Follow-up Lithuanian workshop
CITYnvest organised a national Lithuanian workshop in May 2016 and a second workshop in June 2017 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 Association of Local Authorities in Lithuania. It will be continuously updated, based on the feedback of municipalities that participated in the workshop and national experts (see the list of contacts).
What is the current context?
In order to implement the Energy efficiency directive in Lithuania, the Public building energy efficiency programme was adopted on 26th of November, 2014.
The main aims of the programme are:
- to increase energy efficiency;
- to save approximately 60 GWh annual primal energy until 2020;
- to secure effective consumption of national funding assigned to energy efficiency in public buildings;
- to reduce CO2 emissions;
- to ensure that public buildings meet the standards of hygiene.
In the framework of the Public buildings renovation programme, it is planned to renovate 470 thousand square meters of state-owned public buildings (responsibility of the Ministry of Energy) and 230 thousand square meters of municipal owned public buildings (responsibility of the Ministry of Environment).
The National Public buildings energy efficiency improvement programme was prepared and approved by the Government in November 2014. The Programme is designed not only for the municipalities, but for all owners of public buildings. The Ministry of Environment is not preparing any other programmes especially for municipalities but encourages municipalities to prepare their own programmes of renovation of municipality-owned public buildings. The call (by the Ministry of Environment) for the municipalities to prepare a one public building energy efficiency improvement pilot investment project was launched in April 2016, the deadline for submission - 1st April 2017. More information about the call is available here.
Under the agreement between the Ministry of Environment, Ministry of Finance and the European Investment Bank, the leverage fund was created for the renovation of multi-apartment buildings. For the renovation of public buildings, no leverage fund is planned to be created.
The JESSICA holding fund in Lithuania was established in 2009. In 2009 the Lithuanian government signed a Funding Agreement with the European Investment Bank (EIB) and appointed EIB as the JESSICA Holding Fund manager. As the Holding Fund manager, EIB is responsible for development of the financial products for financing renovations of the multi-apartment buildings (loans), selection of the financial institutions to extend the loans, defining the processes and mechanisms of the implementation of the JESSICA fund functions.
Renovation models using Jessica fund successfully attracted private investors and as a result, 690 buildings were renovated with 67 % energy savings. More information on the JESSICA fund and on multi-apartment buildings renovations using the JESSICA fund.
In Lithuania, the central government is in charge of this renovation model, however it was successful thanks to involving municipalities and their appointed administrators in the process.
The role of ALAL
ALAL is taking an active role in creating and amending legislation regarding the renovation of buildings (both multi-apartment and public) and renewal of urban areas with the aim of energy efficiency. ALAL also promotes renovation by organizing various seminars and conferences on this topic; helping municipalities solve emerging problems by initiating the dialogue between different stakeholders of renovation process.
More information about the current context in Lithuania can be found in the Preparatory Report.
What are the main barriers to accelerate investments in energy efficiency projects in buildings?
1. Lack of good coordination, lack of information and unclear legal acts
Municipalities would like to see better coordination of the responsible institutions. Municipalities know that during the European financing horizon 2014-2020, public building renovation will be financed using financial engineering instruments, but they are lacking detailed information concerning these instruments or financing models. Municipalities also need technical and consultative assistance to prepare investment plans or technical specifications.
Lack of financial resources is the main renovation problem. Most of the municipal budgets are unbalanced, lending limits are exhausted. Municipalities do not have the sufficient resources to contribute to the renovation. On the other hand, banks require guarantees for retrofit projects from municipalities, and local governments are not able to issue those guarantees. Besides, municipalities find it much easier to use the existing EU funds/structural funds than to come up with their own financing solutions.
3. Limited involvement of the private sector in the renovation projects
Municipalities have positive views on the private sector's involvement in the renovation process. However, this requires the creation of favourable conditions at the same time ensuring the buildings will be used in a proper manner after the renovations (i.e. only qualified managers adjusting heating parameters, no windows open while air conditioning is on etc.). The private sector's role must be clearly defined by specifying the responsibilities, duties, and benefits.
4. Lack of information concerning possible renovation models and experience of other countries
Municipalities and citizens in Lithuania are not familiar with innovative financing models and do not have understanding of their functioning. There are not enough good examples of usage of financial instruments, or private-public partnerships in general in Lithuania. Thus, trust and cooperation between local governments and business partners is limited.
5. Limited capacities of municipalities
Municipalities, and especially the small ones, have insufficient human resources to get involved in the innovative financing projects.
6. Low energy prices
Relatively low energy prices in Lithuania make ESCO and similar models not profitable for investors.
Country specific guidance materials and reference projects
- Find ways to overcome the lack of an appropriate energy services market in your region
If there is a lack of trust in the EPC/ESCO model and the market of energy services is not fully developed, choose Separate Contractor Based models. Find examples in the CITYnvest barrier guidance tool.
- Find ways to bundle your investments in order to make the projects more profitable
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
- Find information about renovation models existing in Europe and get in touch with your peers in order to exchange experiences
Visit www.citynvest.eu in order to learn more about the examples of retrofit models, which have already been developed in Europe. Use the Matrix tool to find models, which would be suitable in your context and see the analysis and comparison of various existing solutions.
- Overcome the low return on investments by looking at additional grants as financial instruments
In order to learn more about possible complimentary funding, see the FAQ section on European Support on the CITYnvest website. You can also look at examples of projects using grants as financial instruments in the CITYnvest barrier guidance tool.
- Find more information about the Lithuanian context:
All the information regarding renovations of buildings in Lithuania are on the webpage of the Housing Energy Efficiency Agency, which is the institution administering the renovation process in Lithuania. Information on financing opportunities of renovation projects could also be found on the website of one of the financial institution participating in renovation VIPA.
Step by step approach
Follow the different steps to build your local financing models for energy efficiency! Overview on our website.
Lithuanian experts doubt that financial instruments in general, and the ESCO model in particular could be widely used in the country any time soon. They believe that as long as European support is available, there is no big impetus to look for alternative financial instruments or financial engineering tools. Moreover, the sub-national level does not have a substantial experience in using financing engineering, therefore lacks knowledge and practice.
Thus, the Lithuanian municipalities and regions call on implementing pilot projects based on EU instruments, which would prove that innovative financing instruments can be successfully used in Lithuania. They also call on developing a clear legal framework, favorable conditions for the private sector's involvement in renovation projects and the promotion of public-private partnerships.
 EIB is selecting (by launching a public call) commercial banks or other financial institutions which will be providing loans for the renovation of multi-apartment buildings to the apartment owners or administrators implementing a renovation project.