89322
Scaling Up Energy Efficiency in Buildings in the Western Balkans
The Residential Energy Efficiency
Program in Lithuania
Case Study
May 2014
Prepared by Viktoras Sirvydis
Contents
Abbreviations and Acronyms ....................................................................................................... 3
Executive Summary ....................................................................................................................... 4
1. Country and Sector Context ..................................................................................................... 6
Country Context ........................................................................................................................... 6
Energy Sector ............................................................................................................................... 6
The Housing Sector ...................................................................................................................... 8
Administration of Multi-Apartment Buildings ............................................................................ 9
Strategy and Legislation ............................................................................................................... 9
Existing Barriers to EE............................................................................................................... 10
2. EE Programs Implemented and Results Achieved ............................................................... 11
First Period: Energy Efficiency/Housing Pilot Project (1996–2001) and Post-Project
Mechanism (2001–04)................................................................................................................ 11
Second Period: Multi-Apartment Buildings Renovation Program (2005–10) ........................... 13
Third Period: Housing Modernization Program through JESSICA (2010–present) .................. 14
3. Lessons Learned ....................................................................................................................... 19
Financing and Repayment Arrangements .................................................................................. 19
Procurement ............................................................................................................................... 20
Technical Assistance/Services ................................................................................................... 21
Implementation Arrangements, Including Selection/Eligibility Criteria ................................... 22
Technical and Other Aspects...................................................................................................... 23
4. Relevant Implications for the Western Balkans .................................................................... 23
Similarities and Differences ....................................................................................................... 23
Replicating Lithuanian Solutions in the Western Balkans ......................................................... 24
References ..................................................................................................................................... 26
Annex A. Legal Framework ........................................................................................................ 27
Annex B. Lithuanian Energy Balance 2012 ............................................................................... 29
Annex C. Parameters of Lithuanian Housing Modernization Programs and Projects ......... 30
Annex D. The Energy Efficiency/Housing Pilot Project 1996–2004: Implementation
Mechanism .................................................................................................................................... 35
Annex E. Multi-Apartment Buildings Renovation Program, 2005–10: Implementation
Mechanism .................................................................................................................................... 36
Annex F. JESSICA: Implementation Mechanism .................................................................... 37
The Residential Energy Efficiency Program in Lithuania Page 2 | May 2014
Abbreviations and Acronyms
General
CEB Council of Europe Development Bank
CG credit guarantee
CPMA Central Project Management Agency
CPO Central Purchasing Organization
DH district heating
EE energy efficiency
EIB European Investment Bank
EEHPP Energy Efficiency/Housing Pilot Project
ESMAP Energy Sector Management Assistance Program
ESCO energy service company
EU European Union
GHG greenhouse gas
GWh gigawatt-hour
HESA Housing Energy Saving Agency
HOA homeowners’ association
HUDA Housing and Urban Development Agency
IFI international finance institution
INPP Ignalina Nuclear Power Plant
JAA Joint Activity Agreement
JESSICA Joint European Support for Sustainable Investment in City Areas
kWh kilowatt-hour
MWh megawatt-hour
MB management board
MOF Ministry of Finance
mtoe million tons of oil equivalent
NEEAP National Energy Efficiency Action Plan
PIU project implementation unit
PPP public-private partnership
RE renewable energy
TA technical assistance
tCO2e tons of CO2 equivalent
TWh terawatt-hours
UDF Urban Development Fund
Regional
The Western Balkan region comprises Albania, Bosnia and Herzegovina, Kosovo, the former
Yugoslav Republic of Macedonia, Montenegro, and Serbia:
AB Albania
BiH Bosnia and Herzegovina
KOS Kosovo
MK FYR Macedonia
MNE Montenegro
SER Serbia
The Residential Energy Efficiency Program in Lithuania Page 3 | May 2014
Executive Summary
This case study, which describes the residential Lithuanian energy efficiency (EE) program and
lessons learned, was prepared in support of the Energy Sector Management Assistance Program
(ESMAP)-funded technical assistance activity Scaling Up of Energy Efficiency in Building in the
Western Balkans. During the first period (1996–2004), the World Bank- and donor-funded
Energy Efficiency Housing Pilot Project was implemented around investments of US$28.6
million. In addition, technical assistance (TA) was included to facilitate energy auditor market
development, establish centers to provide legal advice to homeowner associations (HOAs), train
bank officials, and develop a housing agency to further promote EE investments in the residential
sector.
The second period (2005–10) began after the adoption of the 2004 Lithuanian Housing Strategy
for Multi-Apartment Buildings Renovation Program. The Program attracted commercial banking
sector loans alongside state subsidies—which, although initially rising from 15 percent to 30
percent to 50 percent, could not be sustained. In addition, commercial banks were not keen to
take risks and issue renovation loans from their own resources, particularly after the financial
crisis began.
Therefore, during the third period (2010–13), the Joint European Support for Sustainable
Investment in City Areas (JESSICA) financing mechanism was introduced, which provided €227
million from EU structural funds and state budget in the form of renovation loans administered by
financial intermediaries and subsidies to cover 15 percent of investments. For several years,
utilization of this mechanism and its implementation was slow. However, project applications
began to accelerate after the introduction of municipal renovation programs based on the
EnerVizija model, an energy service company (ESCO)–type investment model that created an
additional alternative for city- or district-wide renovation programs (a) initiated by municipalities
and (b) managed by authorized building administrators, who became borrowers of the renovation
loans instead of apartment owners. It is supported with up to a 15 percent subsidy; later, further
incentives were introduced, including an additional 25 percent subsidy from the Climate Change
Fund and soft loans with a 3 percent fixed interest rate from the JESSICA funds.
These changes accelerate the modernization process in Lithuania from about 70 apartment
buildings a year to 490 buildings a year. Subsidy procedures for low-income persons were also
revised: a May 2013 law to provide support to low-income families was amended to require
eligible households to implement a renovation project or risk a cut in their state subsidy from 50
percent to 0 percent for heating costs for a period of three years. This has facilitated the
renovation decision-making process among low-income apartment owners.
Following these revisions, the pipeline of approved EE projects grew to 1,332 by the end of 2013.
This represented a substantial increase in demand from earlier programs, where only 1,075 multi-
apartment buildings were implemented from 1996 to 2012. Still, these figures together represent
only 4 percent of the 35,000 residential buildings built before 1993. Total investment in
renovated buildings was about Lt 395 million (€114 million), total energy savings was 82.25
GWh/year (8.22 percent of the program’s objective of 1000 GWh/year), and total CO2 reduction
was 20,880 tons/year (9.08 percent of the program’s objective of 230,000 tons/year)1.
1
Stebėsena (Monitoring) http://www.atnaujinkbusta.lt/index.php/lt/p/atnaujink-busta/apie-programa/stebesena.
The Residential Energy Efficiency Program in Lithuania Page 4 | May 2014
The following summarizes key lessons learned, and relevant recommendations for the buildings
renovation process in the Western Balkan countries, based on more than 17 years of Lithuanian
experience:
Renovating the residential sector is a challenging undertaking and may require decades to
fully implement. Begin small and test various administrative and delivery mechanisms,
and then scale-up successful approaches.
Support multi-apartment buildings owners in their collective decision-making process,
since it is difficult to reach consensus on investment and implementation decisions
without the majority’s consent. Simple majorities should be sufficient to make investment
decisions on HOA borrowing and contracting.
Where suitable funding sources exist, offer investment subsidies for low-income owners
to encourage their participation. However, make provisions for these subsidies to be
reduced if low-income owners do not support or refuse to vote in favor of the renovation
projects.
Establish a strong central competence center to help homeowners and HOAs, as the
renovation process can be very complex, requiring various tools and management.
Work closely with municipalities and involve them in the housing renovation programs —
including project selection and managing of municipal building renovation programs by
professional administrators. Explore ways to use municipal borrowing capacity to bundle
apartments and seek simplified contracting methods.
Create favorable loan products with affordable interest rates (about 3 percent) and
sufficient subsidies (up to 30 percent2) to reduce the investment payback periods up to 10
years, in order to make investments more attractive and stimulate demand. But ensure that
low-interest loans and grants can be made sustainable and appropriate sources of funding
identified.
2
The exact subsidy amount for each project will be determined based on renovation measures implemented and
energy savings achieved.
The Residential Energy Efficiency Program in Lithuania Page 5 | May 2014
1. Country and Sector Context
Country Context
Situated in Northern Europe, Lithuania is the largest of the three Baltic states, with an area of
65,300 km2. It had an estimated population of 3 million as of 2013,3 and its capital and largest
city is Vilnius. Lithuania regained its independence from the Soviet Union in 1990, and its
current constitution was approved by referendum in 1992. On 1 May 2004, Lithuania joined the
EU, meaning that significant changes to the legal system took place in little over a decade to meet
EU and international standards. The economy grew by 7 –8 percent per year after independence
until 2008.4 The financial crisis hit Lithuania as it did other Baltic states: 2009 saw a dramatic
14.74 percent decline in GDP. As of June 2013, the unemployment rate was 10.4 percent.5
Lithuania’s GDP per capita is €16,548 (2012), compared with the European Union average of
€24,198 (2012). Lithuania's climate is relatively cold. Average temperatures are -5°C in winter
and 17°C in summer. Some winters can be very cold: -20°C (-4°F) occurs almost every winter.
