KfW project in Aspiring region Latvia

KfW project in Latvia

In the year 2004 realization of the project "Heat insulation of buildings for energy saving purposes" has been started. During this project municipalities and communities of apartment owners (cooperative communities of apartment owners, Ltd.) had an opportunity to obtain loan with favourable conditions for complex heat insulation of buildings. The project "Heat insulation of buildings for energy saving purposes" has been implemented in co-operation with German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, German Development Bank Kreditanstalt für Wiederaufbau (KfW), Ministry of Environment of the Republic of Latvia, Environmental Investment Fund and Mortgage Bank. In total 5 million euro has been allocated for realization of the project. In the beginning 127 applications for loans has been received and Mortgage Bank specialists have selected 47 projects to participate in the 2nd stage of competition. Unfortunately many of applicants refused from the idea of project implementation during the preparation process. Main reasons bothering successful realization of the project and loan obtaining were: Difficulties in receiving acceptance of 75% apartment owners to start the project, which is necessary, pretending for loans without mortgage, Due to different wealth level of apartment owners, it was difficult to organize common activities in loan obtaining, Within the project there was planned complex building renovation, which is technically fine, but at the same time is money consuming. Not all of the apartment owners were ready for loan liabilities, which are necessary for financing house renovation in accordance with the program conditions. Until year 2004 / 2005 heating season there have been completed 5 building renovation projects. And there also have been organized the evaluation of results obtained during the heating season. In 2005 renovation of two more houses has been finished: During the project complex renovation of building was done and as a result windows have been changed, external walls, ceilings of cellar and top floor have been heat insulated. Within the framework of the project Environmental Investment fund:

- Provided consultations to the representatives of municipalities about the possibilities of financing,

- Provided informative activities for project popularization,

- Supported municipalities during the project implementation, e.g. procurement process and process of reconstruction,

- Performed environmental improvement monitoring of the implemented project during the loan repayment period.

- Within the framework of the project "Heat insulation of buildings for energy saving purposes" the compact disc has been prepared, which summarises all necessary information about technical and economical aspects of house renovation and also includes all the informative materials, distributed during seminars. (1) http://www.lvif.gov.lv/?object_id=420

Introduction

Housing renovation projects have been implemented within the framework agreement between the Federal Ministry for the Environment, Nature Protection and Nuclear Safety of Germany and the Ministry of Environment of the Republic of Latvia. This monitoring report covers the first 5 renovation projects that were finished in 2004 and also 2 projects that were finished in 2005. The aim of this monitoring report is to analyze the achieved results and to provide information on energy saving potential in the housing sector based on concrete projects. The projects are located in 4 regions of Latvia – Riga, Saldus (Broceni), Liepaja and Limbazi (Salacgriva). The project owners in Riga and Salacgriva projects case are associations of apartment owners, but in case of Broceni and Liepaja – municipalities.

Figure 1 – Location of projects

The monitoring report was prepared by the Latvian Environmental investment fund in close cooperation with the project owners that provided information on results achieved and renovation activities carried out.

Methodology

The calculation of CO2 reduction is based on determination coefficient KCO2.

Table 1 - CO2 emissions determination coefficient

CO2 emissions were calculated using the following formula for woodchips:

B * KCO2 = t/a; t/m,

where, B – fuel consumption (t) per year, month etc. CO2 emissions were calculated using the following formula for natural gas:

Heat energy produced (MWh) * 0.199 = t/a; t/m

The data on thermal energy consumption by each building was provided by the projects’ owners and are based on heat meters that are installed in each building.

For calculation of gas consumption the following data was used for the Riga and Liepaja projects:

• boiler’s efficiency – 94%,

• heat loss in heat supply networks – 15%,

• low heat combustion for natural gas – 9.3 MWh/1000 m3.

For calculation of woodchips consumption for the projects in Broceni, data obtained from “Brocenu siltums” Ltd, was used – 1.5 m3 (or 0.525 t) of woodchip are required for generation of 1 MWh of thermal energy (boiler's efficiency – 90%, heat loss in heat supply networks – 14.4%).

