical ventilation Incentives/cheap loans + Becoming increasingly important HOT WATER Incentives and cheap Solar Thermal Becoming increasingly important loans + ELECTRICITY Daylighting systems Feed in incentives from PV government and cheap + Falling incentive level are curbing growth loans INSULATION Wall Insulation Incentives/cheap loans + Greater use of insulation Loft Insulation Incentives/cheap loans + Greater use of insulation

+ Positive Effect – Negative Effect = No Impact

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Sources of Information  BSRIA Ltd Germany 2012/2013 country reports on Energy Services, Heat Pumps, Solar Thermal, Gas Alternatives and Boilers (www.bsria.co.uk)  www.einspeiseverguetung-photovoltaik.de  http://ec.europa.eu  www.din.de  www.dena.de  www.bmu.de  www.bmwi.de  www.bafa.de  www.bdh-online.de  www.kfw.de  www.enev-2013.info  www.enev-online.com  www.bmvbs.de

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15 Greece

Greece has a per capita GDP of $23,631, and entered the Eurozone in 2001. Greece suffered from the global financial crisis, and its economy has been in recession ever since. Greece has been bailed out twice, in 2010 and 2012.

Almost half of Greece’s electricity production is from lignite (brown coal). In 2008 renewable energy accounted for 8% of the country's total energy consumption – the dominant sources are biomass and waste recycling, although approximately 10% of the country's renewable energy comes from solar power.

National policy and financial incentives The National Target for 2020 set by the Greek government is to achieve a 29% share of renewable energy in the total consumption mix.

The total installed capacity of renewables in Greece is: . Wind – 1,784 MW . PV – 2,403 MW . Small Hydro – 218 MW . Biogas – 4MW

The Targets set out by Greece are further expanded in the 2nd edition of National Energy Efficiency Action Plan that evaluates different measures planned to be implemented in Greece. It needs to be reviewed every 2 years and provides with the updates how Greece is moving towards the targets identified in the energy strategy and on meeting interim targets by 2016. 15.1.1 Law 4122/2013 “Energy Performance of Buildings” This provides for the implementation of Directive 2010/31/EE and sets minimum energy requirements, including provisions of requirements for Nearly Zero Energy Buildings, explains the Energy Performance Certificates, inspections of air-conditioning systems and inspectors registration. 15.1.2 Subsidy Schemes Greece does not have any specific incentives for energy efficiency of office buildings. However, there are provisions of subsidies in place for the residential sector. 15.1.3 Feed-In Tariffs (FITs) FITs are regulated by Law 3468/2006, Production of Electricity from Renewable Energy Sources and High-Efficiency Cogeneration of Electricity and Heat and Miscellaneous Provisions and Law 3734/2009 “promotion of cogeneration of two or more useful forms of energy and miscellaneous other provisions”. Feed In Tariffs are paid at different rates depending on the technology for the period of 20 years.

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Table 22 - Feed In Tariffs in Greece - 2013 Technology €/kWh PV 0.252 - 0.447 Hydro energy 0.087 Geothermal 0.099 - 0.15 Biomass €/MWh Biomass ≤ 1 MW 200 1MW < Biomass ≤ 5MW 175 Biomass > 5MW 150 Biogas ≤ 2 MW 120 Biogas > 2 MW 99.45 Biogas out of Biomass 220 ≤3MW Biogas out of Biomass 200 >3MW

15.1.4 Energy Performance Certificates In Greece energy performance certificates are mandatory for all buildings > 50 m2 undergoing renovation. The total number of EPCs issued by the beginning of 2013 exceeded 274,000 with around 60% issued for rental properties. Nearly 27% of buildings hold a G certificate and around 44% hold A+ to B certificates. At the same time, 45% of EPCs were issued for buildings that were constructed before the introduction of EPC legislation. 15.1.5 Retroactive Cuts and Retrospective Taxation - 2013 The Greek Ministry of Environment, Energy and Climate Change (YPEKA) has recently introduced retrospective tax on systems utilising renewable sources of energy. This created a wave of criticism in Greece. Also retrospective cuts to Feed In Tariffs were introduced as a means to tackle the budget deficit exceeding €300m in February 2013.

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Table 23 - Rooftop Solar Planned Cuts in Greece – 2013 - Source: cleantechnica.com Month/Year FIT (€/MWh) February 2013 125 February 2014 120 February 2015 115 February 2016 110 February 2017 105 August 2017 100 February 2018 95 August 2018 90 February 2019 85 August 2019 80

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Summary on the effects of HVAC and renewables - Greece Products Policies and Incentives Map Possible effects

HEATING District Heating = No specific policy impact; share is negligible Law 4122/2013 “Energy + Domestic Boilers Performance of Indirect positive effect Buildings Law 4122/2013 “Energy + Commercial Boilers Performance of Indirect positive effect Buildings Considerable biomass support might promote Biomass Boilers FITs + higher growth Heat pump + Geothermal is marginal

Compression Heat

Pumps ●

Sorption/Gas Heat

Pumps ● Incentives for investment + Small scale CHP into Combined Heat and Growth in the sector Power Incentives for investment + Considerable biomass support might promote Biomass CHP into Combined Heat and higher growth Power Electric heating = No specific policy Heat recovery nZEB = No specific impact, focus on raising awareness AIR-CONDITIONING Compulsory inspections Air conditioning Changing Air Condition + Positive effect 65% grant for retrofit Mechanical ventilation nZEB = No specific impact HOT WATER Retrospective cuts in Gradual Reduction of Feed-in Tariffs up to 2018 Solar Thermal FITs – might hinder the market FITs ELECTRICITY Daylighting systems ●

Retrospective cuts in Adverse effect on the market as further support is FITs withdrawn and greatly reduced over next 5 years. PV – Solar Keymark Residential PV market slightly preferential over certification large scale projects.

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INSULATION Wall Insulation Loft Insulation

+ Positive Effect – Negative Effect = No Impact

Sources of information . Odyssee-MURE Database http://www.odyssee-indicators.org

16 Hungary

The current republic of Hungary was formed in 1989. Hungary joined the EU in 2004, but still retains the Forint as its currency. In the long term, this may be replaced by the Euro. Per capita GDP is $19,637 (2012 estimate).

Over a quarter of Hungary’s residential buildings stock was built pre-1945. A large proportion was also built during the 1960’s and 1970’s. The Hungarian building stock, ranks among the top ten EU27 countries in terms of specific dwelling energy consumption scaled to EU average climate (247 kWh/m2.year for the Hungarian average residential unit vs. 220 kWh/m2.year of the EU average in the period 2000-2007).

National policy and financial incentives 16.1.1 Hungarian National Energy Strategy and National Renewable Energy Action plan Overview

Introduced in 2011, the strategy sets out the perspective and targets till 2030. The targets of the previous strategy adopted in 2008, have been marginally updated and included:

 Energy from renewable energy sources to reach 20% out of total energy produced by 2030;

 Renewable share of electricity to be around 15%-20%;

 Detailed national targets for reduction of final energy consumption by 1% per year (~57.4 PJ)

 Renewable share of heating and cooling to target 25% by 2030

The new strategy is trying to resolve some of the imbalances in financing certain areas of renewables and provide the fair support to the standard renewable sources of , utilising on geothermal, solar and small-scale biomass sources, which were left out in the previous national policy.

At the same time the government keeps underlining its dedication to nuclear energy. That could hinder the uptake and development of renewable sources, as well as national and local

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initiatives targeted to promote the energy efficient systems in new build and renovation projects.

Some market segments will suffer from this approach, however the office renovation sector will benefit, not only bringing attractive offices to the rental, but also ensuring energy efficient running of the offices in the longer term.

The key organisations responsible for overseeing and implementing various programmes and funding are: • The Ministry of Economy and Transport • The Ministry of Environmental Protection and Water Management • The Energy Centre

Under the Directive 2009/28/EC on renewable energy the Hungarian government extended its target to 14.65% and set up the goals for heating from renewable sources to reach 18.6%. As part of the overall programme, several sub-programmes have been established: . New Green Home Building ; . Panel renewal; . District heating efficiency ; . Home refurbishment; . Renewed public institutions; . Green SMEs

In 2012 the Government allocated €495m from the Cohesion Fund to support energy efficient initiatives and activities. 16.1.2 National Climate Change Strategy (NCCS) NCCS was approved in 2009 and provides goals and actions for implementation in Hungary until 2025. The Climate Change Act 2007 also puts the requirement to update NCCS every 2 years, in line with which the forthcoming new update was still due to be released in 2013 at the time of the preparation of the report. It also defined the sources of funding coming from the sales of the unused emissions under the Kyoto Protocol. 16.1.3 Green Investment Programme (GIP)

This programme was established in 2009 by the Ministry of Rural Development of Hungary and is directed for the benefit of the residential sector. The Green Investment Program (GIP) derives funds from selling of Kyoto Protocol CO2 quotas and is aimed at promoting energy efficiency measures in the residential sector and targets the following main areas: • energy efficiency of residential housing, • energy efficient developments of blocks of flats, • swapping traditional household appliances for more energy efficient appliances • replacement of traditional light-bulbs with fluorescent ones.

The maximum amount of financial support is 30% of the project.

In 2013 the Hungarian Ministry of National Development allocated a further €15.7bn for modernisation and renovation of panel buildings within the Framework of the programme. It forms the part of the Bew Szechenyi Plan and is the second phase of the programme ZBR

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running from 2011. The projects have to be based around achieving energy efficiency, as previously, however this time it also specifies that the panel buildings should be built prior to 1992 and measures are to be delivered as part of the overall renovation package. 16.1.4 New Czechernyi Plan

Green Economic Development Programme of the New Széchenyi Plan (NSzP) has got the budget of HUF 69m (approx. €230,000) with the minimum funding of HUF 1m (approx. €3,300) and maximum amount up to HUF 500m (approx. €1.6m).

The most popular energy schemes are already available in the framework of the New Széchenyi Plan: 1) targeting cooling, heating, electricity supply; 2) targeting development of energy performance of buildings by renovations and replacements of heating systems.

The projects can go through the submitting process up to October 2013.

There are four main streams within the scheme: • District Heating Modernisation with the use of RES • Local Heating and electricity with RES • Local heating and cooling with RES • Renewable energy electricity and CHP (including solar plant and solar parks)

The programme proved to be popular after the 2 year wait and within hours from the start reached its budgetary potential and was temporary suspended for further calls by the National Development Agency (NDA).

Recently NDA had to suspend quite a few similar programmes for the same reason, that most probably is the result of the period 2007-2013 reaching its finishing line. The situation might improve further in 2014 when new funds for the period 2014-2020 will be allocated and announced. 16.1.5 EEA and Norway Grants 2009-2014 These grants provide the necessary funding for environmental initiatives and programmes and are provided by Norway, and with an allocated budget of HUF 40bn (approx. €132m) in 2011. 16.1.6 Environment and Energy Operational Programme (EEOP) This programme is providing funding for the residential sector and supports the increased use of renewable energy sources and more efficient use of energy. The building sector is directly benefiting from the funds arising from the Cohesion Fund and local municipal budgets, as well as organisations themselves. Around HUF 30bn (approx. €100m) were made available to distribute between projects below and above HUF 50m (approx. €170,000). The grants will be covering up to 100% of the project dependant on its nature and normally would cover: • Thermal improvements and reduction of heat losses as part of a renovation package • Energy efficient lighting • Heating, cooling and domestic hot water systems

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16.1.7 Energy Saving Credit Fund (EHA) This fund is providing soft loans to local governments and organisations with attractive interest rates or interest free loans covering up to 25% of investments with the additional bank loan on the preferential terms. 16.1.8 PANEL Programme This subsidy is available for multi-tenant prefabricated apartment blocks and is managed by ministry of local Government and Regional Development. The sector is in urgent need of renovation including improvements of insulation, windows, doors, general heating distribution networks, etc. 16.1.9 Feed-In Tariffs (FITs) - METAR

There are no Feed-In tariffs in Hungary, although official plans were publicised back in 2011. There are still ongoing discussions and amendments as to the possible coming release of the New Hungarian Energy Strategy and allocation of Feed-In Tariffs for different types of technologies. Solar Thermal and PV markets are unable to fulfil their potential as they require financial incentives in place, especially in the residential sector.

The main suggested points of new Feed In Tariffs are:

. Eligibility for 15 years . Specified for different renewable technologies . Periodical reviews . Bonus support and inflation and CAPEX considerations

At the moment the only support available to the residential market is the net metering scheme operating on an annual basis.

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Summary on the effects of HVAC and renewables - Hungary Products Policies and Incentives Map Possible effects

HEATING District Heating EU funding + More favourable funding supports district heating Domestic Boilers EEOP + Market expansion New Czechernyi Plan Commercial Boilers + Growing interest in the market

New Czechernyi Plan Biomass Boilers + Growing interest in the market

New Czechernyi Plan Heat pump + Growing interest in the market

Compression Heat No specific policy Pumps

Sorption/Gas Heat No specific policy Pumps New Czechernyi Plan Small scale CHP + Growing interest in the market

New Czechernyi Plan Biomass CHP + Growing interest in the market

Electric heating No specific policy – Declining interest Heat recovery EEOP + Becoming increasingly important AIR-CONDITIONING Air conditioning EEOP + Cooling systems support Mechanical ventilation EEOP + Becoming increasingly important HOT WATER No official subsidies; release of METAR (FITs) Market is awaiting possible funding; on allocation Solar Thermal and New Energy = growth could be expected in 2014 Strategy is expected ELECTRICITY Green Investment Program Daylighting systems Promotes efficient lighting KEOP Program + NEAP, EEOP No official subsidies; release of METAR (FITs) Market is awaiting possible funding through FITs; PV and New Energy = on allocation growth could be expected in 2014 Strategy is expected

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Direct investment 40%- Some support in commercial and public sector, 70% subsidy for while residential segment will suffer due to no organisations and public financial incentives available sector Current tariffs for net metering make PV attractive Net Metering INSULATION EEOP Wall Insulation + Increased use of insulation PANEL EEOP Loft Insulation + Increased use of insulation PANEL

+ Positive Effect – Negative Effect = No Impact

Sources of information . Odyssee-MURE Database http://www.odyssee-indicators.org . http://www.ceeconstruction.com/182311/National-funding-of-HUF-46bn-for-panel- building-modernisation-in-Hungary.shtml . New Szenchenyi Plan http://www.nfu.hu/uj_szechenyi_terv . National Climate Change Strategy 2008-2025 . Ministry of Rural Development http://www.kormany.hu/hu/videkfejlesztesi-miniszterium . National Development Agency http://www.nfu.hu . Hungarian Energy Office http://www.eh.gov.hu/en/ . Ministry for National Development, National Development Agency, Managing Authority for International Cooperation Programmes, +36 1474-9200, [email protected], www.eeagrants.hu . www.nf.hu . http://www.napelem.net/hungarian_PV_Manitu_Solar/Hungarian_PV_Market_Remains_6 -8MW_in_2013.php . www.buildup.eu

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17 Ireland

The saw fast economic growth from 1995 to 2007 (the Celtic Tiger economy) but also suffered a sharp decline starting from 2008. Construction output slowed down considerably after the “burst of the housing bubble” in 2008. GDP per capita is $43,592 (2012 estimate).

Ireland traditionally relied heavily on peat-burning for electricity production and heating however this has decreased, with corresponding increases in the use of oil, natural gas and renewables such as wind and hydro. There are reserves of oil and gas in Ireland, and these are starting to be exploited. There are no nuclear power stations in Ireland. Sustainable Energy Authority of Ireland (SEAI) have estimated that 6.5% of Ireland's 2011 energy requirements were produced by renewable sources. SEAI have also reported an increase in energy efficiency in Ireland with a 28% reduction in carbon emissions per house from the peak year (2005) to 2013.

Regulations governing the energy efficiency of new dwellings were not introduced in the Republic of Ireland until 1979. 50% of the current housing stock was constructed prior to 1979 and it was not until 2006 that significant thermal retrofits were introduced.

National policy and financial incentives 17.1.1 National Energy Efficiency Action Plan 2

The Action plan that came into effect in February 2013 specifies measures in terms of the Irish National Energy Efficiency Policy under Directive 2009/28/EC till 2020 and confirms the commitment toward the 16% target for share of energy coming from renewable sources in gross final consumption of energy in 2020 and an overall energy saving target of 20% by 2020.

It dedicates the direction to the achieving targets in buildings sector through implementation of Affordable Energy Scheme and implementation of EPBD Directive in Ireland.

The main energy savings in the Buildings sector are envisaged to be provided by the following list of sub-schemes:

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Table 24 - Savings by Schemes within NEEAP in Ireland - Source: NEEAP

Scheme Savings, GWh by 2016

Energy Efficient Boiler 800

Domestic Lighting (Eco- 1,200 Design Directive)

Greener Homes 120

Warmer Homes 130

Home Energy Saving 365

Smart Meter Rollout 375

Better Energy Homes 3,000

17.1.2 Energy Efficient Boiler This initiative highlights the need for regular boiler inspections by the owners of buildings to identify the boilers that are most in need (the older systems) in order to increase awareness for the need of servicing and timely replacements. 17.1.3 Warmer Homes Scheme (WHS) The Scheme was rebranded in May 2011. The main focus is on retrofit improvements of older housing for privately owned or rented accommodation and it is being overlooked by the Sustainable Energy Authority. It covers houses that do not belong to the Local Authority and were built prior to 2002. The owners of the houses should be in receipt of certain benefits to allow them to participate in the Scheme. WHS covers areas of improvements such as attic insulation, draught proofing, energy efficient lighting, cavity wall insulation and general energy advice. 17.1.4 Better Energy Homes (residential retrofit) This programme was initially launched in May 2011 and brought the funding replacement to the Greener Homes Scheme. The level of subsidies available is listed in the table below:

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Table 25 – subsidies for energy efficent works - Source: www.seai.ie Energy Efficient Type of Work Cash Grant Works in € Insulation Attic Insulations 200 Wall Insulation - Cavity 250 Wall Insulation – Internal Dry lining Apartment or Mid-terrace House 900 Semi-detached or End-terraced 1350 Detached House 1800 Wall Insulation External Apartment or Mid-terrace House 1800 Semi-detached or End-terraced 2700 Detached House 3600 Heating System Upgrade 560 Controls with Boiler Heating Controls Upgrade Only 400 (Oil or Gas) Solar Heating 800

Thus, the following measures are promoted and financially supported within the Better Energy Homes Scheme: . Roof and wall insulation . Upgraded heating controls . High-efficiency boiler (>90%) . Building Energy Rating (BER) . Solar heating 17.1.5 Energy Efficiency Fund - 2009 NEEAP activities were also materialised in the separate Energy Efficiency Fund with an allocated budget of €70m to fund measures both in residential and commercial sectors and allows lending of up to 100% of the project cost under the scheme. The Launch of the Fund and the announcement of the Budget was on 28th February 2013. 17.1.6 Strategy for the Renewable Energy 2012-2020 The Strategy was prepared by the Department of Communications, Energy and Natural Resources and sets the achievement of 5 strategic goals: . wind energy . sustainable bioenergy sector . R&D in renewables such as wave & tidal . growing sustainable transport . robust and efficient networks

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17.1.7 Affordable Energy Strategy The Strategy is run by the Inter-Departmental Group on Affordable Energy that includes governmental bodies, regulators and NGOs and identifies 48 short, medium and long-term goals to tackle energy poverty in the residential sector. 17.1.8 Renewable Energy Feed-In Tariffs Scheme - REFIT The REFIT 3 Scheme is supporting a wide range of technologies, including CHP and biomass, with planned production of around 310MW, half of which is projected to be high-efficiency CHP production.

There are 3 main categories under the REFIT scheme (www.dcenr.gov.ie):

 REFIT 1 – 2006-2007 - The original initial REFIT scheme for small and large scale onshore wind, biomass and small hydro (≤ 5MW)  REFIT 2 – 2012 - for small and large scale onshore wind, biomass and small hydro (≤ 5MW.) with the requirements of proof of grid connection and planning permission in place.  REFIT 3 – 2011 – for biomass technologies – overall 310 MW: . 50MW - AD CHP ≤500 kW; AD CHP >500 kW; AD (non CHP) ≤500kW; AD (non CHP) >500kW) . 100MW - Biomass CHP (non AD) sub technologies (biomass CHP ≤1500kW; Biomass CHP >1500kW) . 160MW - biomass combustion and co-firing

17.1.9 New House grants The Housing (Miscellaneous Provisions) (No 2) Bill 2001, published in December 2001, contains a provision enabling the making of regulations providing for greater flexibility for the payment of new house grants in the future, including differential rates to encourage more efficient use of energy, and the use of renewable forms of energy. 17.1.10 Electricity Cogeneration Programme - CHP CHP potential as an energy-efficient measure is recognised at the EU level. The Directive sets up the priority of CHP generated electricity supply to the grid, as well as requirements to assess this potential at the national level and conduct the cost-benefit analysis both for new and refurbished stations. It is expected that the directive will be implemented in the local legislation from 5 June 2014.

As of 2012, the following installed CHP capacity was reported for Ireland: Table 26 – CHP capacity in Ireland - Source: SEAI Electrical Capacity No of Units %% Operational Operational Size Range Capacity, Capacity, %% MWe Micro <50kWe 46 19 0.3 0.1 50kWe<=Small<1MWe 150 62 27 8.8 Large>= 1MWe 46 19 279 91.1

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Total 243 100 306.3 100

17.1.11 Carbon Tax 17.1.12 The rate of tax, with effect from 1 May 2013, is based on a charge of €10 per tonne of CO2 emitted. The rate will increase to €20 per tonne with effect from 1 May 2014. At the same time, carbon tax relief is applied to CHP projects, apart from the micro-CHP. Partial relief from carbon tax is provided for mineral oil, natural gas or solid fuel; while, if peat is used as the main source of energy for the CHP plant, the full relief from carbon tax will be applied. The necessary provisions are enclosed in the Finance Act 2012. 17.1.13 The CHP Deployment Programme At present, the programme undertakes further feasibility studies to understand the applications of CHP, biomass CHP and micro-CHP.

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Summary on the effects of HVAC and renewables - Ireland Products Policies and Incentives Map Possible effects

HEATING No specific policy impact; individual boilers District Heating - = prevalent

Better Energy Homes Efficient boilers and boiler replacements in Domestic Boilers + Energy Efficient Boiler residential sector Commercial Boilers Energy Efficient Boiler + Growing market Biomass Boilers REFIT 3 + Market stimulation Heat pump + Growing deployment but at slow rates Compression Heat ● Pumps Sorption/Gas Heat ● Pumps Small scale CHP REFIT 3 + Market stimulation REFIT 3 Biomass CHP + Market stimulation Carbon Tax Relief Energy prices Electric heating – Less attractive way of heating Smart Meters Rollout Heat recovery - + Growing importance AIR-CONDITIONING Air conditioning = No specific policy impact Mechanical ventilation Definition of nZEB + Growing importance HOT WATER

Solar Thermal + Growth Better Energy Homes ELECTRICITY Daylighting systems WHS + Growth in retrofit residential market segment Was quickly allocated and scheme closed; a view PV Grant – that no further support needed for PV, might impede the market INSULATION Better Energy Homes + WHS Wall Insulation Growth in retrofit residential market segment Home Energy Saving Scheme

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Part L of Building Regulations 2002 Better Energy Homes + WHS Loft Insulation Growth in retrofit residential market segment Part L of Building Regulations 2002

+ Positive Effect – Negative Effect = No Impact

Sources of information . Odyssee-MURE Database http://www.odyssee-indicators.org . Sustainable Energy Authority of Ireland www.seai.ie . Department of Communications, Energy and Natural Resources www.dcenr.gov.ie . Strategy for Renewable Energy www.dcenr.gov.ie/NR/rdonlyres/9472D68A-40F4-41B8- B8FD-F5F788D4207A/0/RenewableEnergyStrategy2012_2020.pdf . http://www.energymanagertoday.com/ireland-launches-91-million-energy-efficiency-fund- 089787/ . http://www.citizensinformation.ie/en/housing/housing_grants_and_schemes/home_energy_saving _scheme.html

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18 Italy

Italy has the fourth-largest economy in the European Union. However, Italy was hit hard by the global financial crisis. The national economy shrunk by 6.76% during the whole period. This is worsened by the fragile and instable political situation. However, recovery is expected in 2014.

