Ron Sint-Nicolaas is the director of sustainable energy for the municipality of Deventer in The Netherlands, which aims to be energy neutral by 2030. His role is to bring together private initiatives, to investigate smart solutions and work with other local and regional governments to overcome existing policy barriers. His highlight is finance.
Can you shortly describe the project where you applied the innovative financing models?
In the municipality of Deventer we came up with a housing subscription scheme. Through this model, we wanted to make the renovations possible also for citizens who don’t have much money. In order to explain how the housing subscription works, let’s imagine that you have a house and your monthly energy bill right now is 150 EUR. If you come to us to get a housing subscription, you will still pay 150 EUR per month maximum but we will help you to install some energy efficiency improvements in your house and lower your energy bill. We will assess the state of your house and how many people live there, check the energy bills for last two years, and we will advise you what kind of renovations can be done in frame of the housing subscription. Though in the end, you will choose the measures to be installed. What is interesting in this model, you can choose only partial renovations and i.e. install double glazing in the first year and then after 5 years you can decide to change whole windows. Normally, we sign contracts with house owners for 15 years. After installing the energy efficiency measures, you will still pay 150 EUR monthly but only 90 EUR will go to the energy provider and 60 EUR will go to us to pay off the renovations that were made in your house. You can, of course, choose to more or less measures.
Our project started in June 2015 with 20 private houses. The municipality came up with the idea, we brought the partners together and mobilized public funds to provide guarantees for the project. Now, we are starting to upscale to 600 households. Investment money is provided by the Energy fund Overijssel.
Why did you decide to use the innovative financing models in your municipality?
We wanted to make the renovations of houses as simple as paying for a mobile phone. We need to remember that, when it comes to retrofits people not always are motivated by the sustainability issues. Many of them retrofit their houses in order to lower the costs related to usage of buildings. And that is good as well because in the end we achieve our policy goal – the citizens consume less energy.
What advantages of this scheme can you see?
Thanks to the model of housing subscription we can understand better what the problems related to renovations of houses are and how they could be solved. We also get a better picture of how the municipality can be involved in this process. I believe it is also an inspiring experience and allows us to get contacts to other stakeholders involved in the process. When you give in any situation the consumer a central place, you will be able to solve the issues better within construction companies, financiers and municipality. This allows you to more effective solutions.
What where the biggest problems in implementation of the housing subscription scheme in your municipality?
The law in the Netherlands indicates limitations for debt level of citizens. Thus some consumers cannot take additional obligations. Since the housing subscription in European rules is treated like a debt, some of the prospective clients may not be able to subscribe to our plan. Hence, we are working on proving that the ‘debt’ for the energy payments is not higher than a housing subscription. Therefore cooperation with the national government is important.
Besides, the housing subscription is treated as a mortgage. According to the current law, the mortgages cannot be transferred to a new owner when the house is sold. Thus housing subscription cannot be transferred to the new owner either. If our consumer moves out, she or he still has to pay off the housing subscription, which cannot be transferred to the new owner of the house.
We also had to face the fact that the financial sector does not want to take risks at the moment. Thus we had to mobilize public money to ensure the guarantee of the risk because the private companies were not willing to do so. On the other hand, the construction companies don’t think in an innovative way yet. They are not open to selling services but they sell products, which may be an obstacle in a scheme such as housing subscription. They are not open to do partial renovation works either, even if clients request that.
How do you evaluate the whole experience?
Setting up the housing subscription scheme is difficult and it takes a lot of time before people understand what the real drive behind this system is. At that moment I am very happy that many people in the Netherlands, also on the governmental level, understood it. So on the 6 of February we sign a City-deal with the national government and 16 other partners and make appointments for up-scaling in the Netherlands and to eliminate barriers. At this moment we are working on the mentioned issues in collaboration with several national parties. Close further more and more cities in Netherlands are interested in the housing subscription.