Winter extremes are -34°C (-29°F) in coastal areas and -43°C (-45°F) in the east of Lithuania.
Energy Sector
The country’s total energy generation capacity is 4,021 MW, of which 68.6 percent is thermal
plants, 25.5 percent hydropower plants, and 5.9 percent renewables. The dominant fuels are
natural gas, firewood, and other wood waste fuels. Following the shutdown on 31 December 2009
of the Ignalina Nuclear Power Plant, a Soviet-era nuclear station, the country's main source of
electrical power has been the natural gas–fired Elektrėnai Power Plant. Lithuania now very much
depends on imports—as of 2012, 63 percent of electrical power was imported—and proposals
have been made to construct another nuclear power plant in Lithuania. The energy balance is
summarized in Annex 2, broken down by resource and sector.
Although the country’s energy intensity fell by 50.4 percent during 1995–2004, energy intensity
per unit of GDP remains 2.5 times higher than the EU average. The National Energy (Energy
Independence) Strategy 2020–20506 cites energy independence as one of the country’s most
important goals for 2020; energy efficiency (EE) policies will be crucial to Lithuania’s efforts to
decrease energy imports and reach its goal of energy security.
Among all sectors, the largest share of final energy consumption belongs to the household and
transport sectors at 33 percent each. Households also consume the largest share of heat —54
percent—as shown in Figure 1.
District heating (DH) covers 63 percent of the total heated area in Lithuanian cities. 57 percent of
district heating companies are fully owned by the municipalities. The remaining 43 percent of DH
companies operate under various public-private partnership (PPP) arrangements. DH tariffs are
not fully cost-reflective, as increases in fossil fuel prices are not passed on to the consumers,
which makes many DH companies not financially viable. The government is taking a number of
3
http://www.lietuva.lt/en/about_lithuania/quick_facts
4
Department of Statistics of the Government of the Republic of Lithuania, National Accounts of Lithuania
(Vilnius, 2006), 20.
5
Darbo Rinka – Situacija. 26 April 2011. Retrieved on 12 September 2011. http://www.ldb.lt.
6
http://www.enmin.lt/en/activity/veiklos_kryptys/strateginis_planavimas_ir_ES/NIS_project_2010_2050.pdf.
measures to increase the financial sustainability of the DH sector, including using biofuels and
municipal waste to generate heat, accelerating the renovation of buildings to reduce heat waste,
and expanding cogeneration power plants.7
Figure 1. Share of Final Energy and Heat Consumption by Sector
Final Energy Consumption by Sector Heat Consumption by Sector
Household Industry
Industry Constructio
s 23%
20% n
33% Constructi
0%
on Fishing
Transport
Commerci 1% 0%
Households 0%
al and
54% Agriculture
public
services Transport Commercial 1%
13% 33% and public
Fishing Agriculture services
0% 0% 22%
Source: Official Statistics Portal, http://osp.stat.gov.lt/en.
The total length of the Lithuanian DH network is 2,497 km. Heat supplied by DH accounts for 51
percent of the housing stock. 26,636 buildings receive DH heat, of which 73 percent (19,357) are
multi-apartment buildings. The number of DH consumers increased from 477,462 to 657,818 (73
percent) in 2001–12. However, the number of consumers that have debts for DH-supplied heat
remained rather similar at 114,077 (17.3 percent) in 2012. Compared with other Nordic countries,
Lithuania has very high heat consumption for all buildings, as shown in Figure 2.8
Figure 2. Heat Consumption per Square Meter of Heated Area (kWh/m2)
Heat Consumption in kWh/m2
300
250
200
150
100
50
0
Ukraine Estonia Lithuania Latvia Poland Denmark Finland Norway Sweden
Source: Euroheat & Power, http://www.euroheat.org.
The average DH price in Lithuania is Lt 0.31 per kWh.9 The main fuel for heat production is
natural gas. Electricity and gas prices in Lithuania are about the same or slightly higher than the
EU average. However, heating prices in Lithuania are lower compared with other EU countries
because heat prices are a prominent subject in local politics, which often seems to lead to under-
recouping of costs and investments. In the Lithuania Regulatory Authority, National Commission
7
Lithuanian District Heating Association, “Lithuanian district heating: present situation and
barriers for developing” (2008). http://www.lsta.lt/lt/articles/view/103.
8
CŠT rodikliai 2012 metų statistika http://www.lsta.lt/files/statistika/19493_LSTA_Ukines%20veiklos
percent20apzvalga_2012_WEB.pdf.
9
€1=Lt 3.4528.
The Residential Energy Efficiency Program in Lithuania Page 7 | May 2014
for Control of Prices for Energy reviews DH tariffs, which must be justified by DH companies.
Three-year tariffs can be adjusted monthly or annually, and municipality councils must adopt a
resolution for each new tariff. Through strict regulation and political involvement, local
government officials attempt to keep heating tariffs low. However, high energy consumption in
the residential sector suggests that the energy subsidies are creating additional costs for the
government. Implementing EE measures in buildings would reduce unnecessary energy
consumption and help to reduce additional costs.
The Housing Sector
In Lithuania, more than 37,267 multi-apartments buildings contain three or more apartments.
Around 35,000 buildings were built according to the technical standard valid until 1993. 66
percent of the population lives in multi-apartment buildings built before 1993. Some 26 percent
of multi-apartment buildings were built before 1960, 65 percent in 1960–1990, and 9 percent
after 1990. Apartments are 97 percent private, and only 3 percent belong to municipal rental
stock.
Although the housing sector consumes 33 percent of final energy, it has the largest energy saving
potential—around 48 percent.10 Multi-apartment buildings consume about 9.5 TWh of energy per
year, but refurbished multi-family buildings can save about 4.75 TWh per year. Multi-apartment
buildings are divided into four categories according to their level of heat consumption:
1. 4.6 percent of buildings use a low amount of heat (10 kWh/m2 per month); these are
newly constructed or high-quality buildings.
2. 17.3 percent use an average amount of heat (15 kWh/m2 per month); these are newly
constructed or other insulated houses.
3. 55.7 percent of buildings use a high amount of heat (25 kWh/m2 per month); these are old
houses targeted for renovation.
4. 22.4 percent use a very high amount of heat (35 kWh/m2 per month); these are old, very
poorly insulated buildings.11
Most buildings are in poor condition and lack proper management. They have inefficient heating
systems and equipment and low-quality windows, roofs, and seals between panels. More than 57
percent of Lithuanians households are not satisfied with their houses, chiefly because of
expensive heating and insufficient comfort level.12
Average energy consumption in the residential sector was 187 kWh/m2 per year in 2008; for
houses built before 1993 it is 160–180 kWh/m2 per year. In the non-residential sector, average
consumption amounted to 244 kWh/m2.13 Although these figures fall below the EU averages,
there is still significant potential for energy savings due to Lithuania’s lower per-capita energy
use compared with EU levels. Before 2000, final energy consumption in households was
decreasing by 3.5 percent each year, but it increased by 2.8 percent per year from 2000 to 2008.
Firewood and other wood waste fuels accounted for 35 percent of residential energy
consumption, followed by heat (33 percent), electricity (14 percent), and natural gas (10
10
Presentation by Prof. Vytautas Martinaitis, Vilnius Gediminas Technical University.
11
Lithuanian District Heating Association, “A step ahead from fossil fuel to renewable resources.”
http://www.lsta.lt/files/Leidiniai/LSTa_knyga_15/LSTA_galutinis%20variantas_2013-04-29.pdf.
12
“PZU Lietuva” survey carried out by “Spinter tyrimai.”
http://www.pzu.lt/naujienos/pranesimai_spaudai/maziau_nei_puse_lietuvos_gyventoju_patenkinti_savo_turimu
_bustu/p371,print.1.
13
http://www.entranze.enerdata.eu.
The Residential Energy Efficiency Program in Lithuania Page 8 | May 2014
percent).14 The total savings potential by 2020 (with 2009 as the reference year) is 17 percent of
the final energy consumption, yielding 740 ktoe savings per year. 15 To achieve these targets will
require investing approximately Lt 2.8 billion to renovate the least efficient buildings, which
consume about 200 kWh/m2 per year. It would require implementing following EE measures:
insulation of walls/roofs, replacement of windows, modernization of heat substations, installation
of balancing valves/controls, and individual heat metering in each apartment.
Administration of Multi-Apartment Buildings
According to Lithuania’s Civil Code, the maintenance and administration of multi-apartments
buildings are compulsory. Multi-apartment building administration can be realized in the
following ways:
A homeowners’ association (HOA) may be established (about 17 percent of buildings are
managed by HOAs).