Electricity is produced mainly from natural gas, which accounts for more than half of the total electricity produced. Another important source is hydroelectric power. Wind and solar power have grown rapidly in recent years thanks to high incentives. There are no nuclear power stations in Italy, however a significant amount of electricity is imported from France, which uses nuclear power extensively. There is a large proportion of buildings in Italy that were built before 1945 – approximately 32%. There are significant climatic differences between the north and south part of Italy. Furthermore, there are economic differences, with northern Italy being generally more wealthy. In the southern part of Italy the present residential building stock is older than that one of the northern part. For these reasons, there are differences in energy efficiency, for example the cooling load of the residential building stock in the south is about 4,100 kWh per dwelling per year and in the northern part of Italy around 3,000 kWh per dwelling per year. Most residential air conditioning systems are split systems and room air-conditioners.

National policy According to the Italian National Renewable Energy Action Plan (NREAP), Italy’s target for 2020 is 17% final energy consumption from renewable sources.

Financial incentives for renewables in Italy are only applicable on existing buildings. Installations of heat generating renewable technologies in new buildings are incentivised through legal obligations requiring that in new buildings a specific percentage of energy used for domestic hot water, heating and cooling must be generated from on-site renewable energies (Law 28/2011 – Section 5.4). 18.1.1 EU Directive 2002/91/EC (recast 2010/31/EU) on the Energy Performance of Buildings In Italy, Legislative Decree 192/2005 (later amended by D. Lgsl. 311/2006), produces a general framework for the transposition of all EPBD articles in the Italian legislation, except article 9 (inspection of air conditioners). The Decree established that all new buildings and all existing buildings with floor area exceeding 1,000 m2, for which an integral renovation of the elements of the “building envelope” is planned, must possess an energy certification.

Legislative Decree 311/06 broadened the scope of Law 192 to existing buildings with floor area less than 1,000 m2 and envisaged mandatory energy performance certification for existing buildings with a floor area larger than 1,000 m2 from 1st July 2007, for buildings below 1,000 m2 from July 2008 (excluding single flats), and for all apartments from July 2009.

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A later Legislative Decree (28/2011) requires that from 1st January 2012 energy performance certificates must be shown on all adverts for properties for sale (as an energy rating between the bands from A to G).

Ministerial Decree 26/06/2009 provided national guidelines for the certification of buildings and building units (applying to those Regions and Autonomous Provinces which had not yet provided for the matter). The energy performance certificate, introduced in 2009 for all property sales, has a maximum validity of 10 years, after which it is automatically renewed if the building complies with the legislation in force.

The recast Directive (2010/31/EU) abolishes the threshold of 1,000m2 of useful floor area and now applies to all buildings (except very small, special purpose or only temporarily used buildings). Member States have to adjust their national legislation accordingly.

Full enforcement of the above provisions would make the replacement of non-condensing boilers with systems using the same technology impossible, thus paving the way for a fast development of the condensing segment. 18.1.2 National Renewable Energy Action Plan Italy has set very ambitious targets in the NREAP of 17% share for the renewable sources by 2020, and minimum 50% share in the production of hot water and 20% of heating demand in either new or refurbished buildings should arise from the renewable sources. The main points:  Simplified approvals of solar systems providing private individuals with the opportunity to proceed with the installation of the system after sending a notification to the respective municipality  Article 11 stipulates that a renewable heating installation providing 50% of hot water needs should be set up in the residential sector, covering both new and renovated buildings. From 1st January, 2012, the renewable systems should also cover 20% of the heating demands  Article 28 contains the provision of Feed-In Tarifs (FITs) to the small renewable heating systems  Compulsory Solar Keymark certification as a prerequisite for obtaining the incentives is introduced from 2013 18.1.3 National Policies and Incentives Schemes In March 2011 the Legislative Decree 28/2011, also known as “Renewables Decree” was approved to implement EU Directive 2009/28/CE. The Decree sets tools, mechanisms and incentives to meet the 2020 targets in terms of renewables.

Article 11 specifies new regulations for the obligation to include a renewable heating installation that meets at least 50 % of the hot water demand in new or refurbished residential buildings (>1,000 m2). This obligation became effective in September 2011.

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Law 28 also establishes that, by 2017, 50% of the energy used for domestic hot water, heating and cooling of new and refurbished buildings must be generated from renewable energies. The obligation will be applied gradually:

a) 20% for applications submitted between 31st May 2012 and 31st December 2013 b) 35% for applications submitted between 1st January 2014 and 31st December 2016 c) 50% for applications submitted from 1st January 2017.

The percentage of energy generated by renewables in public buildings is set up at 10%.

Compliance with the targets set by Law 28 clearly cannot be reached with non-condensing boilers. However, as the provision only applies to new buildings and existing buildings undergoing refurbishment works for more than 1,000 m2, the potential of refurbishment works under 1,000 m2 is left untapped.

18.1.4 Collective heating systems legislation (Presidential Decree 59/2009 – Section 3.1.2) This is getting increasingly implemented across all Italian regions and commercial gas boilers will be the preferred solution despite competition coming from heat pumps, heat interface units and district heating.

Financial Incentives Legislative Decree 201 of 6th December 2011 (also known as the “Decreto Salva Italia” – Save Italy Decree) extends the 55% tax deduction of costs incurred for works carried out to upgrade the energy efficiency of existing buildings until the end of 2012. The measure was first introduced with the Budget Law 2007 and extended several times.

According to the law, refurbishment costs incurred before 31st December 2012 for the purpose of improving the energy efficiency of existing buildings are granted a 55% tax deduction from income revenue in equal instalments over a ten year period. The maximum amount of deductible costs in the new law is the same as in previous years.

Electric, absorption cycle and geothermal heat pumps, condensing boilers, solar thermal collectors and retrofitting of building envelope elements have been the only technologies eligible to the incentive until the end of 2012. Decree 201 extends the scope of the incentive to heat pump water heaters for the production of sanitary hot water installed to replace traditional water heaters. In this case the maximum deductible amount is €30,000 (as for the substitution of non-condensing boilers). Given the maturity of the market and the poor performance of the new construction segment, the presence of thousands of old houses with poor energy standards offers great potential to the condensing boiler market. The Italian Heating Association (Assotermica) estimated that there are 7 million non- condensing boilers to be replaced in the next 8 years to meet Italy’s 2020 targets (EU Directive 28/2009). To the same end, according to the Italian Centre for Economic and Sociologic Market

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Research for the Construction Sector (CRESME) it is necessary to renew around 600,000 houses per year. Thus there is potential for the replacement of between 600,000 and 875,000 boilers a year before 2020. 18.2.1 Mechanism of Renewable Heating Systems and Energy Efficient Measures (small size)- Conto Energia Termico (Thermal Energy) – Feed In Tariff /Conto Energia The Italian Government has introduced a new subsidy as part of National Renewable Energy Action Plan for systems installed after 1st January 2013.

The system is to be in force until end of December 2015. The total allocated budget for this incentive scheme is €900m with the allocation of 22% to public construction and the remaining 78% to private construction. When the cap is reached, the scheme will be submitted for further revision and update. It applies to the whole range of technologies: solar PV panels, heat pumps, heating and cooling systems for hot water or space heating and biomass boilers. In public application it will also cover thermal insulation, condensing boilers and shading systems. The grants are available either over 2-year or over 5-year period depending on the scale of the project.

The funding is available for the systems with the eligible capacities of below 1,000kWh and is covering mainly substitution of existing heating systems with heat pumps or heat pump-based boilers and biomass installations, as well as installations of solar thermal systems.

These funds are purely applicable to renovation projects of existing buildings and are specifically provided in the absence of any other grants available. Table 27 – Incentives for renovation projects - Source: http://www.solar-district- heating.eu/it/NewsEventi/NewsArticoli/tabid/1014/Articled/270

Incentive (€/m2 year) for plants Incentive (€/m2 year) for plants with gross surface <50m2 with gross surface >50m2 Conventional solar thermal 170 55 Solar cooling 255 83 Concentrating solar thermal 221 72 Concentrating solar cooling 306 100

18.2.2 55% Tax Deduction Scheme run until 30th June 2013 The scheme has been extended from the previous deadline of December 2012 for a further 6 months until June 2013. It specifies that 55% of an investment on improving energy efficiency can be recovered during a 10-year period with the maximum amount at €60,000. 18.2.3 Net Metering Scheme The Italian government announced that its net metering scheme would be limited to PV systems no greater than 200kW from 1st January 2013.This mechanism grants the owners of the system 'credits' to use towards their energy bills if excess energy they produce is fed back into the grid.

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18.2.4 Sunstore4 FP7 Project This scheme is directed to achieve a government target of 100% renewable district heating by combining different sources of energy: solar thermal and biomass, for example. 18.2.5 Tax breaks Further encouraging renewable energy generation, the Italian Revenue Agency is set to introduce tax breaks for off-grid PV systems without access to the country’s feed-in tariff. PV systems installed with a maximum budget of €48,000 from 1st July 2013, will have access to a fiscal break of 50%. This includes systems under the net metering scheme. 18.2.6 36% tax deduction for generic renovation costs Generic renovation works have been benefitting from a 36% tax relief since 2001 (Law 380/2001). Legislative Decree 201 of 6th December 2011 (also known as the “Decreto Salva Italia” – Save Italy Decree) has made the 36% tax relief permanent. The Decree has also increased the incentive to 50% until 30th June 2013. The 50% deduction will apply to an increased maximum deductible amount (€96,000 instead of €48,000). The incentive will go back to 36% from 1st July 2013. The incentive is deductible over a ten year period.

Unlike the 55% tax deduction, the 36% fiscal incentive does not target energy efficiency works in particular but covers generic renovation works, such as:

 regular maintenance works (aimed at maintaining or improving the efficiency of existing systems)  extraordinary maintenance works (without increasing or modifying volumes, surfaces and final use of single housing units)  repairs and restoration works  building refurbishment (including removal, change or installation of new systems)

18.2.7 Feed-In Tariffs (FITs) Table 28 – FITs Tariffs for Italy - Source: PV Magazine Rooftop/BIPV Ground-mounted Term Size Incentive Size Incentive 1-3kW €0.182/kWh 1-3kW €0.176/kWh 20 years 3-20kW €0.171/kWh 3-20kW €0.165/kWh 20 years 20-200kW €0.157/kWh 20-200kW €0.151/kWh 20 years 200kW-1MW €0.130/kWh 200kW-1MW €0.124/kWh 20 years 1MW-5MW €0.118/kWh 1MW-5MW €0.113/kWh 20 years 5MW+ €0.112/kWh 5MW+ €0.106/kWh 20 years Note – The tariffs where interupted in 2013 and now recieves a 55% tax reduction over 10 years.

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Table 29 - Standard self-consumption tariff - Source: PV Magazine Rooftop/BIPV Ground- Term mounted Size Incentive Size Incentive 1-3kW €0.100/kWh 1-3kW €0.094/kWh 20 years 3-20kW €0.089/kWh 3-20kW €0.083/kWh 20 years 20-200kW €0.075/kWh 20-200kW €0.069/kWh 20 years 200kW-1MW €0.048/kWh 200kW-1MW €0.042/kWh 20 years 1MW-5MW €0.036/kWh 1MW-5MW €0.031/kWh 20 years 5MW+ €0.030/kWh 5MW+ €0.024/kWh 20 years

Table 30 - PV plants using innovative technology feed-in tariff - Source: PV Magazine Size Incentive Term 1-20kW €0.242/kWh 20 years 20-200kW €0.231/kWh 20 years >200kW* €0.217/kWh 20 years

Table 31 - PV plants using innovative technology self-consumption tariff - Source: PV Magazine Size Incentive Term 1-20kW €0.160/kWh 20 years 20-200kW €0.149/kWh 20 years >200kW* €0.135/kWh 20 years

Table 32 - Concentrating PV plants feed-in tariff - Source: PV Magazine Size Incentive Term 1-20kW €0.215/kWh 20 years 20-200kW €0.201/kWh 20 years >200kW* €0.174/kWh 20 years

Table 33 - Concentrating PV plants self-consumption tariff - Source: PV Magazine Size Incentive _Term 1-20kW €0.133/kWh 20 years 20-200kW €0.119/kWh 20 years >200kW* €0.092/kWh 20 years

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Summary on the effects of HVAC and renewable products - Italy Products Policies and Incentives Map Possible effects

HEATING Potential for market penetration for renewable District Heating Sunstore4 FP7 Project + technologies in district heating (large solar + biomass)

Domestic Boilers EU Directive 28/2009 + Growth in condensing boilers segment Collective Heating Commercial Boilers Market demand increase Legislation + On approval of the decree, an uprising effect is Biomass Boilers Legislative Decree 28/2011 + expected in the sector Market demand increase in first half of 2013 diminishing after 30th of June, 2013 due to end of Conto Energia Heat pump + favourable 55% Tax Scheme, mainly in residential 55% Tax Scheme sector Market can cross benefit from PV installations Electric / Electric Heat Pumps segment is less attractive due Compression Heat Electricity prices – to high electricity prices and gives way to hybrid Pumps Growth in the condensing gas pumps sector Sorption Heat (commercial boilers) Pumps/Gas Heat + Pumps EU Directive 28/2009 Atmospheric gas boilers market to gradually give its share to premix gas boilers

Small scale CHP ●

Biomass CHP ●

Electric heating + Underfloor electric heating for historic buildings

Heat recovery ● AIR-CONDITIONING

Air conditioning + Mechanical

ventilation + HOT WATER 1) Large scale Solar Thermal increase 1) Conto Energia cap, Article 28 of Legislative + 2) Increased market demand though limited by the Decree 28/11 end of the scheme on 30th June, 2013; that can be Solar Thermal negatively offset, if no replacement scheme for 2) 55% Tax Scheme – 55% 3)NREAP 3) General slowdown as Conto Energia is capped ELECTRICITY

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Conto Energia Thermico – Increased demand for shading systems in public Daylighting systems public + sector

Conto Energia cap Solar will be slowing down overall on reaching the PV systems – cap under Conto Energia. 50% tax rebates could Tax Breaks help PV systems with budget €48,000. INSULATION Increased demand for thermal insulation in public Wall Insulation Conto Energia Thermico + sector Increased demand for thermal insulation in public Roof Insulation Conto Energia Thermico + sector

+ Positive Effect – Negative Effect ● No Impact Source: BSRIA

Sources of information . Bsria Ltd Italy 2012-2013 Country Reports on Energy, Heat Pumps, Solar Thermal and Domestic and Commercial Boilers www.bsria.co.uk . Odyssee-MURE Database http://www.odyssee-indicators.org/publications/PDF . Italian Naional Agency for New Technologies, Energy and Sustainable Economic Development http://old.enea.it/com/ingl/

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19 Latvia

Latvia gained independence in 1991 and became a member of the European Union in 2004. Latvia then experienced a period of rapid economic growth – GDP growth exceeded 10% in 2006 and 2007. However, decline was equally sharp after the global economic crisis of 2008, but the economy is now in recovery.

Per capita GDP is $20,969 (2012 estimate). Latvia’s currency, the Lat, was replaced by the Euro on 1st January 2014.

National policy The energy sector policies in Latvia are being monitored and implemented by the Ministry of Economy. Pursuant to Directive 2009/28/EC, Latvia is aiming to achieve a 40% target share of renewable energy sources in the overall energy mix by 2020.There are a number of overall policies, laws and regulations passed in the Latvian government to ensure that the overall target is achieved by 2020.

The main EU Directives relevant to renewable energy and energy efficiency in Latvia are:  Directive 2001/77/EC on electricity production from RES  Directive 2004/8/EC on the promotion of cogeneration based on a useful heat demand in the internal energy market.  Directive 2009/28/EC on the promotion of RES usage A range of Latvian national laws is applicable as well:  Energy Law  RES Energy Law (project)  Electricity market Law including provisions for RES and CHP  Energy End-Use Efficiency Law provides main guidelines for provision of energy efficiency services and defines the role of the public sector to promote energy efficiency  Law On Residential Houses Management provides energy efficiency requirements for buildings 19.1.1 Infrastructure and Services Programme 2007-2013 This programme provides support for multi-tenant housing built in the period between 1944 and 1993, as well as social housing support. It also focuses on improving the efficiency of district heating systems and investments in CHP. 19.1.2 Sustainable Development Strategy of Latvia until 2030 This strategy is defining the goals and objectives for the country in the area of renewable and sustainable energy for 2030 by reducing the dependency on the energy imports, utilising in- country sources of renewable energy and setting out the target to achieve 40% of RES by 2020. It also sets the target for energy dependence from net import of energy resources/gross domestic energy consumption plus bunkering at less than 50% by 2030.

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19.1.3 Principles of Energy Sector Development 2007-2016 This document was adopted in 2006 and sets out the main cornerstones of Latvian governmental strategy. The main goals are set around securing supply, minimising dependency, encouraging competition and further utilisation of renewable sources of energy in the overall energy mix:  until 2016 to use the potential of cogeneration with common heating load about 300 MWth in Latvian big cities (including Riga), and 100 MWth in other Latvian cities;  to stimulate the development of CHP plants and energy producing of renewable sources of energy, using the EU Fund’s special purpose grants for investments;  to increase the usage of local renewable primary resources from 65 PJ at the moment to 82 PJ in 2016 (36-37% of local resources in Latvian primary energy resources structure);  until 2016 to increase the energy efficiency of heat production facilities from 68% to 80-90%. 19.1.4 Renewable Energy Law (Atjaunojamo Energoresursu Energijas Likums) The Law was passed and approved in 2010.

Financial Incentives 19.2.1 Feed-in Tariffs (FIT) Feed-In Tariffs promoted the boom in renewables in Latvia and it currently has the highest share of renewables among other EU countries. Most tariffs are operational over a period of 20 years. There are some capacity restrictions around the feed-in tariffs for different technologies. Table 34 – TIFs tariffs for latvia Feed-In Tariff (as of Jan 2013) €/kWh PV 0.234 Biomass 0.05032 - 0.09105 Hydro 0.08713 – 0.10891

Also Biomass Feed-in tariffs are further spread into groups depending on the capacity and the period of time. CHP plant for electricity production and with capacity under 4MW could be supported for up to 10 years. CHP plants of larger capacity can have this period extended for up to 15 years.

FITS for PV were suspended in Latvia in the summer of 2012 until 2016 (Source: PV magazine).

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19.2.2 Improvement of Heat Insulation of Multi-Apartment Residential Buildings Multi-tenant apartment buildings comprise nearly 66% of the residential housing stock in Latvia, hence a number of funding options are available for renovations in this sector. The subsidy program targets the following areas:  Thermal insulation to the external walls, basement ceiling, external walls of the basement and roof or ceiling of the top floor  General renovation including door replacements and installation of door shutting mechanisms in the areas of common use, such as staircases; as well as window replacements  Construction, renovation, or reconstruction of ventilation systems  Improvement of heating systems and heat supply systems

The main requirements for participation in the programme are: 1. The building should have undergone an energy auditing process. 2. The building should achieve a minimum 20% thermal energy saving as the result of the renovation. 3. The limits for heating energy consumption are set at 100 kWh/m2 for higher than 3- storey multi-tenant buildings and 120 kWh/m2 for lower level buildings.

The funding for the programme is through the allocation of EU Regional Development fund alongside local funding of Latvian government. It aims to provide 50% of the refurbishment cost, but the maximum amount allocated cannot be more than Ls35/m2 (approx. €50/m2) of the multi-tenant building. If at least 10% of the tenants are on low income, then the programme will cover up to 60% of the overall improvement costs. It also requires the majority of dwelling owners comprising at least 50%+1 to be agreeable to the implementation of the scheme and to the provision of the remaining costs of the refurbishment project.

The total amount of allocated funding is Ls 62,75m (approx. €90m) and the programme will continue to be running until the funds are no longer available.

19.2.3 Improvement of Heat Insulation of Social Housing This programme is targeted specifically at the tenants of social housing in the residential sector and funding is available directly to municipalities with 75% of the costs to be provided for. The building should belong to the municipality and at least 70% of dwellings should be rented out to registered persons in need of accommodation. However, it still requires contribution from the tenants and getting bank loans provides a barrier for the rolling out of the programme on larger scale, alongside the common economic problems facing Latvia at the moment.

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Summary on the effects of HVAC and renewables - Latvia Policies and Products Map Possible effects Incentives HEATING Energy Law Some funding is available, however, district Cohesion Fund heating systems are run by municipalities and District Heating Governmental = additional loan conditions are dependent on the Regulations No 1214 individual banks (October 2009) Domestic Boilers + Commercial Boilers +

FITs Promoted uptake and growth Biomass Boilers Green certificates + Biomass is a good source due to availability of Tax deductions forests Heat pump Not included in FITs – Slow take-up of heat pumps Compression Heat Not included in FITs Uptake not supported Pumps – Sorption/Gas Heat Not included in FITs Uptake not supported Pumps – Does not support industrial or individual Energy Law cogeneration, requirement of 75% to be fed into the district heating network Small scale CHP Principles of Energy + Sector Development Can be adversely affected by removal of FITs in 2012 Does not support industrial or individual Energy Law cogeneration, requirement of 75% to be fed into the district heating network Biomass CHP Principles of Energy + Sector Development Can be adversely affected by removal of FITs in 2012 Electric heating - – Low interest Heat recovery No specific policy + Increasing importance but slow AIR-CONDITIONING Air conditioning - = No specific policy impact Mechanical ventilation No specific policy + Increasing importance but slow HOT WATER

Solar Thermal +

ELECTRICITY Daylighting systems - = No specific policy impact

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Market for PV in Latvia is still marginal, however PV FITs = promoted through feed-in tariffs INSULATION Improvement of Heat Insulation of Multi- Wall Insulation Apartment Residential + Multi-tenant residential sector mainly Buildings and Social Housing Improvement of Heat Insulation of Multi- Loft Insulation Apartment Residential + Multi-tenant residential sector mainly Buildings and Social Housing

+ Positive Effect – Negative Effect = No Impact

Sources of information . Odyssee-MURE Database http://www.odyssee-indicators.org . Build Up www.buildup.eu . Ministry of Economics www.em.gov.lv . Latvian Investment and Development Agency: http://www.liaa.gov.lv . Public Utilities Commission: http://www.sprk.gov.lv . Housing and Energy Conservation Bureau: http://www.ekubirojs.lv/?lang=en . Latvian Green Technology Cluster: http://www.kbi.lv/eng . Latvian Renewable Energy Association: http://www.aea.lv/ . Build Up EU Project www.buildup.eu . Ministry of Agriculture www.zm.gov.lv . The Ministry of Environment Protection and Regional Development www.vidm.gov.lv

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20 Lithuania

Lithuania gained independence in 1991 and joined the EU in 2004. Even before joining the EU, economic growth was rapid in Lithuania. As with many countries, decline was sharp after the global financial crisis of 2008, however the economy has stabilised. As of June 2013, the unemployment rate is 10.4%. The currency is The Lithuanian litas, however the government anticipates switching to the Euro in 2015.

Lithuania’s only nuclear power plant was closed in 2004 (reactor 1) and 2009 (reactor 2). There are plans to replace it with a modern nuclear power station. Lithuania is a net importer of energy, although in 2010, renewable constituted 19.7% of the country's overall electricity generation. Biomass is extensively used as a heating source.

Nearly half of the residential stock (47%) in Lithuania was built in 1960-1990s as part of the major construction “wave”, with the share of the buildings built 1960-1980 at 32%. This period is characterised by mass industrial production of multi-family apartments buildings with prefabricated concrete panels. It is reported that the majority of these buildings are in need of refurbishment.

National policy Lithuania has confirmed its target of reaching a 23% share of renewables in the overall energy mix by 2020. 20.1.1 National Energy Independent Strategy - 2012

Adopted in May 2012 by the Lithuanian Government, the strategy defines the main objectives for 2020 and provides guidelines in terms of the developments for 2030 through to 2050. It focuses on decreasing dependencies from import and further utilisation of renewable sources of energy in the overall energy mix. It strives to set the market conditions to take into account the total cost of energy produced from RES.

It aims at gradually introducing the market conditions to consider the total cost of energy produced from renewables. 20.1.2 Heat Law

The Heat Law in Lithuania was adopted back in 2003 and since then has undergone several rounds of amendments. The amendments to the Heat Law introduced in 2009 allowed monthly flexibility of the District Heating prices in relation to the market conditions and purchase price. It resulted in an advantageous position for district heating.

However, in 2011 further amendments to the Heat Law resulted in difficulties for District Heating companies to recover substantial investment costs in the heat substation already incurred to that date. Such fluctuations of legislation might negatively reflect upon the district heating market and result in District Heating companies being much more cautious and less optimistic in terms of advancements and taking incentives in legislation on board for the years ahead.

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20.1.3 The Law on Renewable Energy The Law on Renewable Energy stipulates that, if the auction is won, then the applicable Feed- In Tariffs are guaranteed for 12 years.