For calculation of woodchips consumption for the project in Salacgriva, data obtained from the local boiler house, was used – 1.65 m3 (or 0.576 t) of woodchip are required for generation of 1 MWh of thermal energy (boiler's efficiency – 70%, heat loss in heat supply networks – 3%). Average temperature per month data is obtained from Latvian Environment, Geology and Meteorology Centre. (2) (Federal Ministry for the Environment, Nature Protection and Nuclear Safety of Germany, Ministry of Environmental Protection and Regional Development, Latvian Environmental Investment fund: " PROJECT “Initiative for energy efficiency in the housing sector” MONITORING REPORT HEATING SEASON 2011/2012, Riga, 2012-33p., -4p.)

Description of projects

In total 5 projects were finished in 2004 and 2 projects in 2005, which can and will be analyzed in the monitoring report:

– 1 project in Riga – Celmu street 5,

– 4 projects in Broceni – Skolas street 21 and 23, Lielcieceres street 34 and 36,

– 1 project in Liepaja – Ganibu street 135/141,

– 1 project in Salacgriva – Tirgus street 3.

Before and after project, Celmu str. 5, Riga

During and after insulation of the building – Skolas str. 21, Broceni

During and after insulation of the building – Lielcieceres str. 34, Broceni

After insulation of the building – Ganibu str. 135/141, Liepaja

During and after insulation of the building – Tirgus str. 3, Salacgriva

The project in brief

Within the framework of the German-Latvian environmental protection pilot project "Energy-related modernization of residential buildings" seven residential buildings with a total of 463 flats were modernized with regard to energy efficiency from 2004 to 2005 in Latvia. A total of about 1.6 million euro were invested, which means an average investment of approximately 3.500 euro per flat. During the first heating period following the modernisation savings of approximately 40 percent were recorded in carbon dioxide emissions, heat consumption and heating costs. The Federal Ministry for the Environmet, Nature Conservation and Nucler Safety (BMU) supported the project with interest subsidies and non-reimbursable subsidies for construction costs totaling approximately 580 000 eur. The BNU commissioned the KfW banking group to make the reduced- interest loan available via the Mortgage Bank of Latvia (LHZB). The offer of support for the energy-related modernisation of residential buildings met with great interest from Latvian flat owners, administrators and municipalities. Despite the positive response to the technical and financial modernisation concept offered only one third of the funds were made use of due to the framework conditions in Latvia's housing sector. The modernisation concept included the mandatory implementation of a broad package of technical measures. The high savings in energy and costs for heating that were expected and the interest subsidies offered should convince flat owners to approve this package. An approval of 75 percent of the occupants was obligatory. For many of the modernisation projects this percentage was not reached. Legal and institutional structures of the housing administration contain essential obstacles to implementing the modernisation concept:

1.Housing administrations, financial institutions and municipalities lack experience in planning and implementing modernisation projects.

2.Legal ambiguities with regard to decision-making rules and obligations of flat owner associations, especially concerning areas of mutual ownership.

3.Difficulties in advising on and communicating the advantages of the support concept in order to obtain the necessary approval for taking up a loan to finance investments.

4.Occupants with a low income who are not able to bear the financial burden of taking up a loan.

5.Occupants who are not willing to bear the financial burden of the mandatory package of technical measures for the highest possible savings in energy.

6.Problems with taking up loans and securing them.

The modernisation of buildings successfully realised under the environmental protection pilot project confirm the approach of the concept and demonstrate its potential for practical application. In addition, the large number of project suggestions that could not be implemented also helped to highlight the weak points of the housing framework conditions in Latvia. The approach chosen and the obstacles encountered enable recommendations to be made on where framework conditions need to be further improved to get the modernisation of existing buildings underway on larger scale.

The huge backlog of maintenance work, the high energy consumption in times when energy prices increase drastically and the high emissions it entails, and not least the "climate" within the flats themselves are reasons to further intensify these efforts in the future.