A joint activity agreement (JAA) may be created between apartment owners (about 3
percent of buildings are managed by JAA). Regulated by the Civil Code, the JAA is a
form of a partnership suitable for managing common assets. One main advantage of JAAs
over HOAs is that decision-making is based on JAA owners’ share of the property, rather
than the HOA practice of one vote per apartment owner.
If there is no established HOA or JAA, the municipality must appoint an Administrator16
of a multi-family building to carry out maintenance and administration (about 80 percent
of buildings managed by the Administrator17). Usually, appointed Administrators are
municipal housing maintenance companies.
Strategy and Legislation
Modernizing the residential sector in Lithuania is a key government priority several reasons:
Existing multi-apartment buildings do not comply with technical norms: a large share of
the 35,000 of multi apartment buildings were built according to construction norms that
were valid until 1993.
Housing stock is, by value, the largest national asset.
Household incomes are too low to allow for significant household investment in building
modernization.
Residential energy consumption is very high at 160–187 kWh/m2 per year.
Low-income owners require state budget subsidies to cover heating costs.
Lithuania’s National Energy Independence Strategy sets increasing efficiency of heat
consumption in households and public buildings as a national priority. It aims to gradually
improve the country’s heat production and transportation infrastructure by, for example, replacing
inefficient boilers and installing combined heat and power facilities.
Increased energy efficiency in buildings (particularly better insulation) would achieve 2–3 TWh
in annual heat savings in 2020 compared to 2011, while reducing consumption of natural gas in
14
NEEAP II, p. 5.
15
National Energy Independence Strategy, p. 34.
16
In accordance with applicable laws, Administrators of commonly used premises may be (a) an association of
multi-apartment buildings, (b) an administrator appointed by the municipality, or (c) a person authorized under
JAA concluded by apartment owners.
17
Other entities than HOA, as HOA also belongs to Administrator. See above definition of Administrator.
The Residential Energy Efficiency Program in Lithuania Page 9 | May 2014
district heating, heat production, and transportation infrastructure upgrades could achieve 0.4
TWh of savings annually.18 These measures would remove 1.1 million tons of CO2 equivalent
from the heating sector by 2020, which represents about 5 percent of Lithuania’s total 2011
greenhouse gas (GHG) emissions. Together, the foreseen initiatives would cost the government
sector Lt 11–13 billion (€3.2–3.8 billion), including the assets of state-owned companies, EU
structural funds, and other international support. An additional Lt 11–14 billion (€3.2–4.0 billion)
will be attracted from private investors. The investment is intended to reduce annual expenditure
on imported energy resources by Lt 3–4 billion (€0.87–1.2 million), or 3–4 percent of Lithuania’s
GDP.
The Lithuanian Housing Strategy was approved on January 21, 2004, by the Lithuanian
government.19 Its main goals are to:
1. Expand housing options for all social groups;
2. Strengthen the capacity of the housing sector in the housing market; and
3. Ensure effective use of existing housing, maintenance, upgrading, and modernization,
including the rational use of energy resources.
A summary of the legal framework regulating the renovation of multi-apartment buildings is
provided in Annex A.
Existing Barriers to EE
There are five main barriers to EE implementation in Lithuania:
Metering. The heat consumption of multi-apartment buildings is metered at each
building’s substation; very few buildings have individual heat meters or heat allocators
installed in the apartments. Heating costs are divided per apartment based on the heated
area of the apartment. District heating companies receiving metering readings from the
substations of the buildings, calculate each apartment’s bill based on the heated area, then
issue bills to the apartment owners.
Thermostatic controls. In the heating system of a Soviet-era apartment building, the
radiators are connected in series (rather than in parallel); the flow through one radiator
cannot therefore be regulated without affecting the flow through all others on the same
circuit. For this reason, radiators were not fitted with controls and homeowners overcame
excessive room temperature by opening windows. The fitting of building-level control
systems and balancing valves largely eliminates the problem. However, in order for
individual homeowners to have full control over their heating, it is necessary to install
bypass pipes for all radiators. The installation of bypass pipes is highly intrusive of the
living area and is undertaken only where all apartment owners in a building agree to so
request.
Heat allocation system. The design of the heating system within Soviet-era apartment
buildings is such that, while there are several circuits, each circuit serves multiple
apartments; this makes it extremely difficult to fit individual apartment heat metering.
However, simple heat-output measurement systems may be fitted to radiators that serve
as an encouragement to economize on heating use. These heat allocation systems can be
18
National Energy Independence Strategy of the Republic of Lithuania.
http://www.enmin.lt/lt/activity/veiklos_kryptys/strateginis_planavimas_ir_ES/Energy_independence_strategy09
19.pdf.
19
English version available at www.am.lt/VI/en/VI/files/0.386991001107419000.doc.
The Residential Energy Efficiency Program in Lithuania Page 10 | May 2014
used only in combination with thermostatic controls and where all homeowners in a
building support their introduction.
Financing. HOA and other management structures have restrictions on borrowing and
may not be sufficiently creditworthy for typical financiers, such as banks.
Competing priorities. Homeowners have limited incomes and many different priorities
for investment, of which EE may not be one. Convincing them to do EE, getting
sufficient homeowners to agree, carrying out an energy audit, and then arranging loans
and signing contracts—all this represents substantial transaction costs as well as time and
energy.
2. EE Programs Implemented and Results Achieved
Lithuania’s national EE policy and residential EE program may be understood in terms of three
time periods:
First Period: 1996–2004. In the first period the government implemented an Energy
Efficiency/Housing Pilot Project, then continued post-project renovation of multi-
apartment buildings. Before 1996, government institutions did not have much experience
in running complex modernization programs related with housing or public buildings
renovation.
Second Period: 2005–10. After joining the EU in 2004, Lithuania’s EE policies were
shaped by EU legislation. The Lithuanian Housing Strategy adopted in 2004 specifically
addressed the residential sector, and focused on increasing energy savings in households
through retrofits of multi-flat buildings. A Multi-Apartment Buildings Renovation
Program was adopted that provides loans or subsidies for efficiency upgrades in
dwellings.
Third Period: 2010–present. This period covers implementation that started with
introduction of the EU-funded Joint European Support for Sustainable Investment in City
Areas (JESSICA) financial instrument.
The remainder of this section discusses each period in turn; all three are summarized in Annex C.
First Period: Energy Efficiency/Housing Pilot Project (1996–2001) and Post-Project
Mechanism (2001–04)
The Energy Efficiency/Housing Pilot Project (EEHPP)20 was established in 1996 with the
partnership of World Bank, the Danish Ministry of Housing and Urban Development, and the
Netherlands Ministry of Foreign Affairs. At the time, the residential sector lacked access to EE
financing because government grants and credits for EE investment projects were limited.
EEHPP was one of the first projects to target EE financing through a credit line for homeowners
and HOAs (see Annex D for a discussion of the implementation scheme).
The project provided (a) credit for EE renovations of residential buildings and schools alongside
(b) and technical assistance (TA). Homeowners and HOAs could apply for loans through a
commercial bank. These loans were offered in litas (Lt 4 = US$1) at 11 percent interest rate with
a minimum 10 percent down payment (which could be replaced by investments already made)
20
World Bank, Implementation Completion Report (2002). http://www-
wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2002/03/29/000094946_0203200400521/Re
ndered/PDF/multi0page.pdf.
The Residential Energy Efficiency Program in Lithuania Page 11 | May 2014
and a maximum 10-year maturity. The bank received a fee comprising 1 percent of disbursements
and 3 percent of collections. There was a state grant for 30 percent of the loan principal, not to
exceed Lt 50 (US$12.5) per m2 of living area. In addition to the grant, HOAs and individual
homeowners were given a partial VAT exemption. The loan repayment was shared between
homeowners based on an agreement, usually according to apartment size. Low-income
households could use the existing heat subsidies to repay a portion of their EE investment loans.
The typical project payback period was reduced from 10–15 years to 5–10 years.
The TA component included setting up advisory centers, strengthening project implementation
through support for project preparation (energy audits/investment projects), training of local
consultants, training of banks, advising PIU staff, and reinforcing policy reform in the energy and
housing sectors. Advisory centers were formed to convince homeowners and HOAs to implement
EE by providing free technical, financial, and legal advice. The project initially allocated
US$15.1 million for residential buildings, US$2.3 million for schools, and US$2.9 million for
institutional development and technical assistance. Funds allocated for each component were later
adjusted during implementation because of low demand from HOAs and higher demand from
school renovation programs. The low HOA demand was due to (a) the relatively low number of
established HOAs that were eligible to receive loans and (b) the high interest rate of the
renovation loan.
The following TA package was developed and coordinated by the Housing Credit Foundation
(HCF):21
Banking consultants (TNO/Bouwcentrum/CEA, Netherland);
Energy consultants (TNO/Bouwcentrum/CEA, Netherland and Lithuanian consultants);
Technical monitoring consultants (i.e. for residential housing SWECO, Sweden; schools-
TNO/Bouwcentrum/CEA);
Social monitoring consultants (i.e. Ramboll, Denmark);
Public information consultants (COWI, Denmark);
Public institution HCF advisor (COWI, Denmark);
Training consultants (Knudsen and Soresen, Denmark);
Consultants on HOA organization (COWI, Denmark).