Feed-in tariffs for 2013: . Hydro-electric: €0.008/kWh . Wind: €0.104/kWh . Solar: €0.260/kWh . Biogas: €0.171/kWh . Biomass: €0.145/kWh

Financial incentives 20.2.1 Lithuanian Environmental Investment Fund (LEIF)

The LEIF subsidy promotes the transfer from solid fuel utilised for heating to liquid based biomass or geothermal resources.

The maximum amount that the subsidy can provide is around €200,000 and it cannot exceed 80% of the total cost of the project, with 20% left to be funded though the resources of the applicant. The split of the cost provision is linked not only to the actual system installation but also to the performance during the first year after the project has been implemented and will be financed by 60% and 40% respectively. The 40% share corresponds to the 95% boiler efficiency performance in line with the envisaged environmental characteristics and indicators, assigned for the program. It will be reduced by half if the actual performance falls within the 50% to 95% performance band; and will be totally removed if the 50% of originated performance is not achieved after the first year. Moreover, in the latter case the applicant will have to also repay to LEIF the 60% grant already received.

Thus, the LEIF subsidy is aimed not only at designed projects that are foreseen to achieve environmental improvements, but also at ensuring that the actual environmental improvements are delivered through the operating stage. 20.2.2 Feed-in Tariffs (FIT) Lithuanian Feed-In Tariffs are specified by the Law on Electricity issued 1st July 2004 and amended in 2010.

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Table 35 - Feed In Tariffs – 2013 for Lithuania - Source: RES-Legal Technology Description of FITs, LTL/kWh (approx. €/kWh) Biomass < 10 kW: LTL 0.14/kWh (€0.04/kWh) 10 kW to 5000 kW: LTL 0.13/kWh (€0.04/kWh) >5000 kW: LTL 0.11/kWh (€0.03/kWh) Solar Integrated systems: < 10 kW: LTL 0.21/kWh (€0.06/kWh) 10 kW to 100 kW: LTL 0.25/kWh (€0.07/kWh) >100 kW: LTL 0.23/kWh (€0.07/kWh) Not integrated: <10 kW: LTL 0.22/kWh (€0.06/kWh) 10 kW to 100 kW: LTL 0.20/kWh (€0.06/kWh) >100 kW: LTL 0.19/kWh (€0.06/kWh)

A recent surge in the renewable sector has made the Lithuanian government reconsider some of the subsidies currently in place and impose caps. For example, permits for renewable projects will be halted as soon as they reach their targeted cap.

The caps that were put in place by the Lithuanian government by 2020 for each respective renewable energy are: . Wind – 500MW . Solar Power plants – 10MW . Hydro power plants – 141 MW . Biofuel power plants – 355MW 20.2.3 Excise Tax Renewable sources of energy are exempt from the excise tax.

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Summary on the effects of HVAC and renewables - Lithuania Products Policies and Incentives Map Possible effects

HEATING Negative influence in terms of future investment District Heating Heat Law – into DH substations DH network is extensive Promoted in the residential sector, but may be Domestic Boilers FITs + limited to the separate owner houses Commercial Boilers FITs + Growth in sector envisaged

FITs Promoted in the residential sector, but may be Biomass Boilers + LEIF limited to the owner-occupied houses Alternative heating systems are promoted but FITs Heat pump + uptake is low due to cost LEIF Geothermal is promoted

Compression Heat

Pumps ●

Sorption/Gas Heat

Pumps ● Small scale CHP NEEAP + Growth is expected FITs Biomass CHP + Biomass is promoted LEIF Electric heating - – Less common source of energy for heating Heat recovery = Awareness is needed to materialise growth AIR-CONDITIONING Air conditioning = No specific impact Mechanical ventilation = Awareness is needed to materialise the growth HOT WATER FITs Solar Thermal + Growth might be impeded due to imposed caps

ELECTRICITY Daylighting systems ● PV FITs + Growth might be impeded due to imposed caps INSULATION Building requirements Effective means to improve efficiency in Wall Insulation and EPC indirectly + renovation sector Building requirements Effective means to improve efficiency in Loft Insulation and EPC indirectly + renovation sector

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+ Positive Effect – Negative Effect = No Impact

Sources of information . Odyssee-MURE Database http://www.odyssee-indicators.org/publications . Lithuanian District Heating Association www.lsta.lt . LEIF www.laaif.lt/index.php . Ministry of Environment www.am.lt . RES-Legal www.res-legal.eu

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21 Luxembourg

Luxembourg is considered to be the second richest country in the world has the highest per capita GDP of any country in Europe, at $79,785 (2012 estimate). Unemployment is traditionally low, although it had risen to 6.1% by May 2012, due largely to the effect of the 2008 global financial crisis.

Luxembourg uses imported oil and natural gas for the majority of its energy generation, and has a very small renewables contribution. At the end of 2010 the installed capacity of wind power covered on average 1.1% of electricity use.

National policy and financial incentives The target that Luxembourg announced for 2020 is an ambitious 11% share of the renewable energy in the total energy mix that the country is meant to reach from having only 0.9% in 2005. In 2010 the share of the renewable electricity production was one of the smallest across the EU and constituted 0.5%. 21.1.1 Second National Energy Efficiency Action Plan - 2010 The second National Energy Efficiency Action Plan (NEEAP) considered the developments in Luxembourg and the interim targets to be achieved by 2016. It is stated in the 2nd NEEAP that Luxembourg might exceed its 16% target share of RES by 2016.

The Plan also considered energy saving potential in the residential sector: Table 36 – National Energy Efficiency Plan potential savings by sector - Source: 2nd NEEAP, Luxembourg

Percentage of buildings 2004 2008 2010 2016 Single-family housing (EFH) Before 1970 25% 22% 20% 16% 1971 to 1995 25% 22% 21% 18% After 1995 5% 9% 10% 15% Total single-family housing 55% 53% 52% 49% Terraced houses (RH) Before 1970 17% 15% 14% 11% 1971 to 1995 4% 4% 3% 3% After 1995 1% 3% 5% 8% Total terraced houses 22% 22% 22% 22% Multi-storey dwellings (MFH) Before 1970 10% 8% 7% 5% 1971 to 1995 10% 9% 9% 8% After 1995 3% 8% 10% 16% Total multi-storey dwellings 23% 25% 26% 29% Total all types of buildings 100% 100% 100% 100%

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21.1.2 Reglement du Grand Ducal du 20 avril 2009 This regulation covers the promotion and use of renewable sources of energy in Luxembourg. 21.1.3 Energy Performance Certificates The issue of energy performance certificates is mandatory for buildings with floor area exceeding 1,000 m2. 21.1.4 Feed-In-Tariffs (FIT) and Feed-In-Premium Feed-In-Tariffs in Luxembourg are allocated for a period of 15 years, as provided by Art. 6 RGD, 8 February 2008, and depend on the type of the technology subsidised. The only mainstream renewable energy technology that is not covered by the FIT Scheme is geothermal energy. There have been some recent changes to the rates of Feed-In-Tariffs that will need to go through the final stages of approval before being officially published. New feed-in-Taripffs for PV installations were introduced from January 2013. They are in effect until 31 December 2016 and only for the systems with the capacity below 30kWp. For the renewable sytsems that were entered into operation earlier, the set of transitional measures is put in place, if the invoice for them is raised during 3013-2014. Under these conditions, the feed-in-tariffs that were valid during 2012 could be applied to these types of systems.

Table 37 - Feed-In-Tariffs in Luxembourg - Source: RES-Legal Renewable technology Feed-In-Tariff Description PV < 1 MWp The feed-in tariff for PV for installations smaller than 30 kW -0.264/KWh Decrease by 9% is planned from January 2014 Biomass with a nominal FIT for solid biomass €0.104 to €0.128/kWh capacity of less than 5 MW Biomass : • €0.125/kWh - capacity > 1 MW and ≤ 5 MW • €0.145/kWh - capacity ≤ 1 MW Wood waste (cull): • €0.11/kWh - plants with a nominal electric capacity > 1 MW and ≤ 5 MW • €0.13/kWh - plants with a nominal electric capacity ≤ 1 MW Biogas €0.12/kWh for plants with capacity > 500 kW and ≤ 2,500 kW €0.13/kWh for plants with capacity > 300 kW and ≤ 500 kW €0.14/kWh for plants with capacity > 150 kW and ≤ 300 kW €0.15/kWh for plants with capacity ≤ 150 kW

21.1.5 Prime House Scheme

This was introduced in 2012 with an allocated budget of €90m to invest in green housing projects. The period of running of the scheme will be from 2013 to 2016 and will be applicable both to new housing achieving category A energy (zero-energy houses) and the renovation segment aiming at improving energy efficiency of the current building stock. The subsidies will be up to €160/m2 for houses with floor area not exceeding 150 m2 for 2014; for building permits issued in 2015 and 2016 the subsidy available will be limited to €70/m2.

Table 38 - Prime House provisions - Source: ECOFYS

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Technology Specification Max. % of total Max. amount, € costs Solar thermal DHW 50 3,000 DHW and Heating 50 5,000 Heat pump Ground source 40 6,000 Air 40 3,000 Biomass Central heating; Pellets or wood chips 30 4,000 Pellets 30 2,500 Logs 25 2,500

Refurbishments and renovations will get from 10% to 30% subsidy of the investment cost depending on the level of energy savings achieved. 21.1.6 Scheme for energy efficiency and use of renewable energies in the field of housing This scheme was announced in 2008 and is still currently in force. 21.1.7 PV grants Grants for photovoltaic installations in Luxembourg are only applicable to systems <30kW and would be 20% and 15% of the installation cost in the private and public sector respectively. Also companies would be able to get environmental grants covering up to 50% of the installation costs, if the energy produced is utilised for their own use. 21.1.8 Tax Incentives Accelerated tax depreciation for energy efficient retrofits is available as one of the tax incentives within the renovation sector in Luxembourg.

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Summary on the effects of HVAC and renewables – Luxembourg Products Policies and Incentives Map Possible effects

HEATING District Heating District Heating Subsidy + Additional funding of public sector projects Domestic Boilers NEAAP + Growing segment driven by replacements NEAAP Commercial Boilers + Growing segment driven by replacements EPC Biomass Boilers Green Certificates + Growing segment The market for ground source heat pumps will not Geothermal excluded Heat pump see growth as the cost of systems is still quite from FIT Subsidy – high without subsidies in place.

Compression Heat

Pumps ●

Sorption/Gas Heat

Pumps ● Small scale CHP PRIMe House subsidy + Growing segment Biomass CHP Green certificates + Biomass has largest potential in Luxembourg Electric heating - = No clear specific impact Passive or zero energy Heat recovery Positive impact house + AIR-CONDITIONING Air conditioning - = No clear specific impact Passive or zero energy Mechanical ventilation Positive Impact house + HOT WATER FITs Solar Thermal + Positive impact Tax Credits ELECTRICITY Daylighting systems - = No clear specific impact Especially for installations <30kW

FITs for systems <30kW Income from photovoltaic installations with a capacity from 1 to 4 kW is exempt from income PV Tax Credits + Tax PV grants Subsidies are getting tighter, so the sector might get affected INSULATION

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Sound Insulation Marginal effect on housing sector in close Financial Aid Wall Insulation + proximity to the airports Reglement du Grand Tighter requirements to insulation Ducal du 20 avril 2009 Reglement du Grand Loft Insulation Ducal du 20 avril 2009 + Tighter requirements to insulation

+ Positive Effect – Negative Effect = No Impact

Sources of information . Odyssee-MURE Database http://www.odyssee-indicators.org/publications . http://ec.europa.eu/regional_policy/sources/docgener/evaluation/pdf/eval2007/expert_inn ovation/2011_synt_rep_lu.pdf . EREF . ECOFYS . European Photovoltaic Industry Association . RES-Legal

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22 Malta

Malta joined the EU in 2004 and the Eurozone in 2008. Per capita GDP is $20,852. Almost all of Malta’s energy comes from imported oil, and energy prices are the highest in Europe.

The majority of homes in Malta use electric boilers to heat water. Space heating is predominantly electric, with centralised systems being rare.

National policy and financial incentives Malta is aiming to achieve 10% share of the renewables by 2020 in the total consumption of energy, however, as of 2010 this share was still one of the lowest in the EU and was holding at 0.31% at the national level for gross electricity production. It is a very challenging target to reach for Malta in such a short period of space.

Minimum Energy Performance Standards (MEPS) will be further upgraded in 2017, thus creating further opportunities for renewables and retrofits in the renovation segment. At the moment, Energy performance certificates (EPCs) are used in Malta, but are not very common. Energy audits in the household sector have been also introduced. 22.1.1 Feed-In Tariffs – Malta Table 39 – FITs Tariffs for Malta - Source: EREF Support scheme Net metering system and feed-in tariff Current applicable law Particularities Grant on initial capital investment Photovoltaic: 1164.69 € for the first 1kW peak installed, €582.34 for every additional installed kW peak, plus or minus five percent (1kWp+/-5%) subject to a total maximum input power of 3.7kW peak Net metering: Electricity produced in excess of consumption is purchased by Enemalta (the sole supplier of electricity in Malta) at the rate of 6.99ct per kWh

Capacity / Amount (GWh/a) / (MW) Cent/kWh Hydro 6.99

Wind 6.99

Biomass 6.99

Domestic and residential 25 FIT for PV FIT is decreased by 2 €/MWh for every 1% grand over 50% received Photovoltaic Domestic and residential PV capped at 4,800 kWh/yr Income generated is excluded from Income tax and VAT Non-residential and institutional PV capped at 16,000 kWh/yr

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Anything over thresholds bought at marginal cost. Established annually by the regulator (110 €/MWh in 2011) 24,000 MWh plus allocated units from previous scheme = total PV cap Each kW installed attributed 1600kWh in generation potential, applications on first come, first served basis Applications must be received the same year the FIT is established and commissioned within 12 months of authorisation or notification In order to promote the production/use of renewable energies a grant system for private households is in place

Geothermal 6.99

CSP / Waste / Wave 6.99

22.1.2 Soft loans and Capital Grants There are quite a few option of soft loans provided for some systems in Malta:  Domestic solar water heaters (non-domestic not covered)  Solar thermal applications in the tourist sector

Also, the Ministry of Resources and Rural Affairs provides a one-off capital grant for solar water heaters for domestic use that covers 40% of the system cost not exceeding €560 per family. 22.1.3 Residential Grant to install PV Panels – 2013 A new €21m grant fund was announced in March 2013 will allow around 8,400 applicants to benefit from a 50% grant covering the installation of PV panels, up to a maximum of €2,500 per system. It will be accompanied by the Feed In tariff of €0.22/kWh guaranteed for 6 years.

The average payback period for the a system is thus reduced 5.5 years.

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Summary on the effects of HVAC and renewables - Malta Products Policies and Incentives Map Possible effects HEATING District Heating Domestic Boilers Energy Audits + Replacements driven by tightened requirements Commercial Boilers EPC + Replacements driven by tightened requirements Biomass Boilers FITs + Replacements driven by tightened requirements Heat pump FITs + Positive

Compression Heat

Pumps

Sorption/Gas Heat

Pumps Small scale CHP Biomass CHP Electric heating Heat recovery AIR-CONDITIONING Air conditioning Mechanical ventilation HOT WATER Solar Thermal Soft Loans + Positive impact in residential sector ELECTRICITY Daylighting systems No clear policy impact PV New residential grant + Sector growth INSULATION Wall Insulation Loft Insulation Subsidies + Positive impact

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+ Positive Effect – Negative Effect = No Impact

Sources of information . Odyssee-MURE Database http://www.odyssee-indicators.org/publications/PDF . European Photovoltaic Association 2012 . Ministry of Resources and Rural Affairs http://www.mrra.gov.mt/

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23 The Netherlands

The Netherlands has amongst the highest per capita GDP in Europe: $41,447 (2013 estimate). The Dutch economy was hit considerably by the ongoing global financial crisis and is still in recession.

The Netherlands is a major producer of natural gas, from onshore and North Sea sources. Most of the electricity used in The Netherlands is generated from natural gas. There is only one small nuclear power plant, generating about 4% of the country’s electricity. Renewable energy accounts for about 11% of electricity use, mostly from biomass, wind, solar and geothermal. There is a small amount of hydro power in the mix. Emissions of carbon dioxide in total, per capita in 2007 were 11.1 tons compared to an EU 27 average of 7.9 tons.

The Netherlands has a relatively recent building stock, with approximately 30% dating from 1961-1980 and a similar amount from 1981-2000. Households improved their energy efficiency by 36% between 1990 and 2010. Progress came mainly from space heating, the largest end- use (about 67% of consumption), with an improvement of almost 39%.

National policy The Netherlands Government assigned a more ambitious target for 2020 under the Renewable Energy Directive (Directive 2009/28/EC), aiming at 16% from renewable energy sources. However, as the recent gap in performance against the targets is due to become more evident with the new targets in place, the push for the incentives might be intensified bearing in mind moderate results with some of the subsidy schemes prior 2013. 23.1.1 Energy Performance of Buildings Directive Considerable headway has been made since the adoption of the regulations into Dutch law on 1st January 2008.

The Energy Performance Coefficient (EPC) or Energy Performance Number (EPN) is a dimensionless number designed to designate the energy efficiency of a building. In 1995, the average EPC rating of buildings in the Netherlands was 1.4 for residential buildings and just over 1.8 for non-residential. A target has been set for new buildings to have an EPC rating of zero by 2020. For new buildings, the Energy Performance Coefficient for new homes and other buildings has been tightened to 0.6 from January 2011.

The government intends to leave the detail of achieving EPC ratings in line with the 2020 target to builders and architects. The focus is then on the total energy performance of the building, rather than individual measures.

EPBD Certificates are only issued by qualified assessors examined by a national board. The certificate assigns a class from A to G and recommendations for improvements.

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The rules apply not only to new buildings but also extensive refurbishments of existing buildings.

Up to and including September 2010 (latest data available), 1.7 million Energy Performance Certificates for residential buildings had been issued in the Netherlands (approx. 25% of the total residential building stock) and 8,201 for non-residential buildings, covering 24.5 million m2 floor area.

Dutch legislation is reviewed every couple of years and is currently considered adequate to accommodate the recast 2010 document which seeks to achieve nearly zero-carbon new buildings by 2020. 23.1.2 Environmental Law 2011 This was adopted and implemented in July 2011. For each building or building unit, an Energy- Index is calculated according to a fixed methodology. The certificate applies to existing buildings, both residential and non-residential. Cooling is only considered for non-residential buildings. Small boilers are required to be inspected and maintained every one or two years. To stimulate replacement of older boilers by new energy efficient condensing boilers, a tool has been developed to assess this (“verwarmingsijzer”). For buildings with communal boilers, another tool has been developed to scan the existing installation for energy efficiency, heating as well as cooling. As of the end of 2010, many subsidies and incentives are available, including a grant of €200 for Energy Performance Advice and a subsidy of €350 to €750 when improving energy performance. 23.1.3 Boilers – Levels of Emissions and inspections A voluntary code and legislation in line with the requirements of the EPBD is currently in place in the Netherlands. As is stated in government literature from the Ministry of the Interior, small boilers (15 – 35 kW) are inspected and maintained every year or two years, depending on their type, size and age.

To encourage replacement of old boilers with new condensing ones, a tool named the ‘verwarmingswijzer’ is used. Its intention is to show consumers how savings might be economically achieved, based on energy consumption of upgraded equipment.

With regard to large boilers (> 100 kW) the Netherlands complies with current environmental legislation for maintenance and inspection.

For boilers in non-residential buildings, or residential buildings with communal boilers, a tool named the Installation Performance Assessment has been developed to permit the owner or operator of the building to see what energy efficiencies might be achieved.

In April 2010 strict emission limit values (ELVs) on mid-size combustion plants came into force. New plants are to comply with these regulations immediately. For existing plants there is a transitional period until 2017. The new law for large non-residential heating systems (“BEMS”

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- (the Dutch implementation of the EU Large Combustion Plants Directive (LCP))) sets emission limit values for NOX, Particulates, SO2, Hydrocarbons (CxHy).

Table 40 - Emission Limit Values in BEMS

Installation NOX Particulates SO2 CxHy Boiler (s,l) ≥1 MWn 100 5 200 Boiler (Biomass) <5 MWth 200 20 200 Boiler (Biomass) ≥5 MWth 145 5 200 Boiler (g) ≥1 MWn 70 200 Diesel engine (l) 450 50 200 Gas engine (g) 100 200 1,500 Gas engine (biogas or <2,5MWth) 340 200 Gas turbine (l) 140 15 200 Gas turbine (g) 140 200 Source: BSRIA Legend:

3 3 Emission limit values: solid: mg/Nm @ 6 vol%O2; liquid & gas: mg/Nm @ 3 vol% O2 MWth: Thermal input rate in MW MWn: Nominal heat output in MW s- solidfuelled l- liquid fuelled g – gas fuelled 23.1.4 Dutch Heat Act The Dutch Heat Act came into force in the Netherlands in 2013. It secures a provision for the price customers pay for heat, as well as security of supply of heat. Further developments came out in December 2013 and set out the principle of “No More Than Usual” protecting the customers from overpaying on the district heating network, other than they would have paid staying with the previous heating system. The maximum charging prices are set out annually by ACM (Authority for Consumer and Market). 23.1.5 SDE+ (Stimulering Duurzame Energieproductie - Stimulating Renewable Energy Production) SDE+ assigned categories for energy, biomass, biofuels with the funding subcategories on the basis of a subsidy period. The maximum time that the subsidy could be granted is limited to 15 years and is available to systems with the output not less than 15 kWp. The subsidy covers the gap between the generation cost and the actual electricity price. Different types of technologies compete with each other on the efficiency of granted funding. The scheme favours the technology that requires smaller funding and applied earlier in the process.

From 2012, heating is also included for participation in the SDE+ scheme alongside electricity. The total budget assigned in 2013 for the scheme SDE+ is €3bn and it will be running in 6 stages with the increased level of funding at the later stage coupled with the increased risk of resources having been already utilised. It is capped from the period of 1st April 2013 to December 2013 and is implemented on a “first come, first served” basis:

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Table 41 - Technologies eligible for SDE+ Technology Details for SDE+ Biomass Boilers using solid and liquid biomass, larger than 0.5 MW, limited to 7,000 full load hours per year Existing waste-to-power plants based on municipal or other waste, limited to 3,780 full load hours per year Heat produced in CHP plants based on thermal conversion of solid biomass or bio-liquids Existing CHP based on fermentation or co-fermentation of manure and thermal conversion of solid or liquid biomass Existing CHP installation, older than 8.5 years Existing installations producing exclusively heat, older than 8.5 years Geothermal Deep geothermal heat based on geothermal sources with a depth of at least 500 m is eligible within a specific category. A depth of at least 2,700 m is eligible within a separate category. Funding is limited to 5,500 full load hours per year. CHP installations based on geothermal sources with a depth of at least 500 m funding is limited to 700 full load hours per year. Solar Installations with a collector surface of at least 100 m2 and enclosed solar collectors are eligible. Funding is limited to a maximum of 700 full load hours per year

The allocation and payments of funds under the SDE+ scheme is expected to be implemented in 6 stages:

Table 42 - Maximum Amounts SDE+ 6 Phases Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Phase 6 Electricity €0.07/kWh €0.08/kWh €0.09/kWh €0.11/kWh €0.13/kWh €0.15/kWh Biogas €0.483/Nm3 €0.552/Nm3 €0.621/Nm3 €0.759/Nm3 €0.897/Nm3 €1.035/Nm3 Heat and €19.4/GJ €22.2/GJ €25.0/GJ €30.6/GJ €36.1/GJ €41.7/GJ CHP

The tariffs are paid mainly for a period of 15 years from the date of commissioning; there can be reductions in the number of years, depending on the technology, e.g. boilers using solid and liquid biomass - 12 years, or existing CHP based on fermentation or co-fermentation of manure and thermal conversion of solid or liquid biomass - 5 years.

The SDE+ scheme also now requires certification of all producers of renewable heat through Guarantees of Origin in order to claim the national subsidy. 23.1.6 Energy Investment Allowance (EIA) The Ministry of Economic Affairs, Agriculture and Innovation (Ministerie van EL&I) is in charge of the EIA with the help of Agentschap NL. To non-physical investors, and particularly companies, the Agentschap and Dutch Tax authorities allocate a 44% tax rebate of the

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company’s fiscal profit for investing in energy-efficient equipment and renewable energy sources.

The minimum cost of one operating resource must be at least €450 and the total energy investment per calendar year must be at least €2,200. However the amount is capped to a maximum of €113m per calendar year. This means that for an energy investment amount of, for example, €150m in one calendar year, the EIA amounts to 44% of 113 million. No EIA is granted on the remainder.