Recommendations in brief

1.Review and adaption of the legal framework conditions for the realization of energy-related modernisation of buildings by the Latvian legislative authorities, particularly with regard to flat owner obligations concerning mutual ownership and decision-making rules.

2.The Latvian parliament and government should supply the funds necessary to widely support the energy-related modernisation of buildings; especially for the financial support of flat owners with a low income.

3.Utilisation of funds from the European Regional Development Fund (ERDF) to co-finance national support for the energy-related modernisation of buildings.

4.Encouraging the flat owner's own initiatives for the energy-related modernisation of buildings in coordination with municipalities, occupants and their housing and municipal associations.

5.The institutional structures should be strengthened by adequate financial means, staff, technical equipment and adequate framework conditions for securing loans.

6.Active information and public relation policy aimed at the relevant target group. (3) (Bundesministerium fur Umwelt, Naturschmutz und Reaktorsicherheit (BMU): "Energy-related modernisation of residential buildings in Latvia", August 2010, 123p, - 113p.)

Existing buildings hold great potential for national energy savings

The German –Latvian environmental protection pilot project "Energy-related modernisation of residential buildings"was a model for the renovation of buildings with regard to energhy efficiency based on German experiences in this sector. Seven residential buildings in Latvia with a total of 463 flats were modernisated with regard to energy efficiency. The energy consumption of these buildings could be reduced by more than 40 percent compared to the consumtion prior to modernisation. The project was financed by the flat owners associations concerned. The German Federal Ministry of the Environment, Nature Conversation and Nuclear Safety and the KfW banking group supported the project with interest subsidies and, on a small scale, investment grants. The projects showed that high energy savings in the buildings sector can be achieved at reasonable cost for the occupants. However, as the technical, financial and also the social challenges of an energy-related modernisation of buildings are very complex, they reguired the joint effort of occupants, municipalities and political decision-makers of the energy and house sectors. The project encouraged the broad implementation of energy-related modernisation of residential buildings in Central and Eastern Europe. From 2007, the increased use of money from EU structural funds, which are available to new EU Member States, could serve as an instrument to finance the energy-related modernisation of the huge number of existing residential buildings and facilitate the faster implementation of the EU Directive on the energy performance of buildings. This could serve to effectively combat climate change. It could also alleviate social hardship due to high heating costs as a consequence of poor insulation and sky-rocketing costs for energy. The status of negotiations on the EU Regulation on the European Regional Development Fund (ERDF) expressly provides for the energy-related modernisation of residential buildings in new EU Member States. In Latvia, however, current operational programmes for EFRE only consider public buildings as eligible.

Ministries of the Environment opened up new paths

The environmental protection pilot project of the two environment minitries, which started in 2003, was intended to solve the financing problems by providing support to Latvian flat owner associations and housing administration associations. In cooperation with the KfW banking group (KfW), the German Environment Ministry (BMU) made loans at a reduced rate available by providing interest subsidies, The loans were utilised to carry out energy saving measures fir flats in residential buildings in Latvia, among them system-built buildings. The target group of this project were first and foremost Latvian flat owners who wanhted to do something about the state of their building of their own accord. The aim od the environmetal protection pilot project was to demonstrate the potential in the heating sector for saving energy and thus reducting CO2 emission for the purpose of climate protection. Furthermore, the project wanted to make a contribution towards improving the living conditions in Latvia. In addition to measures concerning the energy-related modernisation, measures to improve the living environment were supported as well. (4) (Bundesministerium fur Umwelt, Naturschmutz und Reaktorsicherheit (BMU): "Energy-related modernisation of residential buildings in Latvia", August 2010, 123p, - 117p.)