After the project ended in 2001, the government of Lithuania extended the program until 2003
using financing from the state budget. The extended program offered up to 30 percent capital
subsidies and covered debt service payments for low-income households. US$22 million was
invested for this project in 1996–2003, of which US$5.3 million was financed by a World Bank
loan. The project served 700 multi-apartment and 25 single-family buildings renovated by 2005.
The total investment was US$28.6 million, and the buildings’ energy consumption fell by 13–24
percent. Key lessons learned were that (a) even small EE investments (US$1,000 per apartment)
result in expected energy savings and that (b) homeowners are able to repay renovation loans (in
many cases the loans were repaid early).
21
The Housing Credit Foundation (HCF), a public entity, was established to act as a TA facility and
administrator for state loans and subsidies. In 2000 it was renamed and merged with other agency; in 2004 this
became the Central Project Management Agency, which transferred its housing-renovation program obligations
with five HOA advisory centers to the Ministry of Environment. On this basis, the Ministry of Environment
established the Housing and Urban Development Agency (HUDA), which became a TA facility and state
subsidy administrator during the second renovation period.
The Residential Energy Efficiency Program in Lithuania Page 12 | May 2014
After September 2005, the experience gained during the project was used to design an apartment
building renovation project called the “Multi-Apartment Buildings Renovation Program” under
the Lithuanian Housing Strategy Program.
Second Period: Multi-Apartment Building Renovation Program (2005–10)
From 2005 to 2010, this program sought to stimulate investments in EE measures by combining
commercial loans with up to 50 percent in state grants (the implementation mechanism is
reviewed in Annex E). The high level of state budget support was thanks to the country’s rapid
economic growth and generated budget income (before the financial crisis). The following
package of state support was developed:
15–30 percent (2005–07) state subsidies, depending on the EE measures implemented;
15, 30, or 50 percent (from February 2007) if C class22 energy performance was achieved;
Up to 50 percent (until March 2009), with limitation per square meter ;
Expenses for technical documentation preparation and works supervision could be
subsidized up to 50 percent.
A 100 percent subsidy to low-income families to support investment repayment via a heat
subsidy.
From September 2009 the state’s provision of 50 percent financial support declined to 15 percent.
Municipalities had limited financial resources to provide additional support to homeowners for
project preparation and implementation, and commercial banks were not very keen to risk issuing
their own renovation loans.
Still, the program supported low-income households by allowing them to participate in
renovation programs, ensuring high-quality implementation, and providing financial, technical,
and organizational advice for households, all of which was designed to increase the households’
quality of living conditions.
To encourage EE investments in households, in 2005–0923 the government set a preferential VAT
rate of 9 percent for residential construction, renovation, and thermal insulation services (the
standard VAT rate was 18 percent). This was paid for using funds from state and municipal
budgets, state-granted preferential loans, and special state funds.
For investment projects whose EE rating (see Table 1) was between 10 and 15 points, the state
offered a 15 percent subsidy; for ratings of 15–30 points, a 30 percent subsidy; and for ratings
over 30 points, a 50 percent of subsidy—with the condition that all external walls will be
insulated.
Although the Renovation Program was quite successful among apartment owners, the state
budget resources allocated to the program were limited and, thus, could not be sustained.
Therefore, implementation of the program had to be suspended.24 (The possibility of mobilizing
EU financial support for the 2007–13 programming period was explored.) During this period
about Lt 325 million was invested to renovate 375 multi-apartment buildings. The average
22
According to a Building Energy Performance Certificate classification.
23
NEEAP II, p. 17.
24
Lithuania Ministry of Environment and Housing and Urban Developme nt Agency. 2011. “JESSICA in
Lithuania: An Effort to Renovate Apartment Blocks.” Presentation at JESSICA Networking Platform, Brussels,
31 March.
http://ec.europa.eu/regional_policy/archive/funds/2007/jjj/doc/pdf/JESSICA/31032011_7JESSICA_nwp_31031
1_lt_apartment_blocks.pdf.
The Residential Energy Efficiency Program in Lithuania Page 13 | May 2014
investment per building was about €290,000 (Lt 1 million) and per apartment about €5,800 (Lt
20,000). The program achieved energy savings of 62–65 kWh/m2 per year, or about 30–46
percent.
Table 1. Energy Efficiency Indicators
Energy
efficiency
Modernization measure rating
1. Heating and hot water systems repair or modernization
1.1. Replacement or modernization of heating substation or boiler (individual boilers) 8
1.2. Heating and hot water systems repair or modernization, installment of individual heat 12
allocation system and thermostatic valves in the apartments, etc.
2. Replacement of windows
2.1. Replacement of windows (replacing at least 80% of windows) 15
2.2. Replacement of windows (replacing 50-80% of windows) 8
3. Repair of roofs, modernization, additional insulation, set of new slope roofs (excluding 5
the installation and furnishing of premises)
4. Balcony glazing 3
5. Facade walls insulation
5.1. Insulation of external walls 16
5.2. Insulation of external walls in the rear of the building 10
Third Period: Housing Modernization Program through JESSICA (2010–present)
In 2009, Lithuania established a lending mechanism for residential EE using funds from
JESSICA, a financial instrument developed by the European Commission and the European
Investment Bank (EIB) in collaboration with the Council of Europe Development Bank (CEB),
and funded through the European Regional Development Fund (ERDF).25 This allowed Lithuania
to provide low-interest loans without burdening the state budget.
More specifically, in June 2009 the Lithuanian Ministry of Finance and Ministry of Environment
signed a Funding Agreement with the EIB establishing an EIB-managed JESSICA Holding
Fund.26 The initially approved fund amount was €227 million, of which €127 million was
allocated from the ERDF and €100 million came from national match funding. The rules and
conditions for participation in the JESSICA-based mechanism were approved by the government.
The Housing and Urban Development Agency (HUDA) of the Ministry of Environment was
appointed as administrator of these rules and conditions (including administration of the
accompanying state subsidy provided to the participating owners of apartments). For the
disbursement and administration of credits to renovation project owners, EIB selected as financial
intermediaries—or “urban development funds” (UDFs)—three commercial banks (AB Šiaulių
bankas, AB Swedbank, and AB SEB bankas) and state-owned Public Investments Development
25
The ERDF is one of two EU Structural Funds dedicated to funding local infrastructure projects.
http://europa.eu/legislation_summaries/glossary/structural_cohesion_fund_en.htm.
26
http://ec.europa.eu/regional_policy/thefunds/instruments/jessica_en.cfm.“Contributions from the European
Regional Development Fund (ERDF) are allocated to Urban Development Funds (UDFs) which invest them in
public-private partnerships or other projects included in an integrated plan for sustainable urban development.
These investments can take the form of equity, loans and/or guarantees. Alternatively, managing authorities can
decide to channel funds to UDFs using Holding Funds (HFs) which are set up to invest in several UDFs.”
The Residential Energy Efficiency Program in Lithuania Page 14 | May 2014
Agency (VIPA) with its partner the Central Project Management Agency (CPMA).27 The
implementation scheme of this JESSICA-supported program is presented in Annex F.
The interest rate on the loan is fixed at 3 percent; the period of the loan is tentatively set between
10 and 20 years (the repayment period may be adjusted in consultation with the financial
intermediaries).
The standardized package of measures to be implemented comprises the following:
Replacement of deteriorated wooden windows with modern, double-glazed, sealed-unit
plastic windows;
Insulation of external walls (including foundation), typically with 15 cm of expanded
polystyrene and rendered finish;
Insulation of roof, typically with 20 cm of expanded polystyrene and watertight finish;
Replacement of external doors;
Glazing of balconies;
Fitting of balancing valves within the heating distribution systems inside the apartment
building (this avoids preferential heating of areas closest to the district heating inlet).
New Mechanisms Introduced for the JESSICA Loans
However, despite the evident benefits of EE upgrading in terms of comfort levels and heating
cost savings, the take-up rate of the JESSICA-supported national program was very low. The
following reasons for the low take-up rate have been identified in the existing methodology,
which requires the following:
The apartment owners must decide (by majority within the building) on the project
preparation and implementation. In practice, the apartment owners have different social
status, often lack knowledge regarding EE, and are reluctant to make such decisions.
The apartment owners must be proactive in commissioning a technical project,
conducting tendering and contracting, and supervising the upgrading works. This is time-
consuming and requires skills that the apartment owners may not have.
The apartment owners must arrange for a loan with a commercial bank and accept
liability for its repayment. In the current difficult economic climate, homeowners are very
unwilling to take on long-term loan commitments.
The approach of upgrading single multi-apartment buildings may also be considered
disadvantageous in terms of achieving the lowest works cost for smaller quantities.