Financial incentives 23.2.1 Sustainable Heat –“Duurzame Warmte” In September 2008 the Dutch government introduced an incentive programme to support development in the renewable technologies market. Meaning ‘Sustainable Heat’ in Dutch, Duurzame Warmte is a government financial allocation via Agentschap: the Ministry of Economy, Housing and Innovation, to sustainable energy products such as heat pumps, micro- cogeneration boilers and solar thermal systems. It is available for dwellings completed at least 2 years ago and the household can obtain a subsidy of €200 per GJ produced annually by the solar thermal system for smaller-sized installations of under 6 m² – and €125 per GJ for larger installations (of over 6 m²). The amount has been capped to €250 per m2 of collector.

The budget granted for solar panels and heat pumps had been set at €32m for the period ending 2011. However, in January 2011, the programme was reported to be running out of funds. The number of systems subsidised has not been revealed. It is unclear if the programme will be renewed in 2012 or if another measure will come into force to accelerate the expansion of renewable technologies. 23.2.2 Net Metering Small systems with output <15kWp and <5,000 kWh per year fall under the Net Metering Scheme and are outside the SDE+. The usage of electricity is directly offset by the production of electricity in the net metering scheme.

23.2.3 MIA / VAMIL

MIA and VAMIL are the fiscal arrangements of the Ministry of Infrastructure and Environment for entrepreneurs investing in environmentally-friendly equipment, including renovation of an existing non-residential building, a green roof or façade greenery system, storm water system, efficient lighting, low NOx burners, water-saving toilets and ventilation systems.

The MIA scheme allows deduction of up to 36% of environmental investment, while VAMIL at the same time provides for flexibility in terms of the timing to proceed with the deduction. The list of the applicable technologies is available from a government website listing 380 items and is updated annually.

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23.2.4 Tax incentives - Reduced VAT rate From 1st October 2010, renovation and refurbishment works carried out in homes that are over two years old has benefited from a lower VAT rate of 6%. This rate applies to work completed between October 1st, 2010 and July 1st, 2011. Nevertheless, the normal 19% VAT rate continues to apply to the supply of materials.

The incentive covers, for example, installation and replacement works, or maintenance on:  Sewage systems  Roofs or verandas  Boiler, water heater, central heating system, gas stove, solar panels and solar water heaters  Bathrooms, toilets, or kitchens  Garages, sheds, gazebos, etc.  Renovation of retirement homes or apartments for persons with a disability  Improvement works to façades  Sweeping, maintenance, replacement of chimneys  Double-glazing of windows  Floors (fitting of concrete screeds, tiles, parquet floors, etc.) 23.2.5 Energy Certificates New buildings and buildings under major renovation are required to meet minimum energy performance requirements. From 1st January 2008, the energy performance certificate is required for all rentals or sales of buildings except dwellings completed after 1999. Buildings with surface area under 50 m2 are also exempted from the requirement.

Since 31st December 2008, all public building must have an energy label. Buildings with a surface area under 1,000 m2 and monuments are exempted from the requirement.

From 1st January 2009, all housing corporations should have their properties labelled with an energy certificate.

The EPC requirement for housing will be tightened in 2011 to 0.6, and in 2015 to 0.4, with the aim of achieving energy-neutral housing in 2020. A comparable tightening has been announced for non-residential buildings for the year 2015. 23.2.6 Other financial measures  The Energy Credit (EBK) scheme: allows private home owners who want to invest in energy savings (for example by insulating cavity walls) to borrow money from banks at low rates. The loan must be repaid within a maximum of fifteen years.  “More with Less” (“Meer met Minder”): the national energy conservation program for existing buildings. This joint initiative between the government, housing associations, construction, installation and energy companies, aims to make 2.4 million existing homes and buildings 30% more energy-efficient by 2020.

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 “Save energy with the Tenants”: an agreement launched in 2008 to help tenants’ associations make arrangements with landlords for energy savings in the social rented sector.

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Summary on the effects of HVAC and renewables - Netherlands Products Policies and Incentives Map Possible effects

HEATING District Heating Dutch Heat Act + Foreseen to encourage the market

Energy Policy - Negative impact on favouring renewables in All HVAC Favouring nuclear – energy generation EPBD ELV (BEMS) Boilers ● Stricter inspections of mid-size combustion plants SDE+ has been mainly targeted at promoting Biomass Boilers SDE+ + biomass, however, biased towards green gas. Marginal positive influence on the segment Will stay largely unaffected, although market is SDE+ Heat pump = expected to start picking up from 2014 EIA EIA prescribes tax reduction for air heat pumps

Compression Heat

Pumps ●

Sorption/Gas Heat

Pumps ● SDE+ Small scale CHP = Slight increase

Better supported through SDE+, but might Biomass CHP SDE+ + require additional investments to push increase in capacity Negatively indirectly affected through increase in Electric heating – electrical energy pricing Introduction of the scheme will open opportunities SDE+ for heat recovery projects, but overall market is Heat recovery Environmental Law 2011 + stabilising from recent downward trend New Directive Certification of boilers indirectly promotes heat recovery segment AIR-CONDITIONING Air conditioning Inspections = To be morphed into CFC-regulation

Environmental Law 2011 Trend towards dynamic ventilation systems and Mechanical ventilation + New Directive on-demand ventilation HOT WATER

For installation with a collector surface of at least Solar Thermal + 2 SDE+ 100 m and enclosed solar collectors ELECTRICITY Daylighting systems - = No clear specific policy impact

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SDE+ Opportunities to apply within the scheme will PV + further positively affect the PV market on top of general favourable trend INSULATION Energy Efficient Building Wall Insulation Growing importance Requirements + Energy Efficient Building Loft Insulation Growing importance Requirements +

+ Positive Effect – Negative Effect = No Impact

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Sources of information – The Netherlands . BSRIA Ltd. Netherlands 2012-2013 Country Reports on Energy, Heat Pumps, Solar Thermal and Domestic and Commercial Boilers www.bsria.co.uk . Odyssee-MURE Database http://www.odyssee-indicators.org/ . http://www.sunwindenergy.com/news/sde-replaces-former-subsidy-renewable-energies- netherlands . EPBD http://www.agentschapnl.nl/programmas-regelingen/wet-en-regelgeving . SDE https://zoek.officielebekendmakingen.nl/stcrt-2013-2815.html . Netherlands Commission for Environmental Assessment http://www.eia.nl/ . http://www.miavamiljaarverslag.nl/ . Spring Agreement http://www.lente-akkoord.nl/ . Energy Investment Allowance (EIA) http://www.agentschapnl.nl/nl/programmas- regelingen/energie-investeringsaftrek-eia . More with Less http://www.meermetminder.nl/26/home.html . Energy Netherlands – Energy Companies http://www.energie-nederland.nl/

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24 Poland

Poland was the first post-communist country to reach its pre-1989 GDP levels, which it achieved by 1995 largely thanks to its booming economy. It is the sixth largest economy in the EU, and one of the fastest growing economies in Europe, with a yearly growth rate of over 3.0% before the global economic crisis.

Poland joined the EU in 2004, but has not adopted the Euro. The currency is Polish złoty. Per capita GDP is $21,118 and total GDP is $813.988 billion (2013 estimates).

A large proportion of the housing stock in Poland was built between 1960 and 1980, a period of growth in population and post-war reconstruction. In general, the thermal performance of much of the Polish housing stock is poor. Sources estimate that 46% of dwellings are insulated, 45% are non-insulated, 9.30% are partly-insulated.

National policy 24.1.1 NREEAP The National Renewable Energy Action Plan provides support for technologies such as solar panels, geothermal heat pumps, small wind farms and large-scale wind farms until 2020. These could receive specific levels of support in the next phase of the programme during 2014- 2020. 24.1.2 Energy policy of Poland until 2030 This policy was adopted on 10th November 2009 by the Polish government. It outlines the main targets in terms of primary sources of energy, as well as renewable energy, and outlines a roadmap towards achievement of the targets. In the area of renewables it focuses on: . The roadmap to reach a 15% share of renewable sources of energy in the overall mix, with separate routes in the areas of electricity, heat, cooling and transport . 10% share of biofuels in the transport sector by 2020 . Protection of forests from excessive exploitation to obtain biomass . Support through certificates of origin . Additional support mechanisms to promote increase of renewables for production of electricity . Considering the exemption of renewables from excise tax . Directly supporting construction of renewable sources generation units and power grids . Provisioning for new technologies utilising waste products and specifically municipal waste 24.1.3 Building regulations/ energy efficiency laws – EPC Implementation of the Energy Performance of Buildings Directive (EPBD) in Poland has resulted in the introduction of the obligatory energy certificate for new buildings and buildings for sale from 1st January 2009.

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In January 2011 Poland launched a thermo-modernisation programme for energy effectiveness, open to local authorities, medical care facilities, higher schools and other institutions financed from the state budget. As well as new-build, existing buildings need higher insulation values.

In Poland, the demand for energy-efficient solutions in private house building is increasing because of rising energy prices. There are already some housing projects with energy requirements 70% below the average. Depending on the type of energy supply, the costs for improved insulation are amortized over a period of 6 to 13 years. 24.1.4 Housing Subsidy Programme This programme is run by the National Fund for Environmental Protection and Water Management (NFOŚiGW). The programme’s budget is around €75m to support the use of renewables in the housing sector with subsidies running from the beginning of 2013 till the end of 2018. It is anticipated to reach nearly 12,000 houses and apartments.

Owners receive grants to renovate or build new homes, and the amount of the grant is dependent on the targeted level of annual energy use. A grant of PLN 50,000 (approx. €12,000) is given for a target of 15 kWh/m2, and a grant of PLN 30,000 (approx. €7,200) is given for a target of 40 kWh/m2. There is additional provision for smaller grants targeted at flat owners: PLN 16,000 (approx. €3,800) for a target of 15 kWh/m2 and PLN 11,000 (approx. €2,600) for a target of 40 kWh/m2.

The regional branch offices of NFOSiGW have additional incentive schemes for small and medium enterprises (SMEs) and the public sector. NFOSiGW provides loans covering up to 75% of the total investment and subsidising 15% of the installation costs. The maximum amount that could be received through the program is PLN 50m (approx. €12m) and is provided for a maximum repayment time of 10 years. The loans are mainly available to large installations of solar systems.

Smaller solar thermal installations can receive a subsidy covering nearly 50% of the installation loan given at the local municipal level.

From 2011 the number of applications within the program increased as it was further extended to cover heating and installations in new buildings. 24.1.5 Green Investment Scheme (GIS) This scheme is mainly concentrated around provision of subsidies for the public sector – schools, kindergartens, nursing homes, etc. Funds are provided to owners for improving the thermal envelope of the building: . Wall insulation . Window and external door replacements . Heating system replacement and upgrades . Replacement of ventilation and air-conditioning systems . Energy management systems

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. Renewable energy sources (wind, solar, biomass) . Replacement of internal lighting with more energy-efficient lighting 24.1.6 EcoFund The EcoFund was created in 1992 by the Ministry of Finance by the conversion of part of the Polish debt for environmental protection fund. It was the forerunner of NFOSiGW and an attractive institution to subsidise renewable installations in Poland. By the end of 2007 the EcoFund had granted over 22,000 m2 of solar thermal collectors and further 18,500 m2 were set to be subsidised between 2008 and 2009.

Grants were available for:

 Energy savings in municipal heating systems;  Use of biomass for energy generation purposes in household and welfare sector and at industrial plants;  Use of solar energy (photovoltaic and solar thermal).

Currently, the EcoFund has around PLN 10m (approx. €2.4m) of grants to spend per year. Private owners of single dwellings and housing communities are eligible for a grant of PLN 1,000 (approx. €240) per square metre of active surface of solar collector. The minimum amount of grant is PLN 50,000 (approx. €12,000). Grants have been mainly used in the commercial sector (hotels and recreational sites, hospitals, institutions of public care, multi- dwellings).

One of the recent projects of EcoFund realised in 2010 was the “Use of solar energy for hot water preheating at building of the town of Lubaczow” (south-eastern Poland). 24.1.7 Thermal Renovation Fund Investors who undertake thermal renovation of a building, whether private, commercial or public and have applied for a thermal renovation loan can apply for loan repayment support of 25% that will be paid from the national Thermal Renovation Fund. As one of the conditions annual energy consumption must be reduced by 10% if a heating system is modernised and by 25% if thermal insulation is additionally improved.

There is also a considerable amount of external wall insulation being applied to existing houses and apartments. There are various grants both for housing organisations and individuals for external wall insulation, thus both existing blocks of flats and individual houses are benefiting. 24.1.8 Provincial Funds for Environmental Protection and Water Management (WFOŚiGW) These were designed to handle smaller projects of less than PLN 10m (approx. €2.4m). Provincial Funds for Environmental Protection and Water Management (WFOŚiGW) provide grants to companies, institutions and individuals engaged in business activities. Grants are intended for purchase and installation of solar thermal systems, heat pumps, photovoltaic solar panels, biomass boilers and heat recovery devices. The grant amount is up to 40% of the total cost of the project.

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Other sources where one can find out about the possibility of co-financing of individual projects based on the heat pump are: District Funds for Environmental Protection and Water Management, Municipal Funds for Environmental Protection and Water Management. However, one important thing is that this is not a unified system of support that can be used for heat pumps and much depends on the interpretation of the rules in a local level. The financing of renewable sources of energy is carried out by BOS bank on preferential terms in collaboration with WFOŚiGW.

Therefore, in every different parameter such as investment, the loan amount and its share in the total cost of the project, the length of the loan and repayment are defined in the capital and the interest rate. In any case, the interest rate will be preferential, and therefore will be less than the interest rate on loans widely used widely in the market, due to the contribution of WFOŚiGW, usually in the form of interest subsidies.

Installers also offer financing options for heat pumps financed in BOS Bank also using foreign funds, in cooperation with the German KfW Bankengruppe or Nordic - NIB. 24.1.9 Rural Development Programme Budget The Rural Development Programme (RDP) budget has provided a wide range of support for investments in the energy sector, from project generation and distribution of renewable energy through to the production of energy from biomass and agricultural products. The nature of RDP funding is dedicated to rural areas, people engaged in agricultural activities and services for SMEs. 24.1.10 KAWKA This programme supports the removal of low-efficiency energy sources, supporting the growth and deployment of decentralised renewable energy sources. It was announced on 1st March 2013 and has been allocated a budget of around €200m. It is specifically targeting highly polluted areas with the population of more than 10,000 people and where pollution resulted from the coal sourced heating. The eligible applicants include municipalities of the respective towns and will be provided for projects having solar thermal, heat pumps, CHP and biogas plants in 2013. 24.1.11 Regional Operational Programmes (ROP) of the EU Even more money will be distributed through ROP: the EC Baltic Renewable Energy Centre states that solar collector buyers will receive additional PLN 240m to 270m (approx. €57m to €65m) from these sources alone. The EU offers subsidies of up to 85% of installation costs.

EU funds are available at both the national and local level. However, the Infrastructure and Environment Operational Programme (IEOP) – the main EU fund for renewable managed by the Ministry of Economy – has so far mostly supported green electricity production. The solar thermal market has enjoyed its growth primarily thanks to the EU Local Operational Programmes present in each of the 17 Polish provinces. Although most of the funds in the EU’s 2007-2013 budget have been exhausted by now, the new EU budget should keep up resource-intensive energy and environmental projects in Poland.

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European means designated for development of the renewable sector in Poland in the time frame 2007-2013 (both from cohesion and structural funds) reached €1bn, an additional €30 million being for production of renewable equipment. The rate of the support is defined according to the EU rules for public aid, and only local authorities and public organisations might be higher subsidised - up to 60-70% of the investment cost.

The first impact of the funds from the EU ROP on increases of solar collector sales in Poland was visible in 2009. Initial applications were submitted at the end of 2008. The biggest co- financing is expected for the regions of Mazowieckie (Warsaw), Lubelskie (Lublin) and Malopolskie (Cracow). Table 43 - Financial framework to support the solar energy sector in Poland, 2011-2012 - Source: EC BREC, 2011 Regional Operational NFOSiGW Swiss Fund Programmes of the EU Time perspective 2010-2015 2007-2014 2009-2012 PLN 300m PLN 258m PLN 225m Financial support (approx. €72m) (approx. €62m) (approx. €54m) Subsidy share (%) 45% 50-85% 49-85% Associations, local Associations, local authorities dealing on Private persons, authorities dealing on behalf of community Beneficiaries housing behalf of community members or residents communities members or residents and/or public and/or public institutions institutions Possibility to apply Yes Only in chosen provinces No for support

24.1.12 Swiss-Polish Co-operation Programme The aim of Swiss-Polish Cooperation Programme is to reduce economic and social disparities within the EU. has made available CHF 1bn (approx. €820m) for the countries that joined the European Union on 1st May 2004. The contribution to Poland amounts to CHF 489.02m (approx. €400m).

For the solar energy sector the subsidy covers up to 85% of investment costs within the financial framework of PLN 225m (approx. €54m). However, private entrepreneurs are not eligible for the application process, only associations, local authorities or public institutions.

One of the areas supported is improvement of energy efficiency by introducing renewable energy systems. The type of project for a subsidy would be the installation of solar collectors of over 100 m2 or the construction of photovoltaic systems for public utility and residential buildings.

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At least 40% of the contribution will be spent in the four south-eastern provinces: lubelskie, malopolskie, podkarpackie and swietokrzyskie. 24.1.13 Norwegian Financial Mechanism Financial assistance is directed by the EFTA countries (Liechtenstein, Norway and Iceland) to the least prosperous EU countries with the lowest GDP. The EFTA countries in return expect to exercise the freedoms of the single market. Under the Norwegian Financial Mechanism between 2004 and 2009 Poland was granted €263.938m.

The main objectives of this grant are: reducing the economic and social disparities within the European Economic Community, to support the new EU members in its internal market and promoting bilateral cooperation. These measures are addressed to all public sector institutions and private and governmental institutions of the country. The minimum amount of funding a single project is €250,000.

The example of the project with the use of solar collectors co-financed by the mechanism is: “Eco-energy strategies for Carpathian municipalities”. 24.1.14 New initiatives The new incentive scheme introduced in 2011 is a €150m preferential credit line for SME solar thermal installations, financed by the European Bank for Reconstruction and Development (EBRD) under the Polish Sustainable Energy Efficiency Financing Facility (PolSEFF). Companies can receive up to €1m for investments that improve energy efficiency. Administered through a few of Poland's commercial banks, it aims to increase energy efficiency in Polish companies either by saving energy or supplying it from renewable sources.

The best incentive for the development of the market according to many manufacturers would be pro-ecologic tax reliefs in Poland. Another new incentive to stimulate the market could be to combine different models and methods of use of renewable energies. Scientists have been already developing such solutions and manufacturers are ready for their implementation. 24.1.15 Additional Grants and Subsidies Schemes There are various grants available for improving the insulation characteristics through the application of external wall insulation systems. These are often available on a regional or local basis. Additionally there are grants for the installation of biomass boilers, heat pumps (special grants from the EU) and solar panels.

The insulation requirements for new housing are:  Walls: 0.30 W/m2K  Roofs: 0.25 W/m2K  Floors above basements: 0.45w/m2K

More recently, sales of heat pumps have been increasing although from a very low base. The lack of grants for the installation of heat pumps in the domestic sector has held back their growth rate but the newly formed Heat Pump Manufacturers Association is actively lobbying

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for grants to be made available. Grants for larger installations in public buildings are already available from various EU sources although this often involves a long bureaucratic process. Heat pumps are available either to provide central heating and hot water or for the provision of hot water only.

The renewable share of total energy consumption in Poland accounts for around 10% (2010). There is a growing use of heat pumps for heating and hot water. Additionally, solar panels are being installed for the production of hot water. Solar panel installations receive grants and this has increased their popularity. They are especially effective in areas where there is no gas and solid fuel is used for heating. The solar panels provide an alternative in the summer to either installing electric water heaters or having to use a solid fuel boiler for producing hot water.

The European funds which were supposed to support the financial investment in solar thermal installations (mainly from operational programmes – actions 9.4 and 10.5) had not been fully used. In 2011 these financial subsidies were recalled; however, there are new programmes and initiatives (e.g. the Swiss fund) thanks to which the market is expected to revive and grow at a much higher rate than in 2010. Table 44 - Proposed new subsidy instruments for the solar energy sector or propositions to increase effectiveness of existing instruments - Source: EC BREC, 2011

Date of Instrument of subsidy Expected result Target group introducing* and expiry Subsidies, 30% expenditure 5m m2 of installed solar Owners of single dwellings 2011-2013 collector surface Subsidies, 50% expenditure 1.2m m2 of installed solar Public sector, industry and 2011-2013 collector surface agriculture Revenue tax reliefs

The actual split of funding between different technologies is not yet officially known, however, there is a contemplation that a large portion of it will be assigned specifically to solar thermal.

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Summary on the effects of HVAC and renewables - Poland Products Policies and Incentives Map Possible effects

HEATING Influence of ETS and IPPC Directives will ETS and IPPC District Heating + force modernization of the sector Expected privatisation Policy towards low emissions Domestic Boilers = No clear specific policy impact Commercial Boilers = No clear specific policy impact WFOŚiGW, RDP, Supported segment, but could be negatively Biomass Boilers NREAP + affected by planned subsidy cuts Marginal increase mainly in the new construction WFOŚiGW sector Heat pump NFOŚiGW + Potential in muti-family sector Krakow grants Krakow area Compression Heat

Pumps ● Sorption/Gas Heat

Pumps ● Small scale CHP = Supported segment, but could be negatively Biomass CHP RDP + affected by planned subsidy cuts Electric heating No specific policy + Expected to complement heat pumps Supported segment, but could be negatively Heat recovery WFOŚiGW + affected by planned subsidy cuts AIR-CONDITIONING Air conditioning = Mechanical ventilation + HOT WATER

NFOŚiGW Subsidy Positive for the industry who can target the whole Solar Thermal + Prosument block of flats ELECTRICITY Replacement of inefficient lighting, although impact is marginal and limited to specific public Daylighting systems GIS + sector Solar Shading Energy Policy of Poland PV Might be negatively affected 2030 – INSULATION

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Thermal Renovation Fund Growing trend as an effective means to increase Wall Insulation + Green Investment energy efficiency Scheme Available mainly on the local and disperse scale, Loft Insulation Various local grants = and, as such, will not affect the market at large

+ Positive Effect – Negative Effect = No Impact

Sources of information . Bsria Ltd Poland 2012-2013 Country Reports on Energy, Heat Pumps, Solar Thermal and Domestic and Commercial Boilers www.bsria.co.uk . Odyssee-MURE Database http://www.odyssee-indicators.org . Association of Heating Appliances Manufacturers and Importers http://www.spiug.pl/ . National Fund for Environmental Protection and Water Management http://www.nfosigw.gov.pl/en/ . The Polish National Energy Conservation Agency www.kape.gov.pl . http://solarthermalworld.org/content/poland-plan-extend-national-residential-subsidy- scheme

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25 Portugal

Portugal joined the EEC (forerunner of the EU) in 1986 and was a founder member of the Eurozone in 1999. Although Portugal’s economy grew rapidly in the 2000s, growth has been mostly negative since 2008 and the country still has not recovered from its financial crisis. Per capita GDP is $22,930 (2013 estimate).

Portugal has seen massive growth in renewable energy. From January to November 2013, around 63% of the energy produced was renewable, including 29.7% hydroelectric, 22.8% from wind, 5.3% from biomass and 0.9% solar energy. The remainder is from fossil fuels, as there are no nuclear plants in Portugal.

National policy 25.1.1 Energy Performance of Buildings Directive and Directive The EPBD was is implemented in Portugal through the following legislation: 1. DL 78/2006, the National Energy Certification and Indoor Air Quality in Buildings (SCE). 2. DL 79/2006, Regulation of HVAC Systems of Buildings (RSECE). 3. DL 80/2006, Regulation of the Characteristics of Thermal Performance of Buildings (RCCTE) 25.1.2 National Energy Certification and Indoor Air Quality in Buildings (SCE) –EPC The requirement for National Certification was introduced into the legislative framework in Portugal in 2006 by Decree-law no. 78/2006 of 4th April. It defines the rules and methods for implementation of regulations in the residential sector and applying them to the new and renovated buildings.

