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France

Follow-up French workshop

CITYnvest organised a national French workshop in order to bring stakeholders together to discuss how to trigger the market uptake for energy efficiency in buildings. In each focus country, CITYnvest first investigates the characteristics of the energy efficiency market and which support local and regional governments need to deploy their own long-term financing models. In this section, you can read a summary of the findings, which were developed in cooperation with the French Association of the Council of European Municipalities and Regions. It will be continuously updated, based on the feedback of municipalities that participated in the workshop and national experts.

What is the current context?

Housing sector in France:

  • 28.8 million primary residences
  • 58% owner-occupiers: 16.6 million
  • 42% tenants, of which
  • Rental sector: private 56% - social housing : - 44%
  • Average surface area of accommodation: 91 m2

Since 13% of households are in energy poverty, the main objective of the French Housing Policy Framework is to ensure decent housing for all citizens.  

Energy transition:

Objectives at national level by 2030 (in comparison with levels from 1990)

  • 40% reduction of of CO2 emissions
  • 20% reduction of energy consumption by 2030 and 50% by 2050
  • 1/3 of energy coming from renewable sources
  • 50% of energy coming from nuclear sources
  • 30% of reduction of usage of fossil fuels

Green growth act:

  • Article 1- All buildings should reach a low emission level by 2050
  • Article 3- Renovation of 500 000 housing/year in 2017, lowering by 15% energy poverty by 2020
  • Article 4- National strategy for energy until 2050, including all types of buildings (residential, commercial, public and private).
  • Article 5- Renovation by 2025 of all residential buildings using more than 330kWhep/m²/year.

If it comes to the private housing stock, the objective is to renovate 380 000 buildings per year.

Existing instruments and incentives supporting building renovations:

Financial support to renovate social housing

  • Sharing of gains from reduced expenses
  • Reduced VAT for improvements to social housing
  • Reduced property tax on buildings for social landlords
  • Eco-loan for social housing
  • Long term zero rate loan
  • National Agency for Urban renewal subsidies

For more information about National Urban Renewal Programme, consult the ANRU website, the one-stop-shop created to simplify the measures taken by local governments and social landlords interested in promoting complete renovation projects within their neighbourhoods.

Third Party Financing:

Third Party Financing refers to debt financing. The project financing comes from a third party, usually a financial institution or another investor, or the ESCO (Energy Service Company), and not from the user/owner of the building. In this model, the total or the good share of the cost of renovations is covered from the future energy savings, thus the buildings’ owners do not need to make big investments. This approach may include both technical and financial support or only technical support.

  • Several regions in France have developed the third party financing models:
  • Rhône-Alpes: The Local Public Company OSER manages energy refurbishments of public buildings;
  • Picardie: The SPEE offers solutions to individuals;
  • Ile-de-France: A semi-public company, Energies Posit’if, supports joint owners.
  • Poitou-Charentes: ARTEE supports private owners.

    More information about French context can be found in the Preparatory Report.

What are the main barriers to accelerate investments in energy efficiency projects in buildings?

  • Project managers need to have expertise in both renovations and finances.
  • Regulatory barriers.
  • Shortage of funds among beneficiaries (citizens) and limited capacity to obtain loans on the commercial market.
  • Balancing liabilities is necessary.
  • Need of creativity in developing projects.
  • Need to standardize the investment models and to make the cost lower.
  • The higher the cost of energy, the higher return on investment in energy efficiency projects. On a purely private market it is difficult to find investors because it is a banking sector and it is complex to fund the flow. There are many fluctuating factors and users are also part of those projects and ESCOs need to dematerialise the assets and to have an interest on the long term.
  • Only projects with a payback shorter than 10 years are interesting for private investors. However, in order to create a possibility of a longer pay-back, a mixed or public tool can be and already have been created.
  • Developing technical and financial solutions for renovations of historical buildings is challenging.

Country specific guidance materials and reference projects

  • Find ways to bundle your investments in order to make them more attractive for private investors

Bundling renovation projects can significantly reduce transaction costs and make projects bankable.
- See the section “How to efficiently bundle buildings?” in the CITYnvest FAQ.
- Consult a toolkit on how to set up a one-stop-shop to bundle different buildings across municipalities following the Renowatt model.

  • Overcome the low return on investments by looking at additional grants as financial instruments

In order to learn more about the possible complimentary funding, see FAQ section on European Support at the CITYnvest website. You can also look at examples of projects using grants as financial instruments in the CITYnvest barrier guidance tool.
 
In France, several private-public or public models have already been developed, which allowed longer pay-back for the building owners. Consult the examples of SPEE and ARTEE for more information.

  • Overcome lack of capacity amongst beneficiaries to finance the renovations.

If the beneficiaries are not able to ensure financing for renovation projects due to low income or no capacity to take loans on the commercial market, you can look into models that include financing services in the framework of the Programme Delivery Unit. Find examples in the CITYnvest barrier guidance tool.
 

  • Consider involving citizen-based funding for renovation projects.

Cooperative and citizen-based models can be an alternative to purely market-based mechanisms or public subventions to finance energy efficiency. See examples of Énergies renouvelables communautaires - Communauté climatologique de Saerbeck, Ecopower and Pajopower.

Step by step approach

Follow the different steps to build your local financing models for energy efficiency! Overview on our website.

National recommendations

In France, the experts expressed the need to put the renovations investment outside the scope of public debt, which could bring about a change of scale. They call on applying a specific treatment to certain energy transition investments, when calculating the public debt and deficit within the scope of EU rules.
Additionally, a need to develop a specific national climate contribution to local governments (financed by carbon price, ETS) which would support local governments in their investments in energy efficiency was identified.
Moreover, promoting and supporting users, clients and investors to better deal with contracting procedures, as well as enhancing cooperation between the public and private sectors was noted as factors which would help scale up energy efficiency investments.