The government has since amended the program to allow building administrators to take out
loans for the renovations. This facilitates arrangements with the lending institutions and places
the management of the loans in professional hands. The loans will be repaid through building
administrators out of the savings residents make on heating payments, which are collected by the
mechanism of the monthly building administration and communal services fee.
State Grant Subsidy and Other Additional Assistance
State grant subsidies are available that will cover 15 percent of upgrading costs. The subsidy is
payable on completion of the EE measures and receipt of a Class C or above Energy Performance
27
VIPA was established to act as a financial intermediary together with CPMA, and both are owned by the
Ministry of Finance. VIPA acts as a publicly-owned financing institution providing loans for renovation
projects, whereas CPMA performs a technical assistance role related to renovation project selection and
appraisal, verification of expenditure, and on-the-spot inspections during implementation.
The Residential Energy Efficiency Program in Lithuania Page 15 | May 2014
Certificate. The state grant subsidy is administered by the Housing Energy Saving Agency
(HESA)28 alongside the JESSICA-based loan.
The Climate Change Program29 is offering an additional 15-percent-plus-10-percent subsidy (until
end 2014) for EE upgrade projects that achieve energy savings of 40 percent or more.
TA is also available to cover 100 percent of technical documentation costs30 and 100 percent of
project management costs.
In addition, municipalities located in the Ignalina Nuclear Power Plant (INPP) Region receive
both (a) a 10 percent additional investment subsidy and (b) TA for project implementation from
an EU-funded Ignalina Nuclear Power Plant decommissioning program. Under this program, the
EnerVizija methodology was developed (see following section).
Supplementary assistance to low-income families is as follows:
Low-income families normally receive state assistance with domestic heating expenses.
For this reason, in the context of EE upgrading, the national EE program provides for
these families to receive funding of loan repayments;
Householders who have registered with their municipality and qualify for supplementary
assistance will receive full compensation of the loan repayment cost through the
municipality, which in turn is compensated by the State;
On 05.2013 Law on support to low-income families was amended by possibility to
decrease the amount of support for low-income persons. In case low-income persons do
not participate in adopting decision to renovate multi-apartment building and refuse to
participate in renovation, they could loose from 50 percent to 100 percent of state subsidy
until renovation project is implemented for a period of 3 years. Such provision
encouraged low-income persons to become more active and vote in favor of renovation.
EnerVizija Methodology
Lithuania has developed a new program for EE upgrades called “EnerVizija” (“energy vision”)
that seeks to overcome the previously described drawbacks of the existing national program for
EE. Its key features are as follows:
Building renovations are initiated by the municipality, which appoints a project
administrator. This makes the municipality responsible for project implementation and
ensures the projected results. Homeowners' consent is required to vote for the renovation
investments proposed by municipality.
Loans to fund the upgrading are taken centrally, normally by the building administration
company, and repaid through each apartment’s monthly building -management fees. This
enables the financial arrangements with the banks to be made by professional officials.
More importantly, it removes the burden of personal loans from the homeowners and
allows the building administration company to assume the credit risk.
Recognizing municipal institutions lack the capacity to manage major construction
projects, TA by a consultant is provided—in particular for the preparation of technical
28
For renovation projects carried out under the previous Renovation Programme, technical assistance was
provided mainly by HUDA. In 2013 this function was transferred to the Housing Energy Saving Agency
(HESA), which in Lithuanian is Būsto Energijos Taupymo Agentur a, or BETA.
29
The Climate Change Program is a special program aimed at financing measures to mitigate climate change. It
is funded by revenues from the sale of carbon credits, GHG emission allowance, and other related sources.
30
Until 2013, this was limited to 50 percent of the costs of technical documentation.
The Residential Energy Efficiency Program in Lithuania Page 16 | May 2014
documentation to be used for procurement and supervision of works, contracting, and
management of renovations.
The building upgrades are based on standardized packages of EE measures selected on a
cost/benefit basis. The procurement of contractors to carry out the renovations may be
done by appointed building administrator for groups of buildings sharing a common
design or location, thereby taking advantage of economies of scale. This grouped
approach can also facilitate EE improvements in the DH system.
In other respects, EnerVizija makes use of elements of the existing national program: the
JESSICA soft loans (loans with a below-market rate of interest), the 15 percent state subsidy, the
additional subsidy provided by the Climate Change Program, and administrative oversight by the
HESA of the Ministry of Environment and CPMA (Central Project Management Agency), which
manages the Ignalina Program.
The EnerVizija methodology is being applied for the first time in the municipalities of the INPP
Region and has now been transposed to the entire Multi-apartment Renovation Program
implemented through the JESSICA mechanism.
The overall cost of EE renovating the selected residential buildings of one municipality program
is likely about €6.0 million. The funding of this cost will be met by a combination of loans and
grant subsidy.
In energy service company (ESCO)–type schemes such as EnerVizija, the financial saving on
energy consumption is the main contributor to the repayment of the upgrading costs.
During the design of EnerVizija, municipalities selected their least efficient buildings based on
records of heating consumption. With TA by professional engineering services, energy audits and
investment projects based on cost/benefit analysis were prepared for these buildings. After the
implementation of the proposed EE measures in the selected multi-apartment buildings, their EE
levels will be raised to Class C; the average saving in heating consumption is calculated to be
more than 40 percent, and in some buildings it will be more than 50 percent.
The investment repayment period—which was calculated for each building individually
depending on its efficiency before and after upgrading—varies from 10 to 20 years. The
repayment calculation allows for an immediate 10–15 percent saving by apartment owners after
upgrading. The situation before and after upgrading, taking advantage of the ESCO-type model,
is illustrated in Figure 3.
Figure 3. Distribution of Costs to Consumers Before and After Renovation
At the outset of the project, the Project Administrator opens a credit line with the UDF; this is
aggregated for all investments foreseen within the buildings concerned. The Project
Administrator uses the credit line to pay invoices submitted by the relevant contractor(s) during
execution of the upgrading works; the Consultant assists the Project Administrator in ensuring
The Residential Energy Efficiency Program in Lithuania Page 17 | May 2014
that all works are correctly implemented and all invoices are accurate. The state grant subsidy and
the Climate Change Program subsidy are then disbursed to the UDF though the HESA according
to work completed up to that point. For municipalities in the INPP region, the CPMA pays for
completed investment projects out of its co-financing contribution.
The beneficiary’s payment declaration must be supported by (a) contractor invoices and
documents indicating that all work has been completed for the building(s) concerned; and (b)
Energy Performance Certificates indicating the requisite level of EE after the upgrading has been
achieved (not less than Class C).
Certain small areas within the selected multi-apartment buildings, particularly on the ground
floor, are used as commercial premises (services, shops, offices, etc.). According to official data
from the Center of Registers,31 the proportion of commercial premises in each building varies but
does not usually exceed more than 5 percent of the total area. Because it is obviously impractical
to upgrade the buildings without including the commercial premises, in the treatment of JESSICA
loans by the EIB and of grants from the state authorities, the de minimis principle is applied—
meaning the commercial premises concerned receive equal treatment with neighboring residential
properties.
Procurement
All procurement of construction works and services is conducted according to the Public
Procurement Law, with the Project Administrator acting as contracting authority. Where possible,
it is conducted electronically via the electronic catalogue of the Central Purchasing Organization
(CPO).32 The CPO has concluded framework agreements with contractors to perform a standard
package of typical multi-apartment building renovation work. In the electronic catalogue,
municipalities can order specific types of renovation work without entering into lengthy
procurement procedures. The same technique is used to procure consulting services in relation to
building certification, preparation of renovation design or performance of construction
supervision services.
For preparation of technical specifications and (if necessary) procurement documents, the Project
Administrator can be provided with TA by the Commercial Partner.
Procurement of contractors to carry out EE renovations is limited to those EE measures foreseen
in the investment projects and eligible for the state subsidy. Unless otherwise required by the
Municipal Architect, all measures will be least-cost solutions.
Results of the EnerVizija Model under the JESSICA Mechanism
Structures created under the EnerVizija Program were later on formalized in the Law on State
Support for Housing of 2013. The amendments stipulated an additional alternative, namely, one
for implementing city- or district-wide multi-apartment renovation projects (districts are smaller
units within municipalities). This alternative is currently promoted by the Ministry of
Environment and supported by municipalities. It is expected that the new implementation
alternative will accelerate the renovation of multi-apartment buildings across Lithuania. During
2013, municipalities presented a first list of 1,680 multi-apartment building projects in various
residential districts. Of these,
31
http://www.registrucentras.lt/jar_p_en.
32
http://www.cpo.lt/en.
The Residential Energy Efficiency Program in Lithuania Page 18 | May 2014
HESA approved 1,332; of these,
917 apartment owners agreed to the projects; of these,
UDF approved 490 projects; of these,
322 projects have entered the procurement phase; and of these,
194 projects have commenced.33
These results show that the EnerVizija model can successfully promote the EE renovation
process.