The main aims are: • Promoting the use of renewable energy systems and also improving indoor air quality, according to the requirements and provisions of the Building regulations and RSECE • Certifying energy performance and indoor air quality in buildings • Correcting and improving energy systems, including boilers and air conditioning systems, both with regard to energy performance and indoor air quality

Currently Portugal is overseeing the regulation set out in the National System for the Energy and Indoor Air Quality Certification of Buildings (SCE). It is expected that the next review will bring more demanding EPC (Energy Performance Certificate) requirements. 25.1.3 Regulations on HVAC Systems in Buildings (RSECE) The respective legislation on Heating, Ventilation and Air Conditioning was introduced in Portugal in 2006 for the Energy Performance on Buildings Directive.

The Main goals of the programme are:

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• A methodology for calculating energy performance of buildings • Minimum energy performance standards • Energy Certification of buildings • Regular inspection of boilers and air conditioning in buildings • Limit energy needs for heating, cooling, primary energy and heat transfer • Maintenance of HVAC systems • Monitoring and energy audits

The main types of buildings to which the programme applies are: Table 45 – Buildings that RCCTE apply to - Source: Institute Superior Tecnico Residential Commercial

Small Large

Pnom < 25 Pnom > 25 Pnom < 25 Pnom > 25 Pnom < 25 Pnom > 25 kW kW kW kW kW kW

New RCCTE RSECE RCCTE RSECE RSECE RSECE Building Stock

Existing Major RCCTE RSECE RCCTE RSECE RSECE RSECE Renovation Building Stock No RSECE RSECE Renovation

The RSECE tightens the requirements and standards for:  Indoor air quality  HVAC design, with limits on power, and clear energy efficiency requirements for new HVAC systems  HVAC energy use  Establishing the need to carry out energy audits every 6 years  Periodic inspections of boilers and air-conditioning systems 25.1.4 Regulations on Thermal Behaviour of Buildings (RCCTE) The Regulations on Characteristics of the Thermal Behaviour of Buildings (RCCTE) define new rules for new buildings in the residential and small services segments, covering buildings without centralised air-conditioning. They tighten the requirements for wall and floor insulation, limit excessive solar gains through tighter controls, and promote limiting the heat losses in buildings.

The main aims of the programme are:

 Setting the methodology for minimum energy performance standards  Implementation of EPC (Energy Performance Certificates)  Limiting heat transfer and energy needs for heating, cooling, domestic hot water and primary energy  Installation of PV solar panels

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Decreto-Lei no. 80/2006. DR 67 SÉRIE I-A de 2006-04-04 describes the requirement to have solar thermal collectors for hot water production in areas of significant exposure. Collectors need to be certified to European Standards and installers need to have the appropriate certification. The system itself needs to have a 6 year guarantee of maintenance. The certification is managed by the General Direction of Energy and Geology.

These Regulations define the requirements for new residential and small service buildings, namely in terms of wall and floor insulation, types of glass coverings and surfaces, limiting heat loss and controlling excessive solar gains. These regulations set limits on the energy requirements for air-conditioning and hot water production, making it compulsory to install solar energy systems and favouring the use of other renewable energy sources.

25.1.5 National Energy Strategy 2020 (ENE 2020) In April 2010 Portugal adopted a new National Strategy for Energy, named ENE 2020, approved by establishing a vision for the renewable energy sector, setting out the investment in research and development, diversification of different sources of energy, promoting renewable sources and increased stability of the grid and reducing external energy dependency of the country. 25.1.6 National Action Plan for Renewable Energy (PNAER) In July 2010, Portugal presented the National Action Plan for Renewable Energy (PNAER), which is based on ENE 2020, and sets the national objectives for the share of energy from renewable sources used in the transport, electricity, heating and cooling sectors in 2020. A 2013 action plan within the PNAER framework is still to be officially released in Portugal.

In broad terms it covers certain measures for some type of energy sources:  For Biomass it is envisaged that the use of biomass in residential heating will be encouraged through efficient equipment. Overall it is expected that around 250 MW will be delivered through biomass projects by 2020. The framework also established the measures needed to foster production of forestry biomass and energy crops and mentions a general direction for Biomass through the support of a dedicated Biomass for Energy Centre.  Geothermal energy should deliver around 75MW of installed power by 2020. Some of the regions of Portugal will be especially relevant for geothermal applications, such as the Azores, that will provide the availability of geothermal energy source thus making investment in the projects especially interesting and economically feasible. 25.1.7 Energy Efficiency programme in Public Administration (ECO.AP) The ECO.AP programme is a special programme set out specifically to target energy efficiency measures in public sector to reach 30% by 2020. It will be using Energy Efficiency contracts in the public sector and the necessary legislation has been approved to allow their usage in public sector. There will be rollout of different measures to improve energy efficiency and transition to more efficient lighting.

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25.1.8 Energy Efficiency Fund Energy Efficiency Fund (FEE): Set up in 2010, the FEE is a fundamental instrument for financing the national targets for energy efficiency set in the PNAEE; for example, it supports the acquisition of equipment with better energy performance or equipment that promotes more rational energy use by citizens and companies, among others.

In the area of funding for the building sector (both residential and non-residential) the EEF considers:  Increased penetration of solar thermal and micro-CHP  Energy performance certification as the main instrument  Urban rehabilitation and renovation  Sustainable construction with improved thermal comfort 25.1.9 PNAEE 2013 National Action Plans for energy efficiency and renewable energy (PNAEE and PNAER) have not yet been officially released. But overall they set the target of reducing the final energy by 1 Mtoe by 2016 and 8 Mtoe in primary energy by 2020.

Estimated investment in PNAEE is around €13bn , with the greatest share being assigned for energy efficiency (€9bn out of that). The support is available both the Energy Efficiency Fund and Carbon Fund representing the public resources on one hand, and private funding on the other. SNRF will provide financial support for energy efficiency measures and installations of solar thermal collectors.

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Financial Incentives 25.2.1 Feed-in Tariffs (FIT) Table 46 - Feed-In Tariffs for Portigual - Source: EREF Support scheme Feed-in tariffs Current applicable law Decree-Law 29/2006, 15th February Decree-Law 339C/2001, 29th December (DL 312/2001) Decree Law 225/2007 Particularities

Capacity / Amount (GWh/a) / (MW) Cent/kWh Licensed before 2009 8.59 Licensed after 2009 7.1 Hydro up to 10MW Duration of the tariff and limit 52GWh or 20 years (25 years in exceptional cases)

Licensed before 2009 9.45 Wind Licensed after 2009 7.45 Duration of the tariff and limit 33 GWh or 15 years

Licensed before 2009 10.53 Licensed after 2009 10.7 Forest biomass 10.7 Animal biomass 10.2 Biomass Anaerobic digestion biogas, solid urban waste, WWTP, efflucents and wastes 11.5 from agro-livestock and agro-food sectors Landfill gas 10.2 Duration of the tariff and limit 25 years (anaerobic and landfill 15 years)

up to 5kW 42 Licensed before 2009 more than 5kW 34 up to 5kW 45 Licensed after 2009 More than 5kW 31 Solar thermoelectric <=10MW 26.7 Photovoltaic PV microgeneration <=5kW 47 PV microgeneration 5-150kW 35.5 21 GWh/MW or 15 years PV micro: 15 years when installed in residential, Duration of the support and limit commercial, service or industrial buildings For others: 15 years

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Geothermal In the Azores 8.84

CHP 99.7 Licensed before 2009 Urban waste 78.2 Licensed after 2009 Wave energy (demonstration up to 4MW) 26.0 CSP / Waste / Wave energy (pre-commercial up to 4MW 19.1 Wave First 100MW 13.1 Wave energy (commercial) Next 150MW 10.1 Then 7.8 Solid urban waste (burning) 5.3

25.2.2 Call 03-FEE-Efficient Building -2012 This programme was initiated on 30th November 2012 and provides funding of around €1m for solar thermal within the framework of Energy Efficiency Fund (EEF). It aims to cover 50% of the costs including installation, and sets the limit of such funding at €1,500. However, the installer, the homeowner and the supplier should meet the certain requirements to participate in the program. The applications are submitted to the FEE through Energy Service Companies (ESCO) and suppliers of energy solutions. The main areas eligible for funding are: 1. Supply and installation of the actual equipment or solution (including solar thermal and efficient windows) 2. The costs of technical analysis highlighting the impact of the improvements; 3. The costs of issuing and registering Building Energy Certificates either in full or in part.

In the period up to February 2013, the total amount of applications received under the scheme was 158 with attributable funding of €201,521. It is worth noting that 81% of this funding was for solar thermal applications.

In the next run up of the programme up to April 2013, there were 439 applications in total with allocated funding in the area of €500,000, 72% of which was towards solar thermal systems. 25.2.3 Taxation on Less Efficient Light Bulbs In 2008, the Portuguese government imposed a new tax on inefficient lighting equipment. The tax aims to compensate the environmental costs related to the inefficient use of energy in this type of equipment, and foster the use of more efficient and economical lighting. The tax is applied to manufacturers, traders and other economic agents that introduce such equipment onto the Portuguese market. The taxes assigned are:  Incandescent light bulbs: €0.41 / unit  High pressure mercury vapour lamps: €6.77 / unit

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25.2.4 Financial Incentives on Solar Thermal market There is a range of financial incentives targeted at the Solar Thermal market:  13% VAT for solar thermal products  A higher allowance for the depreciation for companies acquiring solar thermal equipment  Incentive to cover 50% cost of the system with the rest being covered by a low rate interest loan, mainly applicable for Private Institutions of Social Solidarity (IPSS).

Overall requirements for the scheme are similar to the Building Regulations and require products and installers being certified and provide at least 6 years of system maintenance.

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Summary on the effects of HVAC and renewables - Portugal Products Policies and Incentives Map Possible effects

HEATING

PNAER Promotes co-generation but taxation is not favourable District Heating CHP Directive = Generally DH is not greatly utilised and less Taxes preferable Domestic Boilers RSECE, RCCTE + Positive trend Commercial Boilers RSECE + Positive trend Biomass Boilers PNAER + Support through efficient equipment Heat pump + Positive trend Compression Heat

Pumps ● Absorption/Gas Heat

Pumps ● FITs Small scale CHP + Especially Micro-CHP CHP Premiums in FIT FITs Biomass CHP + Slow pace of growth CHP Directive Electric heating High energy prices – Less favourable Heat recovery SCE + Indoor air quality requirements AIR-CONDITIONING RCCTE Air conditioning + New limits and indoor air quality requirements SCE Mechanical ventilation SCE + Indoor air quality requirements HOT WATER RCCTE FEE-Efficienct Building- Segment is expected to positively respond to Solar Thermal 2012 + stimulus after decline Targeted subsidies ELECTRICITY Efficient Buildings – 2012 Promotes efficient windows scheme and Taxation on Less excessive solar gains control Daylighting systems Efficient Bulbs + Transition to more efficient lighting in public RCCTE sector Eco.AP

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Efficient Buildings – PV 2012 + Positive FITs INSULATION Wall Insulation RCCTE + Tighter requirements in wall insulation RCCTE (Guide on Loft Insulation Marginal effect mainly in renovation market Roofing) +

+ Positive Effect – Negative Effect = No Impact

Sources of information . Odyssee-MURE Database http://www.odyssee-indicators.org . National Energy policy and Taxation http://www.dgeg.pt/ . Solar Thermal Certification Info http://www.aguaquentesolar.com/ . Portuguese Energy Agency http://www.adene.pt . Portuguese Association of Solar Industry http://www.apisolar.pt/pt/noticias/solar-termico- noticias/456-lista-de-empresas-fee . Government of Portugal http://www.portugal.gov.pt

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26 Romania

Romania joined the EU in 2007 but has not yet joined the Eurozone. During the 2000s, Romania enjoyed one of the highest economic growth rates in Europe. After a period of decline in 2009 and 2010, the economy is once again growing. Per capita GDP is $16,518 (2012 estimate).

Fossil fuels are the country's primary source of energy, followed by hydroelectric power then nuclear. The country has a large potential for wind power, although this is largely unrealised.

At the end of the 1960’s, Romania saw a mass introduction of large panel construction. This was then used on a large scale for over a quarter of a century. As a result of this mass use, the general quality of the stock in Romania is lower than in other countries.

National policy and financial incentives 26.1.1 National Targets Romania has set an energy saving target of 2.8 Mtoe by 2016 in its National Energy Efficiency Action Plan (NEEAP). A new edition of the NEEAP is currently undergoing further development. The Romanian Energy Strategy 2007-2020 focuses on energy security, sustainable development and energy efficiency. The reduction of energy use is set to reach 41% by 2020, mainly through the activities in the energy efficiency area.

The main organisations in Romania overseeing energy efficiency policies are:

. The Ministry of Economy, Commerce and Business Environment (MECMA) . The Ministry of Economy and Commerce (MEC) (according to the Government Decision no. 738/2003) is overlooking the national energy strategy, including responsibility for the strategy in the areas of power and thermal energy, hydro and nuclear sources, and fossil fuel energy sources. . The Ministry of Agriculture, Forests, Waters and Environment (MAPAM) is developing the general environmental policy and specific legislation related to water management and environmental protection. Apart from that, it is also implementing the Environmental Programme. However, the responsibility for provision of the actual programme on the local level lies with the local authorities.

Overall Romania is still relying heavily on subsidies to kick start the renewables sector and to ensure the smooth running of the programme. The general economic situation in Europe hast put additional pressures on the Romanian government.

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26.1.2 Energy Audits Energy audits became mandatory for new buildings in 2007 and for existing buildings in 2010. However, at the same time there are no enforceable mechanisms to back this up in Romania and there are some general problems associated with that. 26.1.3 District Heating Policy One of the main issues on the Romanian heating market in the past several years has been the conversion from district heating to individual central heating (called locally “debransarea”). In 2006 the Government issued law on district heating conversions (“Serviciului public de alimentare cu energie termica”, number 325/2006). The law stipulates that a household willing to disconnect from the district-heating network must seek approval from its neighbours, located horizontally as well as vertically in the building and is obliged to seek approval from an association of the condominium and to report the disconnection to the utilities. The law clearly blocked many households from converting from district heating to individual central heating since as it is often difficult to find approvals from the association of condominiums or from the neighbours. It is likely that subsidy removal will lead to a wave of disconnections in towns.

The following points are however to be considered when assessing the market potential for conversions:

 The district heating are continuing to be heavily subsidised as majority of population is still reliant on district heating systems which are highly inefficient;  A bylaw (“ordin”) of ANRSC 343/2010 was issued that households must pay for district heating even if these disconnect (30% in winter and 50% in the summer). The application in real life depends on the local authority and extends the payback period of a conversion;  District heating companies (CET) are usually large companies, often owned by municipalities and regional politicians are not interested in their failure;  Subsidy removal can have a devastating impact on households’ budgets. For example, the price in Constanta rose from RON 170 to RON 338 per Gcal (approx. €0.033/kWh to €0.065/kWh), and in Targoviste it rose from RON 290 to 430 per Gcal (approx. €0.056/kWh to €0.083/kWh). 26.1.4 Casa Verde (“Green House”) Subsidy This programme was launched by the Ministry of Environment in January 2009, but could not be implemented in its original version. The official name of the programme is “Programme for installation of heating systems using renewable energy, including replacing or supplementing traditional heating systems”. During 2009 the rules were adjusted in such a way that only public institutions could receive the funds. However these usually have little budget to provide co-financing. As a result, the impact of the programme on the market was minimal. Casa Verde was originally launched with the aim to create incentives for households to install heating systems based on renewable energy, i.e. solar thermal panels, heat pumps and biomass heating units.

The programme was, however, finally launched again in mid-2010 with the following rules:

 Only physical persons, owners of a residential building are eligible;

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 There must be a conversion of a heating/water heating system from fossil fuel to renewable solution;  There is no list of approved products or installation companies;  RON 6,000 (approx. €1,350) subsidy for solar thermal panels;  RON 6,000 (approx. €1,350) subsidy for biomass-burning solid fuel boilers incl. pellets, bio-waste, corn, etc.  RON 8,000 (approx. €1,800) for heat pumps;  Two systems may be combined and will be both supported;  Eligible cost includes installation, VAT and all the material;  The program is administered by “Agenţia pentru Protecţia Mediului” (APM).

In early 2012, the government announced that Casa Verde would be temporarily halted due to lack of financial funds in APM.

While the overall expectations for the relaunch of the Program are in the air, as of 2013 the Casa Verde program has not been restarted. The situation remains the same for 2014 with the uncertainty over possible allocation of budget for the call of the program in 2014 both for legal entities and individuals in the residential sector. 26.1.5 District Heating Subsidies Update 2013 It is expected that district heating subsidies will be removed (or at least relaxed) in the main markets, which could positively influence demand for wall hung gas boilers. Conversions can only be made outside the heating season for district heating. The magnitude of conversions will also depend on the relative price of natural gas for households, which is expected to rise dynamically. It is envisaged that public funding will be removed out of the district heating sector in Romania by 2015.

Conversion and replacement sales would dominate the years 2012-13, whereas little can be expected from supply to residential and commercial new construction. Heat pumps may be preferential as they will offer the cooling option as well, which is important especially in the South of Romania and the capital. 26.1.6 Green Certificates (GCs) Romania has chosen to promote the energy efficiency project through trading of “Green Certificates”. A Green Certificate (GC) represents renewable energy production of a specified quantity of electricity. The distribution companies have to buy the energy certificates and produce a certain amount of electricity within the annual quota for green electricity, that is being considered at the end of year. The main organisation that is overlooking the process of trading is OPCOM; the information is regularly published and updated on its website. The values for the green certificates are in the range from €27 to €55 per certificate.

Romanian Energy Law – 220/2008 and 139/2010 established the number of Green Certificates per different types of energy per MWh: . Solar PV – 6 GC/MWh (see section below on updates). This could result in growing uptake, however, it could be very difficult for the Romanian government to sustain even in the near future and may result in scale backs starting in 2014. . Biomass – 3 GC/MWh

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. Geothermal – 3 GC/MWh . Small Hydro Plants <10MW - 1 GC/MWh from 2018 . Wave – 3 GC/MWh

Latest policy updates On 4th June 2013, the Romanian government imposed restrictions on the subsidies in the renewable sector effective from 1st July 2013:  Temporary suspension of Green Certificates: for new hydro-power plants – 1 GC; wind – 1 GC; solar – 2 GC; they were deferred till 2017 with gradual recovery.  The Romanian Energy Regulatory Authority will cap the accreditation of renewable plant with the annual limits imposed  GC trading will be only allowed on the centralised market and bilateral trading is prohibited, thus the ability to raise the necessary funding for some projects may prohibit further expansion plans  PV plants on agricultural land could not participate in the GC scheme from 1 July 2013  Financial guarantees should accompany application of grid connection  Technologies will be regularly monitored to disallow overcompensation

26.1.7 Other Incentives FREE initiative (Romanian Fund for Energy Efficiency) This fund is for Romanian companies who want to provide investments into energy efficiency projects and is offering loans for nearly 80% of the investment cost in the range of €100,000 to €1m for projects with a payback under 4 years.

FNGC / Eximbank guarantees These guarantees cover up to 80% of the loans with a low interest rate of 1 to 1.5% and both banks allow easier access to available funds to cover investments into energy efficiency projects.

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Summary on the effects of HVAC and renewables - Romania Products Policies and Incentives Map Possible effects

HEATING Removal of DH Further negatively affected on a recent downward District Heating subsidies – trend Growth is expected for wall hung boilers in Removal of subsidies for Domestic Boilers residential replacements, but can be offset by district heating + cost considerations Removal of DH Commercial Boilers Marginal growth that might increase after 2013 subsidies + Removal of DH Biomass Boilers subsidies + Might be commercially preferred GCs Negative trend being offset by the removal of Heat pump Casa Verde on hold – subsidies for District Heating

Compression Heat – Negative effect Pumps Casa Verde on hold

Sorption/Gas Heat – Negative effect Pumps Casa Verde on hold Small scale CHP + Growth is expected in CHP Biomass CHP GCs + Allocated 50 GCs Electric heating High energy prices – Less attractive source of energy Heat recovery + Growing importance, but delay in uptake AIR-CONDITIONING Air conditioning = No specific policy impact Mechanical ventilation + Growing importance, but delay in uptake HOT WATER Growth is expected but sustainability is Solar Thermal GCs + questionable in view of possible scale backs Most attractive in residential sector ELECTRICITY Daylighting systems = No specific policy effect Growth is expected but sustainability is PV GCs + questionable in view of possible scale backs INSULATION Wall Insulation + Growing importance Loft Insulation + Growing importance

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+ Positive Effect – Negative Effect = No Impact

Sources of information . Bsria Ltd Romania 2012-2013 Country Reports on Energy, Heat Pumps, Solar Thermal and Domestic and Commercial Boilers www.bsria.co.uk . Odyssee-MURE Database http://www.odyssee- indicators.org/publications/PDF/romania_nr.pdf . Casa Verde http://e-casaverde.ro/, www.econet-romania.com . Romanian Energy Regulatory Authority (ANRE) www.anre.ro . The Ministry of Economy, Commerce and Business Environment (MECMA) www.minind.ro . Ministry of Regional Development and Tourism http://www.mdrt.ro/en/ . International Energy Agency http://www.iea.org/policiesandmeasures/energyefficiency/?country=Non%20Member%20 Countries,%20Romania . HORIZONS 2013-2020-2030 http://strategia.ncsd.ro/docs/sndd-final-en.pdf . National Strategy for sustainable Development of Romania http://strategia.ncsd.ro/ . Mational Institute for Building Research Institute INCERC http://www.incerc2004.ro/index- e.htm, www.incd.ro . The Ministry of Agriculture, Forests, Waters and Environment (MAPAM) www.maap.ro . District Heating and Cooling 2013 Survey . http://www.ey.com/Publication/vwLUAssets/Renewable_energy_country_attractiveness_i ndices_February_2013/$FILE/Renewable_energy_country_attractiveness_indices.pdf . OPKOM www.opkom.ro

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27 Slovakia

The Slovak Republic was formed in 1993 when Czechoslovakia split. Slovakia joined the European Union in 2004 and th Eurozone in 2009. Before the global economic crisis, Slovakia had experienced high and sustained economic growth. Slovakia imports 63% of its primary energy use. Renewables play an insignificant part in the energy mix.

National policy and financial incentives Slovakia has set out targets in line with EU directives to be reached by 2020, as follows: . 14% share of energy from renewables in total energy production . 24% share of renewables in electricity production . 14.6% share of renewables in heat produced . 10.0% share of energy from renewables in transport

The main governmental agencies that are responsible for the energy policies are: . Ministry of Economy or Ministry of environment, . Ministry of Transport, Construction and Regional Development. . The main Acts in the area of renewable energy are National Energy Act, Heat Energy Act, EPBD, Labelling Act, Energy Efficiency Act and CHP. The Slovak government is providing updates to the abovementioned acts in line with the retakes of the respective overarching EU directives. As the general changes to the renewable policies across the EU starting from 2013 also reach Slovakia, the funding for subsidies towards PV and biomass technologies have not found their place in the budget allocated by the Ministry of Economy for 2013.

At the same time, Slovakia is on its way to reach its target of achieving 14% of renewable energy sources by 2020 in line of its overall EU level Directive.

The general energy policy is outlined in the number of documents:

. Energy Policy of the Slovak Republic – 2006, the new update to be released soon . Strategy of higher utilization of RES - 2007 . Energy Efficiency Concept of Slovak Republic – 2007 . Energy Efficiency Action Plan for period 2008 – 2010 - adopted in 2007 . Energy Security Strategy of the Slovak Republic - 2008 . National Action Plan for energy from RES - 2010 . Energy Efficiency Action Plan for period 2011 – 2013 - adopted in 2011 . Slovak Energy Act – 2012 . Low-carbon Development Strategy of the Slovak Republic until 2030 – is currently under development and due to be released together with the new Climate Policy debating the introduction of Carbon Tax 27.1.1 Green Investment Scheme The Green Investment Scheme is operated under the established provisions of the Environmental Fund (Act No. 587/2004 Coll. of 21st October) and is providing the support for

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energy efficiency projects with the help of the funds resulting from the sale of the unused CO2 quota within Kyoto Protocol. The aim of the projects under operating Green Investment Scheme is directed at the reduction of greenhouse emission gases. But there are still some concerns as to the realisation of the full potential for the program compared to the neighbouring countries within the EU.

The Ministry of the Environment of the Slovak Republic is responsible for the implementation and running of the scheme.

The Green Investment Scheme is providing support in the form of grants for the following main groups of activities: . Reduction of greenhouse gas emissions by utilising renewable energy sources. This comprises both new installations and replacements of heating and hot water equipment with biomass boilers, heat pumps or solar collectors and can stretch to the replacement of the whole systems. Within this activity any new installation with renewable sources could also be funded. . Reduction of greenhouse gas emissions through energy efficiency by upgrading the necessary equipment to materialise the energy savings.

