Financing deep retrofit of social housing with a holistic neighbourhood approach

The oPEN Lab project is hosting the last workshop of the roundtable series with the financial sector. Their partner BPIE will be organising this online workshop on 2 December 2024. This session addresses the challenges of social housing institutions when it comes to financing deep renovations and retrofits.

Increasing the scale and ambition of social housing renovations

On average, social housing makes up 8% of the total housing stock in the EU, but in countries like Austria, Denmark, and the Netherlands, this figure can reach up to 20%. Achieving the goal of a climate-neutral building stock by 2050 will require a significant increase in the renovation of social housing alongside private residential buildings. Currently, the social housing sector typically employs a strategy of applying multiple light renovation measures across a large number of buildings to take advantage of economies of scale. However, this approach is not aligned with the 2030 and 2050 climate targets for reducing greenhouse gas emissions. Moreover, it implies multiple rounds of renovations, further straining the already limited skilled workforce in the construction sector and likely costing more over the longer term.

Renovation with the neighbourhood approach

Another approach to accelerate the pace and ambition of the renovations is the neighbourhood approach, as highlighted by the Energy Performance of Buildings Directive (EU/2024/1275).  The neighbourhood approach also benefits from economies of scale by simultaneously renovating clusters of buildings within a neighbourhood, with the additional benefit of adjusting the technological and financial solutions to the local context. Deep renovations contribute meaningfully to a climate-neutral building stock while offering multiple benefits for the community and society, such as improved comfort and public health, social inclusion and climate resilience. Such an approach aligns well with the goal of positive energy neighbourhoods (PENs), characterized by groups of buildings and spaces with connected energy infrastructure, producing net-positive local energy due to high energy efficiency and smart on-site energy generation assets. Beyond technical efficiency, PENs can also help alleviate energy poverty, contribute to energy security, and strongly focus on local engagement and co-creation.

Combining public and private financing

The neighbourhood approach is enabled by local public, NGO, and private stakeholders who will scale up PEN projects and other initiatives in the district/city. Therefore, it will likely require the stacking of multiple public and private financing sources. This workshop will invite experts from social housing and the financial sector to delve into various sources and mechanisms of private finance for social housing renovations and discuss what gaps remain. It will address the barriers and bottlenecks from oPEN Lab and SUPERSHINE project demo sites, discuss best practices and explore the role of the public sector in de-risking PEN projects and facilitating access to affordable and scalable financing.