3. Lessons Learned
The lessons Lithuania has learned in designing and implementing programs to address its
particular challenges may be broken down into five areas: (a) financing and repayment
arrangements; (b) procurement; (c) TA/services; (d) implementation arrangements, including
selection/eligibility criteria; and (e) technical and other aspects. Each is presented in terms of an
issue and a solution.
Financing and Repayment Arrangements
Renovation Loan Sources and Conditions
Issue: The Second Period (2005–10) renovation program was based on state grants and
commercial bank loans. But although the grants could in theory cover up to 50 percent of EE
renovation costs, the state budget resources allocated to the program were insufficient; and due to
the economic crisis, it became difficult for apartment owners to borrow from commercial banks.
Program implementation had to be suspended. In addition, practical experience from all three
renovation periods tells us that the banks are not eager to take risks on renovation projects. Even
in the case of JESSICA financing (during the Third Period), no commercial banks have expressed
a desire to co-finance renovation loans.
Solution: The source of financing was switched to a combination of (a) EU Structural Fund
resources allocated to Lithuania under preferential terms (a 3 percent interest rate), (b) a 15
percent state grant, and (c) an additional 25 percent grant from the Climate Change Program. This
model requires less state budgetary resources.
Extended Borrowing Options
Issue: In the case of JESSICA financing, direct borrowing by apartment owners created an
administrative burden for the financial intermediaries, which were required to assess each
homeowner’s creditworthiness. This was especially difficult when the apartment “owner” was a
juvenile or dead and nobody had taken over the apartment. In such cases it was impossible to
provide renovation loans because there was no legal owner.
Solution: Each successive renovation program has gradually increased the options for
representing apartment owners during renovations of buildings where the HOA is not established.
Current legislation allows the Administrator or municipal entity to receive renovation loans on
behalf of apartment owners, or on their own behalf but for the benefit of apartment owners. When
this happens, apartment owners are not obliged to take a loan —and loan repayment risk is
33
“Renovacija: kaip sekasi jūsų savivaldybei?” http://www.am.lt/VI/index.php#a/14046.
The Residential Energy Efficiency Program in Lithuania Page 19 | May 2014
assumed by the Administrator, who collects fixed monthly maintenance payments from the
apartment owners.
Financing of Low-Income Apartment Owners and Attracting Their Participation
Issue: Low-income individuals who receive subsidized energy services are not motivated to
invest in EE measures that will reduce energy bills. As a result, renovation programs do not often
receive the support of low-income apartment owners.
Solution: After renovation, all low-income apartment owners receive a subsidy covering 100
percent of renovation costs, including project preparation costs and loan interest payments.
Although previous legal acts contained this provision, they failed to attract sufficient interest
from low-income apartment owners. On 16 May 2013, the Law on Social Assistance for Poor
Families and Single Residents was amended to state that any low-income persons who fail to
participate in the decision to renovate a multi-apartment building and refuse to participate in
renovation may lose from 50 percent to 100 percent of subsidies for their energy costs for a
period of three years.34 This provision has encouraged low-income apartment owners to become
more actively involved in the renovation process and to vote in favor of renovation.
Delayed Repayments of the Loan
Issue: Some of the apartment owners fail to repay loans on time, especially during the last few
repayment periods.
Solution: A mechanism agreed specifying how and when the loan repayment can be deferred or
extended. Debt service accounts could be used to compensate the lender in the interim.
Procurement
Centralized Procurements
Issue: Preparing procurement documents, and in general executing the public procurement
process, requires sufficient know-how and is time-consuming.
Solution: Where the borrower is a municipal entity or building administrator, all services related
to renovation and associated preparatory work must be procured through the Central Purchasing
Organization (CPO).35 The CPO administers an electronic catalogue 36 of centralized public
procurements that follows national public procurement procedures established in the Law on
Public Procurement. The CPO prepares tender documents and concludes Framework Agreements
with many potential contractors and consultants based on their qualifications and unit price
proposals. The catalogue list various types of services including renovation with or without
additional design consulting, technical supervision of construction work, technical design advice,
assessments to obtain required energy certificates, and investment plan preparation. All listed
works and services can be purchased directly by the renovation project beneficiary ordering the
services. It is expected channeling purchases through the CPO in this manner will facilitate and
34
Article 21(8) of the Law on Social Assistance for Poor Families and Single Residents ( Official Gazette, 2003,
No. 73-3352; 2006, No. 130-4889; and 2011, No. 155-7353).
35
Clause 2.9 of Resolution No. 1725 of the Government of Lithuania ( Official Gazette, 2009, No. 156-7024).
36
The CPO website is at http://www.cpo.lt; the catalog of renovation works and services is at
https://2007.cpo.lt/katalogas.
The Residential Energy Efficiency Program in Lithuania Page 20 | May 2014
accelerate procurement. Detailed instructions have been prepared for using the CPO catalogue to
source renovation services.37
Technical Assistance/Services
State Support for Preparatory Work
Issue: Previous legislation stipulated that grants covering the costs of EE preparatory work—
project preparation, technical supervision, and project administration—could be awarded only
after the renovation was completed.38 This meant that apartment owners were required to fund all
preparatory work—not to mention the cost of the construction—in advance. This situation
obviously did little to encourage EE upgrades.
Solution: The Law on State Support for Housing has established two new ways to finance
preparatory work: (a) renovation loans39 and (b) a grant facility for sending invoices related to
preparatory work to the Housing Energy Saving Agency (HESA) for immediately payment from
state funds.40 These changes give apartment owners more flexibility for renovation because they
no longer need to save money to pay for preparatory work.
Standard Forms and Building Designs
Issue: State institutions and financial intermediaries require extensive documentation from
beneficiaries because the renovation process is complicated.
Solution: The following standard forms have been developed, along with instructions on how to
fill them in:
Grant application and payment request forms, which make it easier to provide the data
required to (a) confirm state support eligibility and (b) make payments;41
Standard technical designs for renovating common types of apartment buildings, which
accelerates the renovation process and reduces the cost of preparing technical
documentation;42
A decision-making template that apartment owners can use when seeking approval for
renovation projects and applying for loans (such templates have facilitated apartment-
owner HOA meetings and helped financial intermediaries evaluate apartment owners’
applications);43
Investment plans;44
Standard tender documentation;45
37
Ministry of Environment, Pastatų modernizavimo paslaugų užsakymas COP kataloge, at
http://www.am.lt/VI/files/0.308370001370528276.pdf.
38
The cost of preparatory work varies with the size of the investment. It can range from 2 percent to a maximum
of 7 percent of the total investment, with an average of about 4 percent.
39
Article 13 (1)(1) of the Law on State Support for Housing.
40
Article 13 (1)(2) of Law on State Support for Housing, Clause 24-28 of the Rules for State Support.
41
Other forms (Kitos formos), http://www.atnaujinkbusta.lt/index.php/lt/p/pagalba-igyvendinant/naudingi-
dokumentai/standartizuotos-formos.
42
Typical technical designs (Tipiniai projektai), http://www.atnaujinkbusta.lt/index.php/lt/p/pagalba-
igyvendinant/naudingi-dokumentai/tipiniai-projektai.
43
Protocol forms (Protokolu formos), http://www.atnaujinkbusta.lt/index.php/lt/p/pagalba-
igyvendinant/naudingi-dokumentai/protokolu-formos.
44
Annex A of Description of the Procedures for the Preparation of Renovation (Modernization) Projects of
Multi-apartment Buildings (Official Gazette, 2009, No. 136-5963, No. 138).
The Residential Energy Efficiency Program in Lithuania Page 21 | May 2014
An Authorization Agreement that should be concluded between apartment owners and the
municipal entity in case the latter employs a new implementation model in future;46 and
A template for the Energy Efficiency Program to be approved by municipalities.47
Building the Capacity of Municipal Entities
Issue: The introduction of a new model in which municipal entities are responsible for renovation
has raised concerns about whether they are able to implement and administer citywide renovation
projects.
Solution: HESA prepared and delivered a training program to municipal entities regarding
renovation program implementation issues such as legal framework, finance management, and
procurement.48 HESA also (a) developed software called “Enervizija IS” to help municipal
entities handle payments received from apartment owners and (b) is strengthening its regional
representation to make TA more accessible to all municipalities.
Implementation Arrangements, Including Selection/Eligibility Criteria
More Options for Project Implementation, and More Eligible Borrowers
Issue: Early renovation programs were designed to encourage apartment owners directly;
municipal institutions were not authorized to pursue any planning of their own. In addition, the
number of potential projects was not very high, so all institutional efforts sought to increase, but
not manage, the volume of renovation projects.
Solution: This changed following the introduction of the new renovation model based on the
EnerVizija experience. In 2013 the Ministry of Environment asked all municipalities to present
lists of multi-apartment buildings that could be renovated, and preparation and implementation of
investment projects for many of these multi-apartment buildings has already started (see Section
2). Under the new model, responsibility for project implementation and related loans is assumed
by the municipality entity/administrator; apartment owners are not required to take any initiative,
and their payments for renovation works are treated like any other ordinary payments for utility
services. However, these municipalities’ programs target primarily multi-apartment buildings
with the lowest EE levels. Therefore, if any other multi-apartment buildings are interested in
renovation, they would have an option to initiate renovation individually and use other
implementation models where the borrower is an HOA or an apartment owners’ representative.