Results of the environmental protection pilot project

Summary of results

Total emission reduction achieved in the first heating season (2004/2005) after the implementation of 5 housing renovation projects is 308 t of CO2, but after heating season 2005/2006 (including 2 more projects) total emission reduction reached 469 t of CO2. In the next heating season (2006/2007) all 7 housing renovation projects show total emission reduction of 553 t of CO2 in comparison to before project data. In the heating season 2007/2008 the total emission reduction reached up 529 t of CO2 in comparison to before project data. The figures in heating season 2009/2010 are a bit lower than previous years due to extremely cold winter reaching only 479 t of CO2. In extremely long and cold winter in heating season 2010/2011 emissions are reduced only by 437 t of CO2 and 2011/2012 reduction reached 429 t of CO2.

Table 2 – Total CO2 emissions reduction,(t)

Table 3 – Total heat energy consumption reduction (MWh / %)

Relative CO2 emissions reduction by projects Total heat energy consumption reduction in the first heating season was 771 MWh, but after the second heat season (2005/2006) it was 1198 MWh (including 2 new projects), but after the third (all 7 projects) it is 1428 MWh. After fourth heating season (2007/2008) total heat energy consumption reduction was 1377 MWh. In fifth heating season (2008/2009) total heat energy consumption reduction was 1034 MWh. In the season (2009/2010) reduction was 1233 MWh. In the season of 2010/2011 reduction reached 1290 MWh and in the last season 2011/2012 the total energy consumption reduction reached 1117.43 MWh.

The reduction of necessary energy resources for heat generation, during 5 heating seasons, reached:

- ~ 335 000 m3 of natural gas,

- ~ 3701 t of woodchip.

Despite the fact that 2005/2006 heating season was colder than the previous season, the heat energy consumption has decreased. Obviously, people have started to use the opportunity to change the consumption themselves according to their needs. The October and November in this heating season were warmer than in previous season. The least heating season (2006/2007) was warmer on the whole, that’s why all indices show high improvement. The heating season 2007/2008 was warmer than previous season so the heat energy consumption has decreased. In heating season 2008/2009 increase of heat energy consumption is fractional even though average temperatures in coldest winter month February was noticeably lower than previous year. In heating seasons 2009/2010 and 2010/2011 heat energy consumption reduction was lower than before, reaching in average level of heating season 2004/2005, which can be explained by extremely cold winter last two years, same as in season 2004/2005. In all projects after renovation of buildings specific heat consumption of buildings is below 70 kWh/m2 as it was originally planned, with the exception of the building on Tirgus str. 3, where the top floor and basement ceiling insulation had not been done and therefore the specific heat consumption of the building after heat insulation is 116.8 kWh/m2. Is highly suggested to perform these activities, so insulation could be more effective. In the heating season of 2011/2012 in all projects after renovation of buildings specific heat consumption of buildings is below 53 kWh/m2 which is even more than it was originally planned, with the exception of the building on Tirgus str. 3 by 112.86 kWh/m2, where the top floor and basement ceiling insulation had not been done.

Almost in all projects heat costs per m2 have been reduced substantially – from 11 % up to 50%, but in comparison with previous heating season the costs per m2 in heating season 2007/2008 have been increased. In Tirgus Str.3 heat costs per m2 has increased to 8% because also the total heat cost has increased in comparison to previous heating season. In heating season 2008/2009 costs per m2 grew in average by 15% if compared to previous season and by 17% in heating season 2009/2010, however in Liepaja and in Riga heating costs reduced by 13% and 43% respectively. In heating season 2010/2011 heat costs per m2 increased almost in all projects which can be explained by overall heat cost increase trend in Latvia. (5) (Federal Ministry for the Environment, Nature Protection and Nuclear Safety of Germany, Ministry of Environmental Protection and Regional Development, Latvian Environmental Investment fund: " PROJECT “Initiative for energy efficiency in the housing sector” MONITORING REPORT HEATING SEASON 2011/2012, Riga, 2012-33p., -33p.)

REFERENCE: Research data has been taken from Latvian Environmental Investment Fund annual report - PROJECT “Initiative for energy efficiency in the housing sector” MONITORING REPORT, HEATING SEASON 2012/2013