The GIS programme can also provide further support in the form of credits and would further add provisions for the activities targeted at the reduction of heat losses within the district heating networks. 27.1.2 JESSICA (Joint European Support for Sustainable Investment in City Areas) This programme has been developed by European Commission and the European Investment Bank together with the Council of Europe Development Bank and provides each country to fund investments in the projects redeveloping and renovating urban sector. The funds could be in form of the loans, subsidies or guarantees.The programme is utilising the provision of EU funds for the benefit of the housing sector and mainly refurbishment segment.

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In addition, there is a range of other subsidy programs addressing the needs of the refurbishments in the residential sector: Table 47 – Programs addressing refurbishment - Source: European Investment Bank – JESSICA Evaluation Study 2010

Instrument Provider Type of Origin of Sources for resources sources 2010 Loans from the State State Housing Loan resources State budget 27,000,000 Housing Development Fund Development Fund – advantageous euro interest rate 1% p.a. Subsidies (removal of Ministry of Construction Subsidies State budget 9,960,000 systemic failures) and Regional euro Development SR Governmental Insulation Ministry of Construction Loan resources State budget At the Program and Regional with interest rate moment Development SR 0% p.a. there are no through the State free Housing Development allocated Fund Program of State Bank Slovak Guarantee and Issued State budget - Guarantees Development Bank guarantee Program of higher utilisation Ministry of Economy SR Subsidy State budget 8,000,000 of biomass and solar energy (Slovak Innovation and euro – in housing Energy Agency) overall allocation of the program SLOVSEFF EBRD + International Subsidy in Sources from the Financial Fund from the connection to the International resources for Decommissioning of offered loan Fund from the housing are Bohunice (BIDSF) Decommissioning drained of Bohunice (BIDSF) Regional Operational Ministry of Construction Grant Structural funds 70,000,000 Program and Regional (ERDF) euro* Development SR Operational Program Ministry of Construction Grant Structural funds 6,000,000 Bratislava Region and Regional (ERDF) euro** Development SR 27.1.3 SLOVSEFF (Slovak Sustainable Energy Finance Facility) This programme is providing financial support with the help of EBRD and is aimed at projects implementing energy efficient measures across the residential sector. High demand for SLOVSEFF funding has helped the Bank make over €150m available through the facility since its launch in 2007, funding around 600 projects, generating annual energy savings estimated at 528,775 MWh/year and improving the lives of approximately 82,000 Slovak residents. 27.1.4 State Housing Investment Fund This fund is operational to provide grant and subsidy support in the renovation sector, mainly in the residential segment. Under the provisions of State Housing Investment Fund the allocation of grants is available for the thermal insulation of residential buildings that has been brought in force from 15th of October, 2012 and is regulated by Law. 302/2012 Coll, amending

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and supplementing Law no. 607/2003 Z. z. the State Housing Development Fund, as amended (10.10.2012). 27.1.5 Programme for Promotion of Biomass and Solar Energy Use in Households This programme also targets specific projects to increase use of biomass and solar energy, although recently the solar sector has been negatively affected by the policies’ updates and reduction in some provisions in the Slovak Republic. The solar equipment should follow strict rules and be Solar Keymark certified.

This subsidy is running in line with the regulatory provisions of Decree No. 1 / 2005 of the Ministry of Economy and Government Resolution No. 383/2007 outlining the strategy for greater use of renewable energy sources in Slovakia.

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Requirements for boilers Requirements for solar collectors Boilers for burning wood pellets, wood chips, Min energy gain 525 kWh/year applicable to wood logs with the certified efficiency of the 1m2 aperture for hot water preparation – >84% and emissions <1500 mg/m3 for technical requirements established carbon monoxide and 100 mg/m3 for solid inTechnický skúšobný ústav Piešťany, š.p particles. The amount can reach up to 30% Funding was: of the installation price, but not more than €1,000 . Single family dwelling - €200 per m2 of solar collector, up to an area of 8 m2 . Apartment building: €100 per m2 of solar collector, up to €300 for each apartment with solar hot water application

The programme was established in 2009 but quickly reached its target by 2011 and was stopped in 2012. No funding under the program is allocated for 2013. 27.1.6 Feed-In Tariffs and Feed-In Premium – RES-E In 2009 the Slovak Government adopted the Law on the Promotion of Renewable Sources of Energy and High-Efficiency Cogeneration that entered in the effect on 1st January 2010.The scheme is targeted at the following RES technologies: hydropower, solar, wind, geothermal, biomass (including all products derived from biomass processing), biogas, sewage gas and biomethane.

The Scheme is providing a Feed-In premium on top of the average electricity price and is allocated by the Regulatory office of Network Industries. It takes into account the type of the technology, the type of the project, size and date of the installation and covers both new installations and renovations and upgrades of the systems. It can be valid for 15 years, but could be reduced in case any other ways of funding were utilised for the system either on the EU or national level.

From 1 January 2012 the following tariffs apply (Source: RES Legal): . Solar Energy – Roof-top or façade <100kW – €0.119/ kWh . Geothermal – €0.1905/kWh . Biogas – from €0.093/kWh to €0.149/kWh . Biomass – €0.112/kWh . Biomass from waste – €0.122/kWh . PV – since July 2013 only, if P ≤ 30 kWp 27.1.7 Exemption from consumption tax Renewable is additionally promoted through exemptions from consumption tax that applies to electricity in general. In terms of calculation of the relevant subsidy, it will be fully equal to the tax calculated for the amount of electricity consumed in kWh. 27.1.8 CHP Support Slovakia supports electricity produced by high efficiency CHP depending on the capacity of the CHP, the technology used and on data of power plant put into operation.

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Summary on the effects of HVAC and renewables - Slovakia Products Policies and Incentives Map Possible effects

HEATING No clear specific impact; funding is directed at District Heating GIS = reduction of heat losses in DH distribution RES-H&C Domestic Boilers + Biomass Domestic boilers receive subsidies GIS Feed-In Premiums can positively affect biomass Commercial Boilers RES-E + or hybrid boilers Biomass is given priority by the government, Biomass Boilers GIS + especially in the residential sector, however, strict rules and allocations can hinder growth GIS Heat pump + Positive support, but costs can affect the uptake RES-E

Compression Heat

Pumps ●

Sorption/Gas Heat

Pumps ● Small scale CHP GIS + Supported by the government Reduction of budgeted subsidies to zero result in Biomass CHP – negative effect, however overall biomass sector is supported by the government High electricity prices due to imbalance of Electric heating Discouragement of installation provisions of subsidies – to RES Heat recovery ● AIR-CONDITIONING Air conditioning = No Clear specific impact Mechanical ventilation = No Clear specific impact HOT WATER GIS No funding for Solar Negative impact Solar Thermal – Subsidy Scheme

ELECTRICITY Lighting GIS + Public lighting improvements supported Budget Cut Reduction of budgeted subsidies to zero creates PV – tense competition on the market of PV, as the FIT support is withdrawn

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FITs are still available for <30kWp systems only INSULATION JESSICA Wall Insulation State Housing + Promotion Development Fund JESSICA Loft Insulation State Housing + Promotion Development Fund

+ Positive Effect – Negative Effect = No Impact

Sources of information . Odyssee-MURE Database www.odyssee-indicators.org . Environmental Fund www.minzp.sk/ . SIEA www.siea.sk/ . Ministry of Economy www.economy.gov.sk/ . Slovak Environmental Agency www.sazp.sk/public/index/index.php . JESSICA www.sfrb.sk/sites/default/files/Informacia%20o%20JESSICE_0.pdf . Energy Centre www.ecb2.sk/?lang=en . Slovak Energy Agency www.eanitra.sk/new1/ . Slovak Biomass Association www.skbiom.sk/ . State Housing Development Fund www.sfrb.sk/node/139

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28 Slovenia

The Republic of Slovenia was formed in 1990. The country joined the EU in 2004 and the Eurozone in 2007. It is the wealthiest of the former communist states, with a Per capita GDP of $28,195 (2012 estimate). The economy was hit hard in the global financial crisis and is still currently in decline.

Electricity production is 24% hydro, 35% fossil fuel, and 41% nuclear. District heating is extensive in the capital, Ljubljana. New hydropower plants are planned or under construction, in addition to an increase in wind and solar power which are currently very minor sources.

The housing stock in Slovenia is relatively old with approximately half of the stock constructed before 1960.

National policy and financial incentives Slovenia has confirmed its ambitious target for the share of renewable energy sources in the overall energy mix being 25% by 2020 and 30% by 2030. Slovenia also considers achieving 20% share of the renewable sources of energy in District Heating production.

The overall national policy regulating the measures that Slovenia is planning to undertake are governed by the following acts and provisions: • 2nd National Energy Efficiency Action Plan – 2010 • Energy Act

In comparison to the extensive measures in quite a few EU countries, Slovenia has a more limited choice of programmes and financial instruments addressed at achieving the above mentioned targets. 28.1.1 Energy Act The Slovenian Energy Act is aiming at bringing requirements to the energy efficiency policies at the national level in line with the Directive 96/92/EC.

The latest recast of the Energy Act provides for financial aid to the renewable sources in case the production of electricity is more expensive than the price of it. In this case the investment subsidies could be up to 40% for the new projects. 28.1.2 EcoFund EcoFund is providing non-repayable subsidies, as well as low interest loans to the public for investing into energy efficiency and renewable projects. It encourages customers to consider products with alternative technologies targeted at reduction of CO2 emissions. It is addressing such products as heat pumps and biomass heating, as well as installation of boilers in the residential buildings.

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Building regulations require that at least 25% of the energy needs in the building should be covered by renewable sources. This requirement is relevant to the new build sector, as well as renovation sector.

The Fund is mainly covering the heating and cooling segments and awards grants and subsidies to relevant projects concerning investment into the renewable sources of energy.

In the beginning of 2013 €5m was allocated to projects dealing with private households concerning the following technologies:  installation of heating systems with biomass or condensing boiler  district heating  effective ventilation systems  installation of solar systems, biomass boiler or efficient heat pump system  electricity generation from renewable energy sources or micro-cogeneration of electricity and heat  heat loss reducing technologies – replacement of doors and windows, thermal insulation including roof insulation)  passive residential buildings

28.1.3 Feed-In Tariffs and Feed-In Premiums Table 48 - FITs in Slovenia - Source: EREF Support scheme Fixed feed –in tariffs (guaranteed purchase prices*) for up to 10MW and operating support for all projects up to 125MW (bonus payment where variable costs reflect changes in the market price of electricity) Current applicable law Energy Law 1999 (as amended) Decree on support for electricity generated from Renewable Energy Sources (No. 37/2009) Methodology for determining reference costs of electricity generated from renewable resources (No. 360-81/2009-1) Particularities *The contract length is 15 years. The fixed part is determined every give years based on a technology cost review, or earlier if there are significant changes to the capital costs and other investment parameters. The variable part shall be determined annually or more frequently on the basis of forecast reference market prices of energy. **Supplement of 15% for constituent part of the building ***Supplement of 10% where manure and slurry exceed 30% of the volume. Supplement of 20% for plants less than 200kW where manure and slurry exceed 70% of the volume.

Capacity / Amount (GWh/a) / (MW) Cent/kWh <50kW, fixed tariff 10.5 Operating support 6.0 50kW to 1MW, fixed tariff 9.3 Hydro Operating support 4.7 1MW to 10MW, fixed tariff 8.2 Operating support 3.5

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10MW to 125MW operating support 2.9

Up to 10MW, fixed tariff 9.5 Wind Operating support 5.3 10MW to 125MW, operating support 4.3

<50kW: determined individually 50kW to 1MW, fixed tariff 23.4 Operating support 18.5 Plants using wood as primary fuel (more than 90%) 1MW to 10MW, fixed tariff 17.5 Operating support 12.6 10MW to 125MW operating support: determined

individually <50kW: fixed tariff 16.1 Operating support 11.4

Biogas obtained from 50kW to 1MW, fixed tariff 15.6 biomass Operating support 10.8 1MW to 10MW, fixed tariff 12.9 Operating support 9.3 <50kW: fixed tariff 13.9 Operating support 9.2

Biogas obtained from 50kW to 1MW, fixed tariff 13.9 biodegradable waste*** Operating support 9.1 Biomass 1MW to 10MW, fixed tariff 12.9 Operating support 8.3 <50kW: fixed tariff 8.6 Operating support 3.7 50kW to 1MW, fixed tariff 7.4 Sewage gas Operating support 2.6 1MW to 10MW, fixed tariff 6.6 Operating support 1.7 <50kW: fixed tariff 9.9 Operating support 5.5 Landfill gas 50kW to 1MW, fixed tariff 6.7 Operating support 1.9 Up to 5MW 6.17 < 50kW on.a

Plants using biodegradable 50kW to 1MW, fixed tariff waste 1 MW to 10 MW, fixed tariff 7.4 Operating support 2.5

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Capacity / Amount (GWh/a) / (MW) Cent/kWh 7% degression through 2013 <5kW, fixed tariff 33.2 Operating support 28.6 50kW to 1MW, fixed tariff 30.4 On buildings Operating support 25.7 1MW to 10MW, fixed tariff 25.2 Operating support 17.1 10MW to 125MW operating support 17.1 <5kW, fixed tariff 38.2 Operating support 33.5 50kW to 1MW, fixed tariff 35 Building integrated** Operating support 30.3 Photovoltaic 1MW to 10MW, fixed tariff 290 Operating support 24.2 10MW to 125MW operating support 20.5 <50kW 39 Self standing structures < 1MW 36 Up to 5MW 29 Limited to 5MW <50kW, fixed tariff 31.2 Operating support 26.6 Ground mounted 50kW to 1MW, fixed tariff 28.8 Operating support 24.1 1MW to 10MW, fixed tariff 23.2 Operating support 18.4

Feed in tariff up to 10MW 15.2 between 9.26 Geothermal and 10.2 Premium Fixed tariff 15.2 Operating support 10.4

The Feed-In Scheme is provided in the Law on Energy (No. 70/2008) and a set of other national legislative regulations, namely (No. 37/2009, 53/2009, 68/2009, 76/2009, 17/2010, 94/2010, 43/2011). 28.1.4 Solar collectors subsidy This subsidy is mainly targeted at Solar Thermal installations in the residential sector and covers up to 25% of installation and equipment costs. However, it has a ceiling of €150/m2. In

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order to receive the subsidy, the system should be provided by registered and certified installers. 28.1.5 Biomass Subsidy for Heating Systems This subsidy also covers up to 25% of the total investment cost for heating systems using biomass as a source of energy. It covers wood pellets, wood chips or firewood and has a funding ceiling of €2,000. 28.1.6 Heat Pump Subsidy In order to get the subsidy, heat pumps should meet the required efficiency criteria. If the requirements are met, the subsidy will cover 25% of the investment cost of the system not exceeding €2,000 for space heating , €1,500 for air/water heat pumps and €1,000 for hot water applications. 28.1.7 CHP support CHP is promoted and supported in Slovenia and depends on the capacity of the CHP system, the fuel used, and the number of hours the system is utilised. 28.1.8 Central heating subsidy (renovation of residential sector) Promoting disconnection from district heating in the residential sector, the incentive provides 25% of the costs, limited to €2,000 per residency. It is mainly targeted at programmes of reconstruction in the residential sector. 28.1.9 Biomass district heating (DH) systems grants The main areas of investments that are covered under this programme are biomass District Heating and micro biomass District Heating systems. The systems are limited in capacity to 20 MW as a test to meeting the eligibility criteria. 28.1.10 Biomass boiler equipment support Support is provided under the Operation programmes for Development of Environment and takes the form of subsidies provided for the retrofit of current systems in favour of biomass and upgrading it to biomass sources.

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Summary on the effects of HVAC and renewables - Slovenia

Products Policies and Incentives Map Possible effects

HEATING Growth in the sector mainly targeted at biomass District Heating Co-financing Scheme + technology

EcoFund Growth in sector encouraging disconnection from Domestic Boilers + Subsidies DH network Commercial Boilers + Operation Programme Biomass Boilers + Biomass supported for Development grant EcoFund Loans Moderate growth in the market Heat pump + Feed-In-Tariffs (FITs) Geothermal energy also covered by FITs Compression Heat Heat pump Subsidies + Positive influence Pumps Sorption/Gas Heat Heat pump Subsidies + Positive influence Pumps FITs Small scale CHP + Especially under 1MW and micro-CHP Feed-In Premium FITs Biomass CHP + Especially under 1MW Feed-In Premium Electric heating Energy Prices – Negative impact New standards drive the segment growth, albeit Heat recovery Passive House + at low rate AIR-CONDITIONING Air conditioning Eco Fund + Segment is supported New standards drive the segment growth, albeit Mechanical ventilation Passive House + at low rate HOT WATER

Solar Thermal + FITs ELECTRICITY Daylighting systems ● PV FITs + INSULATION Wall Insulation Eco Fund + Facades insulation

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Loft Insulation Eco Fund + Roof insulation supported as well

+ Positive Effect – Negative Effect = No Impact

Sources of information . Odyssee-MURE Database http://www.odyssee-indicators.org . http://www.buildup.eu/sites/default/files/content/slovenia_nr.pdf . EcoFund www.ekosklad.si . Ministry fo Economic Development and Tedhnology http://www.mgrt.gov.si/en/ . Energy Act http://www.mgrt.gov.si/fileadmin/mgrt.gov.si/pageuploads/Energetika/Preciscena_besedil a/EZ-NPB3_ENG.pdf . ECOFYS Report 2012 . Energy Agency of the Republic of Slovenia http://www.agen-rs.si/en/

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29 Spain

Spain has the fifth-largest economy in the European Union. However, since the global financial crisis, the Spanish economy's performance has been poor. Between 2008 and 2012, the economic boom of the 2000s was reversed, leaving over a quarter of Spain's workforce unemployed by 2012. In 2012, the Spanish economy contracted by 1.4% and was in recession until Q3 of 2013. In 2009, Spain generated 18.6% of its electricity from nuclear power, and 25.9% from renewable sources. Spain is the world's third biggest producer of wind power, after the United States and Germany. In 2005 Spain became the first country in Europe to require the installation of photovoltaic electricity generation in new buildings, and the second in the world (after Israel) to require the installation of solar hot water systems.

National policy Spain has stated the target of achieving a 20% share of renewable sources of energy in the total energy production by 2020. 29.1.1 Consumer energy rates Back in 2003, in a climate of buoyant economy, the government agreed with the electricity companies an accounting formula that allowed an effective “freezing” of the prices of electricity in Spain. But the sharp oil price hike of 2004-2008 created an increasing gap between the approved prices and the actual costs, creating a big bubble of debt, which surpassed the €20bn barrier sometime during 2011. Instead of putting an end to the system, for fear of taking an unpopular political decision, the government simply converted the deficit of the energy system into public debt, issuing a specific line of bonds known as FADE (Electricity Deficit Amortisation Fund). So far FADE is keeping a quite healthy rating and the government is not finding major difficulties (other than increasing yields) to place the successive bond emissions. The result is that there are no immediate plans for redefining this policy, but it is evident that sooner or later the debt is going to be too big to sustain.

The Government has opted to release a degree of pressure by agreeing to a relevant increase of electricity prices during 2011. According to Eurostat statistics, the rise on household electricity bills in 2011 was almost 13% in relation to previous year.

Impact estimation: There are two possible scenarios. One possibility is that the government finds a way to migrate from the current subsidized system to an open one by taking relatively small steps, the 13% increase of 2011 being the first one. It is also possible that, in a context of a more scrutinized economy, Spain will be forced to reduce even more expenses and long- term debt, and putting a more abrupt end to subsidising electricity bills may be a likely course of events. 29.1.2 Subsidies for electricity from solar sources 2011 saw a severe reduction on subsidies to the production of electricity by solar photovoltaic facilities: -45% for large PV solar farms, -25% for large solar roofs and -5% for small solar roofs. The outlook for 2012 is uncertain: some experts believe that the subsidisation regime is

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sustainable enough after the 2011 readjustment; others expect more drops as the pressure on public budgets increase.

Impact estimation: In the building context – i.e. PV collectors on roofs – there is a largely dissuasive effect in the non-residential market and a much smoother impact on the housing market. The problem is that the size of PV consumption in housing is largely irrelevant in comparison with that of non-residential. It is necessary to remind that the building code CTE (see section 27.2.1) makes PV compulsory for non-residential in a handful of situations while it puts no obligation whatsoever on housing. Therefore, the reduction of bonuses is more harmful precisely for the part of the building market where the true potential is. 29.1.3 Changes in the legal situation of energy self supply So far there has been a legal vacuum for individuals who are in a position of producing their own energy: the existing laws provided a framework for feeding electricity to the grid more or less at large scale, but there it was hardly appropriate for small-scale producers whose priority is self-consumption and occasionally have some energy surplus. In April 2011 the government published a draft of the decree. It defines the legal and technical conditions for producers up to 36 kW that generate electricity using either renewable sources or CHP. It also provides a “simplified procedure” for measuring the energy transferred from the building to the grid and the energy transferred from the grid to the building, and settling the difference according to a regulated framework. The draft has been forwarded to the National Energy Commission, who drew up a series of remarks in July 2011. Other than that, there are no signs of further progress of the Decree and, in sight of the election calendar, it is improbable for it to resurface again prior to Spring 2012.

Impact estimation: Despite the positive potential of this new framework, it is evident that the potential beneficiaries of it are quite small in number.

Building codes 29.2.1 The 2011 revision of CTE (Código Técnico de la Edificación) The building code appeared in March 2006 and was revised in 2011. However, the revision has been extremely superficial, and mostly in fields unrelated to HVAC. Here is a short synopsis of the changes:

 Document “SU” (use safety) has been enlarged and converted into “SUA” (use safety and accessibility), which now covers issues regarding physical accessibility of buildings. This new emphasis on accessibility has had also some collateral effects in Document “SI” (fire safety).

 Documents “SI” (fire safety), “HR” (noise) and the aforementioned “SUA” and are now available with official interpretation notes. The legally binding text has not been altered, but the notes are expected to clarify some practical issues from the text, making it easier to apply.

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 Document “HE” (energy) was originally published with a map for the designer to check which climatic zone the building belonged to. Now there is a complementary document with an extensive table of municipalities and their corresponding climatic zone. The purpose is a more exact zone assignation and less room for ambiguity.

 A few other complementary documents about fire resistance of building materials, fire- resistant doors, performance of glass, lifts, etc.

It can be concluded that CTE was subject to a minor review, just to fulfil the commitment of the 5-year revision. And from the point of view of the HVAC market, the Code has suffered no changes. This table summarises some of the potential issues that have been postponed: Table 49 - Key issues missing from the CTE revision of 2011 - Source: BSRIA

Present situation Likely evolution expected Upgrade of the energy The efficiency standards are not too A tighter standard could be perfectly qualification requirements demanding; i.e - the current CTE reasonable. For instance, 80% of “B” expects 90% of the new buildings to or “C” buildings be either in the energy classes “C” or “D”. Adaptation of the code to The present CTE was written with new A more realistic code in renovation renovation buildings as the main target, up to a context, possibly through a relaxation point that the strict application of the of some exigencies that would make it Code in renovation is sometimes too more renovation-friendly. difficult and/or expensive. Extended approach to The only form of renewable energy Geothermal may be a good candidate renewable energies that is thoroughly covered by the to be added, on the basis of having an current version of CTE is solar energy, expansive market in Spain. both thermal and PV.

Impact estimation: Minimal. The changes about climatic zone assignation may displace a few projects from one zone to another, but other than that, CTE remains the same from the point of view of the HVAC market. 29.2.2 Energy performance calculation software During the last weeks of 2010, the European Commission issued a formal warning to Spain about some deficiencies in the practical application of EPBD. One of the points covered in the Commission’s notice was the absence of a calculation methodology that covers the full spectrum of buildings, new or existing. The Spanish official calculation software (Calener and its simplified versions) is adequate just for new buildings, and only for the most common like housing and some tertiary buildings. During 2011 there has been some speculation about the possible publication of a version of Calener for existing housing and perhaps also for existing commercial and office buildings. But so far this piece of software has not yet been made public, but it may well be already written and ready for release.

Another point of friction with the current version of Calener is its incapability to handle “sophisticated” choices of equipment such as geothermal, CHP or absorption chillers. It is known that some Regional energy agencies have been approached by developers involved in projects using these technologies and, seeing the evident dysfunction, the agencies have

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agreed to accept energy calculations using other software different than the official, or have provided “patches” to compensate Calener’s shortcomings.