Control of Renovation Quality
Issue: A key concern of apartment owners has been the quality of renovation works. HESA has
historically performed certain functions related to evaluation of renovation quality, but these
45
Annex B of Description of the Procedures for the Preparation of Renovation (Modernization) Projects of
Multi-apartment Buildings (Official Gazette, 2009, No. 136-5963, No. 138); Annexes 1–9 of the Description on
the Procurement of Technical Supervision Services and Construction Works (Official Gazette, 2010, No. 64-
3174).
46
Order of the Ministry of Environment dated 3 July 2013 ( Official Gazette, 2013, No. 72-3618).
47
Ministry of Environment, Energinio efektyvumo didinimo daugiabučiuose namuose programos patvirtinimo
forma, http://www.am.lt/VI/index.php#a/13123.
48
BETA, Mokymai adminstratoriams, http://betalt.lt/lt/mokymai-ir-seminarai.
The Residential Energy Efficiency Program in Lithuania Page 22 | May 2014
functions have been too fragmented. The risk of poor-quality renovation was deemed “high” in a
study by the Lithuanian District Heating Association.49
Solution: Along with the supervisory functions performed by HESA and the State Territorial
Planning and Construction Inspectorate, officers appointed by municipalities will also monitor
renovations. The Ministry of Environment has also started a separate training program for the
State Territorial Planning and Construction Inspectorate during which the newly amended legal
framework is addressed, along with particular problems detected in prior renovation work.
Additionally it is planned to amend construction agreements such that 10–15 percent of the
construction price will be withheld for a year and later used to remedy construction deficiencies.
Other possibilities include (a) insuring the quality of renovation work and (b) requiring that
contractors pay a deposit that would be returned upon satisfactory completion of the job. All
these changes require both amendments to current legislation and agreements with financial
intermediaries.
Technical and Other Aspects
Impact of Declining Energy Consumption on Central Heating Systems
Issue: Large-scale EE renovations in cities may affect central heating production and supply
systems due to the rapid decrease in heat energy consumption. The National Energy
Independence Strategy anticipates that heat consumption will decline by 30–40 percent through
planned renovation of multi-apartment buildings until year 2020.50
Solution: Cities planning large-scale EE renovations are required to coordinate with heat supply
companies to allow them to plan required infrastructure investments. However, it is expected that
the negative effect on DH will be diminished by the annual growth in numbers of heat consumers,
as heating prices should not increase significantly after renovation.51
4. Relevant Implications for the Western Balkans
Similarities and Differences
There are a number of institutional and regulatory similarities between the Western Balkan
countries and Lithuania because all were formerly part of the Soviet Union and applied quite
similar housing construction and maintenance practices. Multi-apartment buildings in the Balkans
are very similar to those built in Lithuania before 1993. As in Lithuania, people living in these
buildings have different living and social conditions, which makes it very difficult to make
renovation decisions. They have similar EE problems with heating in wintertime, although the
overall heating season in the Western Balkan countries is somewhat shorter than in Lithuania and
cooling loads are higher.
49
Lithuanian District Heating Association, “Tesingiausia priemon ė renovacijai – paskata,"
http://www.lsta.lt/files/studijos/2012 percent20metu/A-77_V.Stankevicius_renovac_paskata.pdf.
50
Clause 70 of the National Energy Independence Strategy, approved by Resolution of the Parliament dated 26
June 2012 (Official Gazette, 2012, No. 80-4149)
51
Lithuanian District Heating Association, “Lietuvos šilumos tiekėjų asociacijos pranešimas. Renovavus
daugiabučius gyventojų mokėjimai už šilumą tikrai sumažės,” http://www.atnaujinkbusta.lt/lt/nv/lsta-
pranesimas.
The Residential Energy Efficiency Program in Lithuania Page 23 | May 2014
The main difference is that the Western Balkan countries have less DH coverage and more single-
family homes than in Lithuania. In Lithuania, because the government focused on renovating the
most inefficient multi-apartment buildings built before 1993, it granted only minimal support to
single-apartment buildings. However, experience has shown that making renovation investment
decisions in single-apartment buildings is much easier than in the multi-apartment buildings—
especially when appropriate financial products are available and energy cost savings can be used
to repay EE renovation loans in less than 10 years.
Replicating Lithuanian Solutions in the Western Balkans
Early Lithuanian EE programs focused on encouraging HOAs and homeowners to take the
initiative to renovate their buildings. Eventually planners recognized it was more efficient to
initiate and manage the renovation of multi-apartment buildings on behalf of their owners, with
the state or municipality assigning professional project managers.
An analysis of Lithuania’s experience and lessons learned suggests that the following solutions
can be replicated for Western Balkans residential EE programs:
Adopt a long-term housing strategy with expected quantified results. This will both focus
the EE renovation process and make it more sustainable. The legal and regulatory
framework should be amended to cover program design, subsidies and social support
mechanisms for low-income families, program management and quality control systems,
and regulations for project implementation (such as construction laws, guidelines and
building certification regulations). The optimal subsidy would be up to 30 percent,
depending on the EE measures implemented: the higher the savings achieved, the higher
the proportion of the grant could be provided.
Create a competence center. It is recommended at the national level to establish an
institution to coordinate TA while developing tools and methodologies for choosing and
implementing renovation projects. These tools might include templates for investment
plans and energy audits, typical project designs, procurement solutions, standard
procurement documents, decision-making templates for apartment owners, loan
administration tools, monitoring of renovated buildings, and publicity and visibility
campaigns. Technical assistance can be obtained from the state or international donors or
from the EU-funded Instrument for Pre-Accession Assistance (IPA) for EU candidate
countries in the Western Balkans.
Secure loan resources from international financial institutions (IFIs) and state resources
to (a) provide partial grants to reduce interest rates and (b) cover part of renovation
investments. Financial intermediaries could be both private commercial banks and public
development banks or public agencies. (Competence centers could also act as financial
intermediaries for the state if qualified; renovation processes require program
management and technical knowledge in addition to loan administration abilities.) As for
the start-up of residential programs, Balkan countries can attract IFIs to act as holding
funds and help them set up implementation mechanisms, share knowledge from other
countries, and attract EU and multilateral donor funds.
Support multi-apartment building owners in the decision-making process. It is difficult to
reach agreement on investments among owners who have different economic conditions
and social interests. According to Lithuanian law, decisions to renovate multi-apartment
building must be made by a simple “50 percent plus one” majority of votes of all
apartment owners. If less than half of apartment owners attend the meeting, it is not
possible to make a decision; a second meeting may then be held with the same agenda
The Residential Energy Efficiency Program in Lithuania Page 24 | May 2014
and same voting principle—50 percent plus one. To facilitate the decision-making
process in the Western Balkans, it is suggested that in the second meeting decisions be
made by the simple majority of owners participating in the meeting—not a majority of
owners in the building (such a model exists in Estonia). On the other hand, in Lithuania,
some renovation process stakeholders believe that renovation decisions should be adopted
in a different way. If the state or a municipality decides that certain multi-apartment
buildings have to be renovated, they could be added to specific lists without the prior
consent of apartment owners. If the owners wish to be excluded from the renovation
program, they would have to adopt a separate decision expressly voting against
renovation.
Provide investment subsidies for low-income owners—while at the same time advising
them that their existing energy bill subsidies will be reduced if they do not support, or
refuse to vote in favor of, the renovation. Lithuanian experience shows that the possibility
of receiving benefits for a short time, rather than a longer undefined period, increases
motivation.
Partner with municipalities. Give municipalities a strong role in (a) selecting renovation
buildings and (b) managing entire municipal renovation programs, including loan
repayments by entities assigned on behalf of the owners of multi-apartment buildings—
especially the least efficient buildings in terms of heating and energy consumption.
Involve and train project administrators and DH suppliers, helping them to implement
ESCO-type projects as was done under the Lithuanian EnerVizija model. ESCO-type
partners can facilitate greater achievement of real savings. However, it should be done in
close coordination with DH companies, which will need to produce and supply a lower
amount of heat to the renovated buildings and make necessary investments on the heat
production side.
Develop an energy consultants market capable of producing energy audits, advising on
investment plans, and supervising renovation works. Technical support can be provided
to develop ways to prepare energy audits, perform cost-benefit analyses, and train energy
consultants.
Develop a sufficient construction market with contractors of relevant competence as well
as a system for inspecting the quality of renovations. Contractors’ and engineers’ liability
should be defined in law.
The Residential Energy Efficiency Program in Lithuania Page 25 | May 2014
References
Central Project Management Agency, the website of the JESSICA program:
http://www.cpva.lt/lt/veikla/jessica-programa.html.
Europos socialiniai, teisiniai ir ekonominiai projektai (ESTEP). January 2009. JESSICA
Evaluation Study for Lithuania. European Investment Bank (EIB).
http://www.eib.org/attachments/li-evaluation-study.pdf.