Impact estimation: The appearance of a new calculation software for existing buildings may not make too much of a difference if it is not followed by a change of the enforcement policies about energy certification in existing buildings. Anyway, it can be understood as a first step in the right direction, because it could be contradictory to ask building managers and homeowners to invest on energy performance if there is not a tool to measure how much impact to expect on their energy bills.

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29.2.3 Certification policies Compulsory certification The Spanish Decree 47/2007 Procedure for the energy certification of buildings demands an energy certification according to the 7-level scale (A to G) for every new building and for every existing building that suffers an extensive renovation.3 The next obvious step is to extend the need for energy certification to existing buildings.

The Urgent Action Plan for Energy Savings and Efficiency published on March 2011 shows how the Government plans to take this step. This document announces that the first existing buildings that are going to be subject of a compulsory energy certification are non-residential buildings with heavy energy consumption, in the following way:

 High priority: buildings with an HVAC installation with thermal output > 1,000 kW  Medium priority: buildings with an HVAC installation with thermal output between 400 and 1,000 kW

It is important to note that the Urgent Action Plan is not a law in itself, just a roadmap. It suggests a very wide timeframe to implement this policy (2011-2018). On the other hand, it recommends starting the certification process with public buildings, in order to use them as “testing ground” before extending the requirement to private buildings. There are no hints regarding what will be considered an adequate or an inadequate result of the certification progress, which can be an indicator that the future law might be just a procedure for testing, just like Decree 47/2007.

Impact estimation: The publication of the Urgent Action Plan… is just an appetiser of what the mid-term future might look like, and has not effectively changed anything in the present market.

Voluntary certification In recent times, a few voluntary schemes for energy certification of buildings have appeared in the Spanish market. While it is obvious that there is no legal need at all for certifying buildings according to these methods, their sheer availability in Spain can be understood as an indicator that there might be a certain demand for certification that the official procedures do not satisfy.

3 Involving more than 1,000 m² or a renovation of more than 25% of its surface of façade and roofs

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Here is a summary of the four main privately-developed voluntary certification schemes that can be found in Spain: Table 50 - Voluntary energy certification systems available in Spain

PassivHaus A direct import from Germany, it seems like its promoters are applying directly the parameters developed in the country of origin. LEED As above, but applying the parameters developed originally for the United States.

BREEAM The system has been adapted to the climate and the building particularities of Spain, and it also offers specific certification methods for commercial, industrial and office buildings. A method for housing seems to be on the pipeline. Green Building Council They promise also a specific methodology for Spain, which is still to be made public.

Despite the number of choices, demand is still very low. Right now, only a handful of buildings throughout the whole country have completed the certification process. LEED and BREEAM appear to be the stronger competitors.

Impact estimation: Voluntary certification in Spain is a mid-term bet. In a market with different offers to choose from it is understandable that the promoters want to start as soon as possible, even if the present and near-future conditions are gloomy. 29.2.4 Inspection policies In section 27.2.2 it was mentioned that the European Commission expressed its disapproval on some aspects of the way EPBD is being implemented in Spain. In this wake-up call, the Commission also showed a specific concern about the laxity in terms of inspection policies. This is an issue of key importance where there are no signs of progress. On the one hand, saving on building costs assuming that the chances of being inspected are low –or none at all– is very tempting in a context of economic crisis. On the other hand, the crisis is also impacting the budgets of the regional authorities who claim to have insufficient resources for developing an effective inspection service. The trend for 2012 is clearly for higher budget austerity at Regional level, so the chances of an improvement of the situation are definitely scarce.

Inspection of energy rating and certification The Spanish Decree 47/2007 that regulates energy certification also establishes that Regional Governments are authorised to “arrange all the necessary inspections to check and watch that certifications are observed”. At this moment, Regions are in a very heterogeneous situation regarding control of energy certification of buildings. The creation of an official registry for certifications –the first step prior to inspection– has not even been undertaken by all the regions, as the following map shows:

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Key:

Shadowed regions have published a procedure for the registry of energy certification of buildings. This does not imply that control or inspection is effectively undertaken.

Regions with an asterisk (*) have subcontracted an external control service.

Figure 4 - Regions with a regulated energy certification policy (2011) - Source: BSRIA

Very small number out of the 17 Regions is conducting inspections of any kind. In those cases, the buildings subject to control are only a sample among all the finished ones, and the kind of check is rather elementary. Inspectors appear to take note of which choices have been made for wall insulation, windows and HVAC equipment and just check if these are the same as in the project. No energy measurements are performed.

Impact estimation: The process of building up an inspection scheme in every Region is coming up only very slowly, and it is unlikely to witness acceleration anytime in the near future. The quality of the inspection process in those few Regions who have just started is too low to have an effect in the HVAC market.

Inspection of HVAC installations In addition to the overall energy certification of the building described above, the HVAC installations of new buildings are also subject to a process of registration and periodic inspection of its performance according to the Regulation on Thermal Installation of Buildings (RITE). The situation is not too different to the situation with energy certification, this is, the inspection tasks are in hands of the Regions, and the present situation is far from being fully functional. The map below shows which regions have started to adapt their laws to assume the missions defined by RITE. Note how very few regions appear on both maps simultaneously.

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Key:

Shadowed regions have published a procedure for inspection of HVAC installations. This does not imply that control or inspection is effectively undertaken.

Figure 5 - Regions with a regulated HVAC inspection policy (2011) - Source: BSRIA

The market for solar products is probably the one that feels more harmed by apathy among authorities when it comes to inspect if buildings follow RITE’s requirements. Thermal solar equipment is largely unverified both at the design stage and once it is in operation, so the result is that many times it is inadequate, breaks down very quickly and the owners simply end up refusing to spend on repairs.

Impact estimation: The probable continuation of the present laxity in inspections is potentially very harmful for the industry. In the case of solar thermal, it spreads the impression that all this equipment is largely useless, it is only (carelessly) put in place because there is a legal obligation, and therefore it is an unnecessary expenditure instead of an investment with a return for the owner.

29.2.5 Building regulation and energy efficiency legislation National legislation was passed with the aim of sustainable construction and higher energy efficiency.

 Código Técnico de la Edificación (CTE) or Technical Building Code is the regulatory framework for new buildings as well as refurbishment projects in Spain. The CTE was approved by Royal Decree 314/2006 and partially incorporates the Energy Performance of Buildings Directive (EPBD 2002/32/CE). The code sets minimum requirements to be met by a building and is structured in six basic documents: structural safety; safety in case of fire; safety of utilisation, hygiene, health and protection of the environment; protection against noise; and energy efficiency and saving. The latter contains HVAC requirements of a building. Following the formal commitment for a revision every 5 years, a reviewed version of the Building Code was published in 2011. However, modifications affecting the HVAC segment are deemed minimal and will not affect the market.

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 Regulation on Thermal Installation of Buildings (RITE) stipulates what requirements every new HVAC installation must meet in terms of energy performance and safety, both at project stage, execution stage and maintenance stage. RITE was enacted by Royal Decree 1027/2007 in July 2007. A modified version of the regulation was published by Royal Decree 1826/2009 of in November 2009. Higher energy performance of heating and cooling equipment is regarded among measures to achieve greater energy efficiency.

The enforcement of RITE represented significant changes to the HVAC installations including: o Regular evaluations of the performance of heating equipment with an output between 20 and 70 kW at 2-year intervals o Energy efficiency inspections of heating equipment with an output between 20 and 70 kW every 5 years o Ban of the installation of atmospheric boilers <70kW after January 2010 o Mandatory boiler flue discharge through the roof. Exceptions to the general rule are gas sealed chamber boilers with nominal power <70kW, for which ventilation through facade is permitted in single family houses or refurbishment of multi dwelling buildings. In the latter, these shall be individual boilers classified as Class 5 NOx emissions. o Ban of the installation of coal burners from 1 January 2012, after which the only solid fuel boilers available will run on biomass 29.2.6 Alternative heating technologies Consumers in Spain are becoming more and more aware of energy efficiency issues and of new technologies. Renewable technologies such as heat pumps and solar thermal systems are gaining popularity and are starting to be demanded by households, which slowly erodes the boiler market. Even so, some of the technologies can be combined and there will be potential for hydronic boilers. For instance, a boiler can be used together with a solar thermal system or with a heat pump.

Financial incentives The incentive schemes about energy efficiency and alternative energies in Spain have not undergone changes during 2011, for two reasons:

 Most of the schemes were designed to last until 2012  The general election brought forward to November 2011 has acted as a deterrent for any further action to adjust the incentive policy. The probable change of government, plus the increasing budget difficulties, make it very difficult to foresee how the policies will develop in 2012 and beyond. 29.3.1 Government policies and financial incentives/subsidies Plan Renove (Replacement Plan) is a direct discount subsidy scheme adopted following the action plan of the Strategy for Energy Saving and Energy Efficiency. Every year the Ministry of Industry, Tourism and Trade transfers funds to the Autonomous Communities for this

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purpose. Each Autonomous Community (i.e. the Spanish provinces) then defines and manages customised plans according to the specific needs and priorities of the region.

Key:

AP Home appliances (washers, dryers…) W Windows WH Water Heaters B Boilers AC Air conditioning E Elevators

Figure 6 - Direct incentives for purchase of efficient building equipment in the different regions (2011) - Source: BSRIA based on government publications

Although Renove plans vary among Autonomous Communities, most support HVAC products, including high efficiency condensing boilers. Regarding boilers, the average financial aid amounts to €300 for the replacement of an individual low efficiency boiler that is upgraded to a gas/oil fired low temperature or condensing boiler.

Renove Plan was programmed until 2012 as part of the Energy Saving and Energy Efficiency Plan 2008-2012. A notable reduction of the budget is expected for the next period, although some support schemes for energy efficient HVAC equipment are likely to remain.

The Spanish Government, by Royal Decree 1/2012 of January 27 approved by the Council of Ministers, has suspended financial aid directed to new installations producing electricity through cogeneration, renewable energies and waste.

Incentives for housing renovations In the housing context, incentives are concentrated on renovation of existing buildings. With a very small number of exceptions (mostly showcase projects) the authorities see no logic in subsidising new buildings for their rational use of energy, because the application of the compulsory building standards CTE and RITE make every new building efficient. 29.4.1 Tax deductibility From April 2010 until 31 December 2012, homeowners are entitled to deduct from personal income tax up to 10% of the cost of renovations of their principle residence. These kinds of

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deductions are capped annually at €4,000 per taxpayer and up to a maximum total of €12,000 and only apply for taxpayers whose taxable income lies between €33,007 and €53,007.

Impact estimation: Very small. The average-income households that may benefit from this tax relief are not in a position to prioritise home renovation in a context of a lengthy crisis. Note also that this tax break applies for any kind of renovation, so it is not strictly an endorsement measure of energy efficiency or renewable energies. 29.4.2 Reduced VAT rate From April 2010 until 31 December 2012, the Spanish low VAT rate (8% instead of 18%) is applicable to a renovation work that includes masonry work, plumbing, carpentry, installations, electricity installation or painting/decorating.

Impact estimation: Very small, for the reasons described for tax deductibility and also for reasons deriving from the “relaxed” way that VAT has been historically applied in the market of small renovation. 29.4.3 Loans and subsidies The loans and subsidies that were drawn up in the Plan Estatal de Vivienda y Rehabilitación (Housing and Renovation Plan) are still currently in force since the Plan covers the period 2009-2012. Energy improvement works are among the range of eligible projects in the Plan. It is up to the project designer to choose the methods to increase the performance of the building to be renewed, but the following are cited as examples and therefore regarded as preferential: free cooling, heat recovery, evaporative techniques, and refinement of controls. The subvention amount ranges between 22% and 35% of the eligible cost of the project: the 22% quota is granted by the Central Government and Regions are allowed to increase it at their discretion.

Impact estimation: Conceptually there should be no changes as the policy remains the same as in previous years. In practice, there is a growing sentiment that the risks of applying for one of the grants/subsidies (and dealing with paperwork, technical project, contracting a certified builder instead of a “grey” one, etc) and having it denied by the authorities (for budgetary reasons) are getting higher. 29.4.4 “Renove” plans – replacement of equipment Planes Renove or Replacement Plans allow purchasers of new appliances to receive a direct discount on the tag price on the condition that the chosen apliance belongs to a certain type that assures better-than-standard energy consumption. These Plans are defined and managed by Regional governments. Every Region has a Plan, but not all Plans cover the same spectrum of appliances, as the map below shows:

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Key:

AP Home appliances (washers, dryers…) W Windows WH Water Heaters B Boilers AC Air conditioning E Elevators

Figure 7 - Regions with direct incentives for purchase of efficient equipment (2011) - Source: BSRIA

The number of regions that are not supporting HVAC products is diminishing progressively with each passing year. In the Urgent Action Plan for Energy Savings and Efficiency published in March 2011, the Government specifically proposed that every regional Replacement Plan should include high-efficiency boilers.

Purchasers receive a discount in the range between €50 and €500; the lower amounts are usually for water heaters and the higher amounts for air conditioning. A condensing boiler has an average subsidy of €300.

Impact estimation: The majority of regions exhausted the budget of their 2011 Plans in autumn or earlier – this is a sign that there is healthy demand. Nevertheless, the early exhaustion may have been caused by lower budgets.

Currently it is impossible to estimate how large the budgets are going to be in 2012. A sizeable cutback is certainly expected, but so far there are no fears for an abrupt cancellation of the Replacement Plans scheme as a whole. A possible formula for the near future could involve the utility companies. This is already happening now in some regions such as Madrid, where a small proportion of the discount is paid by the gas supplier, assuming that the end user buys a gas-fired boiler.

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Incentives for non-residential renovations 29.5.1 Incentives for renovation of tourism related buildings From 2009 to 2011, the Spanish tourism sector has had a line of credit called Plan FuturE with the specific purpose of financing building renovation, mostly in hotels. It is unknown if there will be a continuation of the Plan in 2012, because the decision will be in hands of the next government.

Impact estimation: Plan FuturE has been mostly an instrument for tourism companies to get access to credit at a time when the conventional credit routes have been blocked. Contemplating energy improvement as part of the application was helpful, but not essential, for benefiting of the Plan. In other words, the Plan has had mostly a tangential impact in the HVAC business, so its potential disappearance will not be critical. 29.5.2 Incentives for renovation of buildings of the public administration At this moment there are two plans in operation for the improvement of energy efficiency in public buildings: Plan 330 AGE (December 2009) and Plan 2000ESE (July 2010). The Plan 2000ESE requires that every participant must contract an energy service company (ESCO) for the purposes of auditing the building, suggesting adequate improvements in equipment and energy management and finally measuring the benefits. The Plan even recommends including clauses in the contract for effectively linking the remuneration of the ESCO to the results in terms of energy savings.

During 2011 those plans have received some boost through the Urgent Action Plan for Energy Savings and Efficiency of March 2011, via two different measures:

 The government has opened a window between March and December 2011 for financing the start-up of new ESCOs, a kind of service company that is still scarce in Spain. Anybody wishing to create a company of this kind can apply, during the aforementioned period, to an official credit line of €600m that was created in the first place to aid generic investment on energy efficiency and renewable energies.  A specific support measure for replacing existing boilers in public buildings for biomass boilers. The government offers a direct subsidy of 15% of the cost, and the chance to finance the rest.

Impact estimation:  On renovation activity: There is not much information available on how many public bodies have jumped at the opportunity of these Plans, which may be a hint about a modest degree of success. Once again, this makes sense in the current economic context: the Spanish public sector has plenty of more urgent issues than renovating their building stock. For instance, some public bodies have plans for selling part of their buildings (offices, hospitals) to the private sector and rent them back; so maintenance and renovation would be in hands of the future private owners.  On the ESCO market: It is obvious that the number of ESCOs in Spain is growing, but it is open to discussion which is the effective contribution of the government plans to this growth. For instance, some of the largest new ESCOs are backed by large facility

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suppliers, either Spanish or from other countries. Anyway, the “good example” factor of the public administration as first clients for the ESCOs is nevertheless valuable.

29.5.3 Feed-In Tariffs The PV sector is one of the most adversely affected by suspension of the FIT incentive. The substitute for the scheme allows for small generators under 100 kW to connect to the grid and receive market prices for the electricity fed back into the grid: Table 51 – FITs for Spain Rooftop/BIPV Size Incentive Ground-mounted Size Incentive Term <20kW €0.283/kWh Any size €0.121716/kWh 30 years >20kW €0.15675/kWh 30 years

Royal Decree 14/2010 states how many hours will be allowed to be paid from 2014. The country will be separated into the different geographic bands with the set limits: Table 52 – Maximium Hours for feed in payments - Source: PV Magazine Until 31 Dec, 2013 Fixed Installation Installation with 1-axis Installation with 2-axis tracking tracking 1250 1644 1707 From 2014 onward Zone I 1232 1602 1664 Zone II 1362 1770 1838 Zone III 1492 1940 2015 Zone IV 1632 2122 2204 Zone V 1753 2279 2367

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Summary on the effects of HVAC and renewables - Spain Policies and Products Map Possible effects Incentives HEATING District Heating No specific policy = Limited coverage by DH The scope of these Plans varies from region to Renove Plans (direct region, but boilers seem to have some priority in Domestic Boilers discount on the moment + the government’s guidelines. It is important for of purchase) manufacturers to be present in the right distribution channels.

Economic Situation Adversely affected; overall segment dominated by gas-fired boilers and best projects will be in Commercial Boilers Public Buildings – renovation sector, especially through public Subsidy sector subsidies Marginal growth not posing major threat to Biomass Boilers Subsidies + current position of the products in the heating market There is little room for reaction for the domestic end user, but users in the secondary and tertiary sectors may consider alternatives like CHP or absorption heat pumps. It also may make sense Heat pump Energy prices hike + to consider a diversification in energy sources, like electricity for cooling and gas for heating, despite the higher complexity of having such “dual” installations. Air-conditioning heat pumps are more popular Compression Heat Energy prices hike See above Pumps + Sorption/Gas Heat Energy prices hike See above Pumps + See above It may benefit from the new decree about small Small scale CHP Energy prices hike + energy producers and self-consumption, although the size of the potential market is small, even in the best-case scenario Marginal growth not posing major threat to Biomass CHP Subsidies + current position of the products in the heating market Electric heating Energy prices hike – Less needed in Spain Residential segment is negligible; commercial Heat recovery Public spending cuts = sector could benefit from support AIR-CONDITIONING A trend towards replacement of equipment with Air conditioning + R-22 refrigerant standard could open opportunities Residential segment is negligible; commercial Mechanical ventilation Public spending cuts = sector could benefit from support

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HOT WATER Unless there is a noticeable improvement of the inspection policies, solar thermal products are facing an increasing risk of losing credibility, mostly at domestic end user level. Solar Thermal + Manufacturers are not in a position to correct this, but they can contribute with either “foolproof” products or providing adequate information to installers (if not end users too) ELECTRICITY Solar Shading Daylighting systems Market development Requirements + Negatively affected by the suspension of FITs PV FITs – and decrease of the bonus for producers of PV, particularly in the non-domestic building market. INSULATION Wall Insulation RITE + Increased importance Loft Insulation RITE + Increased importance

+ Positive Effect – Negative Effect = No Impact

Sources of information . Bsria Ltd Spain 2012-2013 Country Reports on Energy, Heat Pumps, Solar Thermal and Domestic and Commercial Boilers www.bsria.co.uk . Odyssee-MURE Database http://www.odyssee-indicators.org . ECOFYS . EREF

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30 Sweden

Sweden joined the EU in 1995. Sweden retains the Krona as its currency and it seems unlikely Sweden will join the Eurozone. GDP growth in 2011 was 3.9%, but fell to an estimated 0.4% for 2012. The outlook for the next two years is growth at or above 2.5%.

In 2006, hydropower accounted for 44% of electricity production, nuclear power 47%, biofuels, peat etc. produced 9% and wind power 1%.

National policy Sweden is on track for its 2050 carbon emission goals reduction. There are a number of programmes targeted at reaching further energy efficiency in the country. Being at energy intensive country, it aims at energy savings of 9% by 2016 from 2001-05 levels and at 20% reduction of the energy intensity by 2020. 30.1.1 EPBD in Sweden In Sweden, the implementation of the EPBD is the responsibility of the Ministry of Enterprise jointly with the Ministry of Environment. The responsibility of both the regulations on energy use and energy declaration of buildings is delegated to the National Board of Housing, Building and Planning (Boverket). The supervision of the regulations is the responsibility of the local authorities in the 290 municipalities in Sweden.

Sweden has implemented the EPBD via various pieces of national legislation:

 National law SFS 2006:985 that came into force on 1st October 2006.  Ordinance SFS 2006:1592 that, together with the old law SFS 1994:547 on essential requirements on construction works, complete the full transposition of the EPBD into national law.

National Law (2006:985) on the energy certification of buildings together with the ordinance (2006:1592) and the regulations from the National Board of Housing, Building and Planning, (BFS 2007:4) regulate the certification of buildings and inspection of systems (System for Energy and Indoor Air Quality Certification of Buildings and Regulations for Regular inspection air-conditioners). 30.1.2 Sweden Energy Policy In 2009 Sweden approved two main Bills (2008/09:162, 2008/09: 163) that set out the objectives for 2020 and 2050 long-term objectives. As part of the 2050 targets, Sweden aims at zero net emissions of GHGs that provided for the emergence of Climate Roadmap. It highlights the need for research and innovation as the main element of the roadmap to be adopted in the course of 2013.

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30.1.3 Ecodesign Framework Directive This sets up design requirements for all types of energy-using products. The National Board of Housing, Building and Planning also introduced a regulation (BFS 2007:5) defining the competence of energy experts that are accredited by the official body SWEDAC, where the independent experts are listed.

The National System for Energy declaration of Buildings (BED) came into force on 1st March 2007. The BED aims to achieve two primary objectives: saving energy, while ensuring comfortable conditions and acceptable indoor air quality.

The timetable to implement energy certification in various types of buildings was divided into two phases until its full implementation in January 2009:

 In the first phase - all existing “Special buildings” greater than 1000 m2 (public buildings) and buildings that are rented, must have an energy declaration (building certificate).  In the second phase, all buildings sold or rented have to have a declaration not older than ten years. The second phase also includes buildings that are sold and new buildings that have requested a building permit after 1st January 2009.

The summary of the Energy declaration is the most visible aspect of the BED. This document assigns an energy performance label to residential and non-residential buildings and records the energy performance of the building, the reference values of similar new buildings and an interval with reference to similar existing buildings of comparable age, heating system, and geographic/climatic aspects.

A national register administered by Boverket has been set up and by the end of June 2008 more than 8,100 Energy Certificates have been registered, contributing to the monitoring of progress of the EPBD implementation.

On 1st February 2009, new building regulations applicable to new buildings came into force to limit the amount of electric power input for heating in dwellings. These new regulations divide Sweden into three climate zones setting different limits for the various zones. 30.1.4 Nearly Zero Energy Biuldings The support of the project in Sweden was realised as part of the Budget proposed for 2013. It allocated SEK 120m (approx. €13m) per year for 2014-2016 for the realisation of the aim. 30.1.5 Building Code requirements In January 2012, a 20% tightened version of Swedish Building Code (BBR 19) (Boverket 2011b) was released, setting out requirements for the new buildings in Sweden, that especially affected thermal insulation, airtightness and energy consumption in order to achieve almost zero energy specification of the buildings.

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Financial incentives 30.2.1 ROT Tax Deduction Scheme The ROT scheme was initially introduced in autumn 2004. The ROT deduction can be used by owners and tenants of houses, flats etc. to offset the costs of maintenance, repairs and rebuilding. ROT in Swedish stands for reparation, maintenance and extension.

The incentive allows for up to 50% tax deduction of the labour costs related to renovation and extension for each owner of a private property. The maximum amount to be offset is SEK 50,000 (approx. €5,000). The amended ROT scheme introduced on 1st July 2009 allows for greater flexibility and allows the end user to immediately benefit from the scheme upon installation. 30.2.2 LAGAN Project support is provided to achieve 50% energy consumption reduction in both the new and retrofit sectors and to show high demonstrative value. 30.2.3 Solar Cells Subsidy This subsidy was first introduced in 2009 and its funding allocation is reassessed on a regular basis. For 2013 the total amount of SEK 105.7m (approx. €11m) was distributed in Sweden among different regions with larger amounts allocated to Västra Götaland, Skåne, Östergötland, Blekinge, Stockholm, Jönköping and Halland. Although slightly lower on average than in previous years, the total investment in years 2013-2016 will be SEK 210m (approx. €21m) for solar cells, confirming Sweden’s path to support the market. 30.2.4 Solar Thermal Investment subsidy Since 1st June 2000, subsidies have been available on the market for the installation of solar heating systems for space heating and/or domestic hot water production.

At the beginning of 2009, the Swedish government more than doubled the total annual budget of the long-term incentive programme (called “Stöd för installation av solvärme”). The budget was increased from SEK 10m (approx. €1m) to SEK 25m (approx. €2.5m). Simultaneously, it increased the maximum subsidy per project from SEK 250,000 (approx. €25,000) to SEK 3m (approx. €300,000), enabling buyers to profit from incentives-based subsidies of SEK 2.5/kWhth (€0.25/kWhth) for solar thermal systems.

The incentive is a performance-based subsidy and eligible technologies are solar thermal systems with glazed (liquid) collectors. The applicable sectors are residential buildings, multi- dwelling houses, public buildings. The programme allocates subsidies according to the calculated annual collector yield (kWh/a) of eligible collectors. A list of both eligible collectors and their calculated annual module yield is published by Solar Energy Association of Sweden (SEAS). The area-specific yield varies from 300 to 600 kWh/m2; subsides therefore vary from SEK 750/m2 (approx. €75/m2) to SEK 1,500/m2 (approx. €150/m2) depending on the type of collector.

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The maximum incentive amount is of SEK 7,500 (approx. €750) per residential unit and SEK 3m (approx. €300,000) per project, provided that collectors are approved by an accredited laboratory and in accordance with EN 12975. From 2010-2011 the Solar Keymark will be required in order to qualify for the incentive.

The incentive scheme is administrated by the National Board of Housing, Building and Planning, Division of Building Construction and funds are made available by the Ministry for Enterprise.

On 1st July 2009 a new financial support for the installation of solar PV was also introduced. The amount allocated in 2009 was of SEK 100 m (approx. €10m) but applications received within the first week already used the whole allocated fund. For 2010 and 2011 the amount allocated is about SEK 50m to SEK 60m (approx. €5m to €6m) per year. The support can be provided for all types of grid-connected photovoltaic systems, and for installations started earlier than 1st July 2009 and completed by 31st December 2011. 30.2.5 Other Financial Incentives and Subsidies In 2006 the government introduced a 5-year incentive program that ran from January 2006 up until 31 December 2010. Subsidies supported private households in converting oil burning or electric resistant heating to heat pumps or pellet burners. Subsidies were granted for 30%, up to a maximum of approx. €3,300, of the labour costs for installation of a hydronic heat distribution system and heating appliance. Approved heating appliances were district heating, ground source heat pumps, biomass boilers and solar thermal collectors. Due to high demand, financial funding was soon proven to be insufficient to cover all applications.

In order to provide support for biogas the government will provide an additional SEK 280m (approx. €28m) between 2013 and 2016, as well as SEK 210m (approx. €21m) for additional solar energy support.

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Summary on the effects of HVAC and renewables - Sweden Products Policies and Incentives Map Possible effects

HEATING No direct clear effect, DH holds strong position in District Heating is Sweden District Heating = widespread DH plants hinder market for oil commercial boilers General direction on Domestic Boilers + Market potential energy efficiency General direction on Commercial Boilers + Oil boilers will be further negatively affected energy efficiency General direction on Biomass Boilers + Market potential energy efficiency + Market growth, especially most for heat pumps, if ROT Tax Deduction the scheme is to stay in place Scheme Also retrofit opportunities for ageing heat pumps Heat pump Stringent Building installed base, with 80% after 1993 Regulations Very well developed segment in Sweden, especially in domestic applications Compression Heat ROT Tax Deduction + Market growth, especially most for heat pumps, if Pumps Scheme the scheme is to stay in place Sorption/Gas Heat ROT Tax Deduction + Market growth, especially most for heat pumps, if Pumps Scheme the scheme is to stay in place Small scale CHP National Policy + Segment is supported Biomass CHP National Policy + Segment is supported Electric heating Regulations of 2010 – Limit electrical power used for heating Heat recovery systems integrated with Heat Heat recovery + pumps AIR-CONDITIONING Air conditioning Inspections = Requirement for regular inspections Mechanical ventilation + Growing importance HOT WATER ROT Tax Deduction Market will respond positively but might give way Scheme Solar Thermal + to heat pumps market Incentive program with

allocated funds ELECTRICITY Daylighting systems - = No specific policy impact PV Solar Cells Subsidy + Market will grow especially in regions with higher allocation of funds (Västra Götaland, Skåne,

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Östergötland, Blekinge, Stockholm, Jönköping and Halland) INSULATION Tougher Building Better insulation is promoted as effective means Wall Insulation Regulations + to achieve energy savings Tougher Building Better insulation is promoted as effective means Loft Insulation Regulations + to achieve energy savings

+ Positive Effect – Negative Effect = No Impact

Sources of information - Sweden . Bsria Ltd Sweden 2012-2013 Country Reports on Energy, Heat Pumps, Solar Thermal and Domestic and Commercial Boilers www.bsria.co.uk . Odyssee-MURE Database http://www.odyssee-indicators.org . International Energy Agency http://www.iea.org . National Board of Housing, Building and Planning: BOVERKET http://www.boverket.se/ . Norden Solar http://www.nordensolar.se . Swedish Governmental Agency for Innovation Systems(VINNOVA) http://www.vinnova.se/en/ . Swedish Environmental Protection Agency (Naturvårdsverket) http://www.swedishepa.se/ . Swedish Electricity Safety Board http://www.elsakerhetsverket.se . Swedish National Grid (Svenska Kraftnät) http://www.svk.se/Start/English/ . Swedish Energy Markets Inspectorate (Energimarknadsinspektionen) http://www.ei.se . Swedish Energy Agency (Statens Energimyndighet) under the Ministry of Enterprise,Energy and Communications http://www.energimyndigheten.se/en/ . Ministry of the Environment (Miljödepartementet) http://www.government.se/sb/d/2066 . Ministry of Enterprise, Energy and Communications (Näringsdepartementet) http://www.government.se/sb/d/2067 . Swedish District Heating Association http://www.svenskfjarrvarme.se/

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31 United Kingdom

The United Kingdom has the sixth-largest national economy in the world, and the third-largest in the European Union. Since the downturn of 2008-2009, the UK economy has shown some growth, helped by the London Olympic Games of 2012. The UK, more so than many other European countries, relies on natural gas for heating and electricity production. This source accounts for approximately 40% of electricity production, with approximately 32% for coal and 18% from nuclear. Whereas the UK was formerly self- sufficient in natural gas production, in recent years increasing quantities have been imported, as production from North Sea oil fields has reduced. The total of all renewable electricity sources provided for 11.3% of the electricity generated in the United Kingdom in 2012, reaching 41.3 TWh of electricity generated. Renewable energy contributions to meeting the UK's 15% target reduction in energy consumption by 2020, in accordance with the 2009 EU Renewable Directive, was 3.94% in 2012. Buildings account for approximately 47% of CO2 emissions in the UK. Non-domestic buildings have been reported to account for 17% of total energy consumption in the UK. With the turnover of building stock being only around 1% per year, it has been estimated that 80% of the buildings that will exist in 2050 have already been built. Approximately 21% of dwellings in the UK were built before 1919. Therefore attention is required to the refurbishment of existing building stock to improve and reduce the operational CO2 emissions.

National policy and financial incentives Recently announced changes to EPBD Directive came into effect in the UK on 9th January, 2013. 31.1.1 Energy Bill 2012-2013 The New UK Energy Bill was presented on 29th November, 2012. It focuses on areas of concern in terms of limited availability of gas, the potential risk of electricity supply shortage, and the emphasis of the government on energy efficient measures. The Bill also confirmed the level of investment in low-carbon technologies in the period until 2020.

As the Bill progresses its way through the parliament, it can include additional provisions and proposals, the most important of which is to promote energy efficiency by reducing electricity demand, to reduce the number of energy tariffs and to potentially set a decarbonisation rate for the power sector for 2030. 31.1.2 The UK Green Policy

The UK Green Policy is one of the parts of the proposed Energy Bill. The UK declared to reduce emissions by 12.5% relative to 1990 levels over the period 2008 to 2012 in order to meet its obligations under the Kyoto Protocol. The Department of Energy and Climate Change (DECC) is responsible for the Climate Change Act 2008 and has conducted environmental programmes including energy efficiency control.

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31.1.3 Energy Companies Obligation (ECO)

The Energy Company Obligation Scheme came into force from 1st May 2013 and works alongside the UK Green Policy in supporting energy efficiency measures. It superseded the Carbon Emissions reduction Target (CERT). There is also a provision of heating packages and insulation measures to low income families and vulnerable households. The scheme is intended for the big six energy providers: British Gas, Npower, SSE, EDF Energy, Scottish Power and EON. It provides a legal obligation for them to fund energy efficiency measures to reduce their respective bills.

The administrator’s role was assigned to Ofgem (Office of Gas and Electricity Markets – the government regulator for the privatised energy industry), and the scheme will commence on 31st March 2015.

There are three main elements in the ECO – CERO, CSCO, HHCRO: 1. CERO (Carbon Emissions Reduction Obligation) This focuses on hard to treat homes and, in particular, measures that cannot be fully funded through the Green Deal. Solid wall insulation and hard-to-treat cavity wall insulation are the primary measures that the government intends to be promoted under this target. Other insulation measures and connections to district heating systems are also eligible if they are promoted as part of a package that includes solid wall insulation or hard-to-treat cavity wall insulation. 2. CSCO (Carbon Saving Community Obligation) This addresses the provision of insulation measures and connections to district heating systems to domestic energy users that live within an area of low income. This target has a sub-target, which states that at least 15% of each supplier’s Carbon Saving Community Obligation must be achieved by promoting measures to low income and vulnerable households living in rural areas. 3. HHCRO (Home Heating Cost Reduction Obligation) HHCRO, also known as 'Affordable Warmth Obligation', is also directed at low income and vulnerable families. The scheme provides free insulation and heating upgrades funded by the government if the household is in receipt of social security benefits.

The full list of the suggested measures can be found at the Ofgem website at: https://www.ofgem.gov.uk/publications-and-updates/energy-companies-obligation-eco- measures 31.1.4 CRC (The Carbon Reduction Commitment Energy Efficiency Scheme)

This is a mandatory scheme aiming to improve energy efficiency and cut carbon emissions, targeting large public and private sector organisations. Target organisations are obliged to take responsibility for their emissions. They will be fined if they exceed their obligated amount but will also receive incentives. The government mentioned that it may deliver carbon saving of 21 MtCO2 by 2027 and aim to achieve this goal by increasing cooperation.

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31.1.5 The Merton rule 'Merton Rules' are a variety of planning policies at municipality level, named after the London Borough of Merton, which was the first to adopt such a policy, in 2003. These rules vary from location to location, but generally require new developments to incorporate energy efficiency and renewable energy measures beyond those required by national Building Regulations. For example, many municipalities require new developments to generate at least 10% of their energy needs from on-site renewable energy equipment. The most commonly accepted threshold is 10 homes or 1,000 m2 of non-residential development - though this is sometimes lower. 31.1.6 Green Deal The UK government launched “Green Deal” on 1st October 2012. This aims to help increase energy efficiency and usage of renewable technologies. In order to achieve the goal, this provides various incentives to those who contribute to save energy in the ways listed below. This is also expected to increase the use of BACS integrated with BEMS.  No up-front cost for energy efficiency improvements  Assist in reducing overhead of energy fuel costs (this also meets CRC scheme obligation)  Council tax deduction  Green Deal Finance (financial aid to contributors to save energy with up to £10K)  Measurement of various equipment

The Green Deal applies to both residential and non-residential sectors and is overseen by the Green Deal Registration and Oversight Body. It replaces current policies such as the Community Energy Saving Programme (CESP). The Green deal is aimed at homes that require solid wall insulation and free grants of up to 60% of the costs are available.

The financing scheme is not like a personal loan – it is attached to the electricity bill. When there is a change of ownership, the new owner picks up the bill and will carries the payments forward, as he is benefiting from the energy efficiency measures installed.

Green Deal in the UK - Process Outline

 Assessment – Survey and Initial Advice - Meeting the However, in 6 months of Advisor Green Deal running only  Organising Finance – Green Deal Plan Provider 4 homes signed up for it  Installation by the certified installer in the UK  Repayment through electricity provider

The Green Deal is one of the main policies for the residential sector, however, due to the terms of financing and relatively high annual percentage, the uptake of the deal could be slow. One of the main factors is that the financing for the particular property is passed on to the new owner if the property is sold. Thus, it could create some difficulties in the market and affect the sale price. In the current unstable economic situation it could be considered quite a risky policy to take by the householders. That, in turn, will affect the speed and implementation of the scheme.

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31.1.7 Feed-in Tariffs (FIT)

The Feed-In Tariff scheme (FITs) provides the opportunity to claim money back from the energy supplier for the electricity generated and fed back into the grid. It was introduced on 1st April, 2010, and was the main incentive scheme for the uptake of renewable electricity- generating technologies; including solar photovoltaics and micro combined heat and power (CHP). To qualify for the FITs, both the supplier and the product need to be certified under the Microgeneration certification Scheme (MCS). The scheme and the tariffs are set out by the government, whereas the administration of the scheme is with the energy suppliers and Ofgem.

FIT Scheme is being regulated by the Ofgem with the tariffs regularly updated on their website; https://www.ofgem.gov.uk/environmental-programmes/feed-tariff-fit-scheme/tariff- tables

The photovoltaic table was most recently published on 28th February 2013, and the non- photovoltaic table on 1st February 2013 and the tables were updated in the end of 2013. This is one of the main driving forces for the installation of solar PV and micro CHP as sources of renewable electricity in the domestic sector. To obtain the standard tariff, an EPC rating of D or higher is required. For properties with an EPD rating of E, F or G, the lower tariff can be obtained.

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Table 53 - Feed-in tariff payment rate table for photovoltaic eligible installations for FIT (1 February 2013 – 31 March 2014) - Source: Ofgem, July 2013 2013/14 Description For eligible installations with an eligibility date on or after …. After 1 After 1 After 1 After 1 After 1 Feb 2013 May 2013 July 2013 Oct 2013 Jan 2014 and and before and and and before 1 1 July before 1 before 1 before 1 May 2013 2013 Oct 2013 Jan 2014 Apr 2014 Higher rate 15.44 15.44 14.90 14.90 14.90 Solar A new building photovoltaic with before first Middle rate 13.90 13.90 13.41 13.41 13.41 total installed occupation capacity of 4kW Lower rate 7.10 6.85 6.85 6.85 6.61 or less, where Higher rate 15.44 15.44 14.90 14.90 14.90 attached to or A building which wired to provide is already Middle rate 13.90 13.90 13.41 13.41 13.41 electricity to.. occupied Lower rate 7.10 6.85 6.85 6.85 6.61 Higher rate 13.99 13.99 13.50 13.50 13.50 Greater than 4kW but not exceeding Middle rate 12.59 12.59 12.15 12.15 12.15 10kW Lower rate 7.10 6.85 6.85 6.85 6.61 Higher rate 13.03 13.03 12.57 12.57 12.57 Greater than 10kW but not Middle rate 11.73 11.73 11.31 11.31 11.31 exceeding 50kW Lower rate 7.10 6.85 6.85 6.85 6.61 Higher rate 11.50 11.50 11.10 11.10 10.71 Solar Greater than photovoltaic 50kW but not Middle rate 10.35 9.99 9.99 9.99 9.64 exceeding 100kW (other than stand- Lower rate 7.10 6.85 6.85 6.85 6.61 alone) with total installed capacity Higher rate 11.50 11.10 11.10 11.10 10.71 Greater than 100kW but not Middle rate 10.35 9.99 9.99 9.99 9.64 exceeding 150kW Lower rate 7.10 6.85 6.85 6.85 6.61 Higher rate 11.0 10.62 10.62 10.62 10.25 Greater than 150kW but not Middle rate 9.90 9.56 9.56 9.56 9.22 exceeding 250kW Lower rate 7.10 6.85 6.85 6.85 6.61 Greater than 7.10 6.85 6.85 6.85 6.61

250kW Stand-alone (autonomous) solar photovoltaic (not 7.10 6.85 6.85 6.85 6.61 attached to a building and not wired to provide electricity to an occupied building) Export tariff 4.64 4.64 4.64 4.64 4.64

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Table 54 - Feed-in tariff payment rate table for non-photovoltaic eligible installations for FIT year 4 (1 Apr 2013 – 31 March 2014) - Source: Ofgem, July 2013 Description Period in which tariff date falls Tariff (p/kWh) Anaerobic digestion with total installed capacity of 1 April 2010 to 29 September 2011 13.09 250kW or less 30 September 2011 to 31 March 2014 15.16 Anaerobic digestion with total installed capacity greater 1 April 2010 to 29 September 2011 13.09 than 250kW but not exceeding 500kW 30 September 2011 to 31 March 2014 14.02 Anaerobic digestion with total installed capacity greater 1 April 2010 to 30 November 2012 10.21 than 500kW 1 December 2012 to 31 March 2014 9.24 Combined heat and power with total installed electrical Before the conditional date 11.34 capacity of 2kW or less (tariff only available for 30,000 units) On or after the conditional date 12.89 31.1.8 Enhanced Capital Scheme

The Enhanced Capital Allowance (ECA) Scheme allows companies to claim tax relief for investments in equipment meeting energy-saving criteria. The ETL (Energy Technology List) website confirms that there are 16,610 products that are eligible for accelerated 100% tax relief. The list has been updated to include carbon dioxide heat pumps for water heating. At the same time, automatic boiler blowdown control equipment, condensate pumping equipment, switched reluctance drives and automatic air purgers have been removed from the list and some other categories will be revised.

31.1.9 Government Heat Strategy (GHS) On 26th March 2013, the UK Heat Strategy was published that included the update on the Renewable Heat Incentive (RHI) for homes. It concentrates on cutting the emissions from heat in the UK and provides £9m (approx. €11m) funding for local authorities and £1m (approx.. €1.2m) for Manchester, Leeds, Newcastle, Sheffield and Nottingham to develop heat networks.

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Zero Carbon Homes H o Smart meters m Con es strai The Green Deal and ECO ning The Green Deal Co De m man Zero Carbon on-domestic me d rci Energy Efficiency Directive al

Energy Efficiency Directive Ind ust EU ETS / Carbon price floor ria l Climate Change Agreements / levy

2012 2015 2020 2025 2030 2035 2040 2045 2050

H Mo o RHPP RHI domestic m vin es g to CRCs Co Lo m w RHI me Ca rci al rb Heat networks on RHI Ind He ust at EU ETS / Carbon price floor ria l Sector by Sector 2050 roadmaps

Figure 7 - Government Heat Strategy (GHS) - Source: DECC 31.1.10 Renewable Heat Incentive Scheme (RHI)

The Renewable Heat Incentive Scheme was developed by the Department for Energy and Climate Change (DECC) and is similar in its provision to the Feed-In Tariff scheme only in relation to heating. The UK government has set a target of 15% of heating from renewable sources by 2020. The scheme encourages the uptake of renewable technologies by households and businesses with the help of financial incentives.

The non-domestic sector will be a springboard for introduction of RHI (Phase 1) followed by the domestic sector from 2014 (Phase 2). The scheme provides a subsidy that is payable over a period of 20 years.

In the consultation document on domestic RHI the main requirements are set to meet the relevant standards: air source heat pumps (£0.069 - £0.115/kWh – approx.. €0.08 - €0.14/kWh), biomass boilers, ground source heat pumps (£0.125 -£0.173/kWh – approx. €0.15 - €0.21/kWh) and solar thermal technologies (£0.173/kWh – approx. €0.21.kWh).

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Renewable Heat Premium Payment (RHPP)

Phase 2 of the RHI has been delayed until March 2014. To compensate for this delay and ease off the transition, a one-off payment known as the Renewable Heat Premium Payment (RHPP) is available. It mainly covers solar hot water systems, heat pumps and biomass boilers with the financial support depending on the type of technology used. 31.1.11 Landlord’s Energy Saving Allowance This allows landlords to get up to £1,500 against tax for energy-saving improvements to each dwelling they rent out until April 2015. 31.1.12 Regional Growth Fund This fund is part of the government’s strategy to stimulate growth and help to rebalance the economy by supporting those areas and communities currently dependent on the public sector. Regional Growth Fund Rounds one and two are expected to create and protect 300,000 jobs. The Regional Growth Fund is leveraging approximately £6 of private sector money for every £1 of public money. Round four has recently been launched. 31.1.13 Carbon Price Floor The CPF ensures a minimum carbon price for emissions from electricity generation, following a straight-line trajectory to £30/tonne (approx. €36/tonne) (2009 prices) by 2020. To ensure CHP is on a level playing field with other heat sources, emissions associated with heat from CHP will not be liable to Carbon Price Support (CPS) rates. Use of a boiler substitution method for exempting heat means that carbon savings from CHP are valued at the full CPF. In addition, generators up to 2 MWe capacity are not liable to CPS rates, which will exclude approximately 80% of CHP schemes. 31.1.14 Reduced VAT rate In the UK,a reduced rate of VAT (5%) applies to all professionally installed energy saving technologies (both components and installation), including solar thermal:  central heating and hot water system controls  draught stripping  insulation  solar panels  wind turbines  water turbines  ground-source heat pumps  air-source heat pumps  micro combined heat and power units  wood-fuelled (biomass) boilers

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Summary of the effects on HVAC and renewables - UK Products Policies and Incentives Map Possible effects

HEATING Demand increase for heat networks, esp. District Heating Heat Strategy + Manchester, Leeds, Newcastle, Sheffield and Nottingham Positive influence, however, offset by general Domestic Boilers Part L + slow economy and dip in new housing construction Decline in Commercial Growth slowdown due to economic restraints and Commercial Boilers sector – government cuts

RHI (RHPP) Increased market demand but marginally lower Biomass Boilers + comparative to other solutions, mainly in Merton Rule residential sector Part L Increased CoP to at least 2.76 Heat pump RHI + Delayed increased market demand till RHI Phase Merton Rule II domestic in 2014; non-residential driven

Compression Heat

Pumps

Sorption/Gas Heat

Pumps Heat Strategy No change from previous years Small scale CHP + Feed-In Tariffs Demand for micro CHP <2 kW Biomass CHP RHI + Increased market demand Continue to be negatively affected under the Electric heating Energy Bill – carbon emission calculation methodology Heat recovery Part F + Heat recovery is becoming more commonly used AIR-CONDITIONING Legal requirement for air Due to the poor execution, there is no real impact Air conditioning conditioning inspection to the air conditioning maintenance and introduced ● retrofitting market A typical design for airtight domestic buildings Mechanical ventilation Part F + Increasing market demand. HOT WATER Demand increase depending on mechanism and RHI (RHPP) tariffs of domestic RHI expected in mid-2013 (if Solar Thermal + 5% VAT PV Feed-in Tariffs remain higher, solar thermal demand will be marginal) ELECTRICITY

Some developments to increase awareness, but Daylighting systems - ● in the very early stages

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Adversely effected, especially in the residential PV Feed-In Tariffs – refurbishment sector due to cut in FIT INSULATION Green Deal Wall Insulation ECO (solid and hard-to- – Reduction of 83% from current level is predicted* treat)

ECO: CERO, Push the market for brick houses before 1965-67 Wall Insulation CSCO, HHCRO + and non-brick after 1976-67 Loft Insulation Green Deal – Reduction of 43% from current level is predicted* Source: BSRIA *http://www.guardian.co.uk/environment/2012/jun/11/green-deal-policy-floundering

+ Positive Effect – Negative Effect ● No Impact

Sources of information  Bsria Ltd UK 2012-2013 Country Reports on Energy, Heat Pumps, Solar Thermal and Domestic and Commercial Boilers www.bsria.co.uk  Odyssee-MURE Database http://www.odyssee-indicators.org/publications/  EEW-2 Report – the UK – 2013, http://www.energy-efficiency- watch.org/fileadmin/eew_documents/Documents/EEW2/United_Kingdom.pdf  OFGEM http://www.ofgem.gov.uk  Renewable Heat Incentives Scheme http://www.ofgem.gov.uk/e- serve/RHI/Pages/RHI.aspx  Feed-In Tariffs www.fitariffs.co.uk  Heat Strategy https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/48574/ 4805-future-heating-strategic-framework.pdf  Department of Energy and Climate Change (DECC) https://www.gov.uk/government/organisations/department-of-energy-climate-change  UK Renewable Energy Roadmap/Dec 2012 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/80246/ 11-02-13_UK_Renewable_Energy_Roadmap_Update_FINAL_DRAFT.pdf  Energy Saving Trust http://www.energysavingtrust.org.uk/Take-action/Find-a-grant

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