Europos socialiniai, teisiniai ir ekonominiai projektai (ESTEP). April 2009. Supplementary
JESSICA Evaluation Study for Lithuania. EIB.
http://www.eib.org/attachments/documents/supplementary-study-on-JESSICA-
instrument-for-energy-efficiency-in-lithuania.pdf.
Housing and Energy Saving Agency (HESA) (in Lithuanian, Būsto Energijos Taupymo
Agentura, or BETA) website: http://betalt.lt/lt/apie-programa.
Housing and Energy Saving Agency (HESA). Stebėsena (Monitoring).
http://www.atnaujinkbusta.lt/index.php/lt/p/atnaujink-busta/apie-programa/stebesena.
Housing and Urban Development Agency website: http://www.bkagentura.lt.
Lithuanian District Heating Association. “A step ahead from fossil fuel to renewable resources.”
http://www.lsta.lt/files/Leidiniai/LSTa_knyga_15/LSTA_galutinis
percent20variantas_2013-04-29.pdf.
Lithuania Ministry of Environment. Main Legal acts regulating renovation of multi-apartment
buildings. http://www.am.lt/VI/index.php#r/1596.
Lithuania Ministry of Environment and Housing and Urban Development Agency. 2011.
JESSICA in Lithuania: An Effort to Renovate Apartment Blocks.” JESSICA Networking
Platform, Brussels, 31 March.
http://ec.europa.eu/regional_policy/archive/funds/2007/jjj/doc/pdf/JESSICA/31032011_7
JESSICA_nwp_310311_lt_apartment_blocks.pdf .
Monitoring report. 2011. “2010 metais atnaujintų (modernizuotų) daugiabučių namų atnaujinimo
(modernizavimo) programos įgyvendinimo stebėsena.” UAB "Miesto renovacija.”
http://www.am.lt/VI/index.php#a/11730.
The Residential Energy Efficiency Program in Lithuania Page 26 | May 2014
Annex A. Legal Framework
The main laws regulating the modernization of multi-apartment buildings in Lithuania are as
follows:
1. The Civil Code of the Republic of Lithuania. The Civil Code states that the maintenance
and administration of multi-apartments buildings are compulsory.
2. The Lithuanian Housing Strategy approved by the Government of the Republic of
Lithuania (Resolution No. 60) on January 21, 2004.
3. The Law for State Support to Obtain or Rent House and Modernize Multi-Apartment
Buildings defines conditions to provide state support.
4. The Multi-apartment Buildings Modernization Program defines objectives, tasks,
implementation measures, financing sources and implementation mechanisms.
5. The Regulations on State Support for Modernization of Multi-Apartment Buildings and
on Supervision of Implementation of Renovation Projects define procedures for providing
state support and functions to renovation process participants.
6. The Rules on Credit Taken to Modernize Multi-Apartments, and on Interest
Compensation Rules, for Persons with the Right to House Heating Subsidies define credit
and interest coverage procedure.
7. The Rules for Projects Preparation for Multi-Apartment Buildings Renovation define
investment plan preparation and approval procedures as well as requirements for
construction design.
8. The Procurement Rules for Construction Works and Technical Supervision Services for
Multi-Apartment Building Renovation regulate construction work and procurement of
technical supervision services, when procurement is executed by the body that does not
belong to the purchasing organization (such as HOA, administrators, apartment owners
under JAAs, etc., for which the Law on public procurement is not applicable).
9. The Homeowners Association Law defines establishment and management of HOA for
collaboration in the residential sector.
10. Building Code and Certificates: Lithuania developed its first performance-based building
code in 2005 following the adoption of the EU Energy Performance of Buildings
Directive (EPBD) 2002/91/EC in 2002, which requires member states to use energy
sources economically and promote energy efficiency.
11. The Technical Regulation of Construction STR 2.01.09:2005 was adopted under the
authority of the Ministry of Environment and the Ministry of Energy. A performance-
based code covering single and multi-family residential buildings, it requires an energy
frame calculation to establish the maximum allowable energy consumption of new
buildings. The code addresses low maximum u-values, thermal bridging linear value
requirements, heat recovery considerations, mandatory commissioning and testing of
boilers and HVAC systems, and compulsory training of energy inspectors. 52 The code
enforces conformity to the regulations during construction via third-party inspection.
12. The Building Energy Performance Certificate requires that all new and existing buildings
be certified starting from 2007.53 It evaluates the performance of each building based on
its energy consumption. After the evaluation, the building is grouped according to one of
nine classes, from A++ (very efficient) to G (inefficient). 54 According to the regulations,
52
http://www.gbpn.org/databases-tools/bc-detail-pages/lithuania.
53
http://www.buildingsdata.eu/results.
54
http://www.pastatu-sertifikavimas.lt.
The Residential Energy Efficiency Program in Lithuania Page 27 | May 2014
the energy class of new buildings should be at least C, and renovated buildings should not
be less than D. The certificates are valid for 10 years. 55 The certificates are available to
the public on the online database.56
13. According to the Regulations on the Inspection of Boiler, Heating, and Air-Conditioning
Systems and Methodologies, boilers should be inspected every 2–3 years. Heating
installations with boilers with a capacity over 20 kW and older than 15 years should be
inspected separately. Air conditioning systems with a capacity higher than 12 kW should
be inspected every 3 years. The government covers the cost of the inspections, and
residents can request inspections free of charge.57 One year after the implementation of
the scheme, limited interest in inspection and lack of information on the consumer side
were the biggest challenges for the legislation.
55
http://www.pastatu-sertifikavimas.lt/placiau.html.
56
For the database: http://www.spsc.lt/cms.
57
Implementation of the EPBD in Lithuania (2012). http://www.buildup.eu/publications/38188.
The Residential Energy Efficiency Program in Lithuania Page 28 | May 2014
Annex B. Lithuanian Energy Balance 2012
All amounts in terajoules
Crude oil,
Hard Firewood, Biogas other
coal wood and and inputs
and agricultural liquid Secondary to Natural Renew Petroleum
Energy balances Total lignite Peat waste biofuel solid fuel refineries gas able58 products Electricity Heat
Production of 65216 709 41533 5088 4379 13507
primary
energy
Imports 590537 8067 4623 1699 1724 387233 111200 45171 30820
Exports 345768 580 153 4871 3614 228 3417 325913 6992
Final 202464 7698 275 28898 2668 1683 22946 68295 32115 37886
consumption
Industry 40215 4396 40 3406 52 592 11648 1153 10110 8818
Construction 1662 8 157 490 626 307 74
Transport 65905 2537 1130 61768 270
Agriculture 455 18 496 21 1156 1994 644 226
Fishing 92 82 10
Commercial 25705 1305 112 1372 79 361 2652 202 11263 8356
and public
services
Households 64330 1968 123 23467 709 5670 2470 20412 20412
Source: Statistics Lithuania, Energy Balance (2012).
58
Hydropower, wind, solar, geothermal energy, and energy from chemical processes.
Annex C. Parameters of Lithuanian Housing Modernization Programs and Projects
Parameters 1st period (1996–2004) 2nd period (2005–10) 3rd period (2010–present)
Program The Energy Efficiency/Housing Multi-apartment Buildings Renovation Multi-apartment Buildings Renovation
Pilot Project 1996–2000 and post- Program Program through JESSICA with new
59
project mechanism 2000–04 model based on “EnerVizija” initiative
Objectives The project objectives were to This program implements the Lithuanian Housing strategy, whose objective is to ensure
provide credits for EE renovation the effective use, maintenance, and modernization of housing and the efficient
of residential buildings and consumption of energy. The program seeks to renovate multi-apartment buildings built
schools, and to deliver technical before 1993.
assistance. Program objective until end of 2020: reduce heat (fuel) consumption in renovated
buildings by not less than 20 percent, achieve annual heat savings of no less than 1000
GWh, and reduce CO2 annual emissions by not less than 230 thousand tons.
Budget Total: Lt 70 million Total: Lt 325 million Total: € 227 million
Source of US$10 million credit line from Loans from Participating €127 from EU Structural Funds
funding loans World Bank; Commercial Banks own resources; (ERDF)
US$10.6 million revolving fund State grants €100 from state budget resources
US$8.0 million (state budget
grants)
Source of State budget State budget JESSICA HF
funding Municipal grant for multi-apartment blocks State budget
subsidies renovation local programs (optional). Special Program for Climate
60
Change
Management Ministry of Finance; Ministry of Environment; Ministry of Finance as Managing
of Funds Housing and Urban Development Agency Authority of Structural Instruments;
(subsidies management) JESSICA Holding Fund managed by
EIB;
59
EnerVizija initiative ….
60
Climate Change Programme is a special programmed aimed at financing measures aimed at managing climate change. Funding sources of Climate Change Programme are
funds received for the sale of assigned amount units of greenhouse gases, green house gas emission allowance and other relates sources.
The Residential Energy Efficiency Program in Lithuania Page 30 | May 2014
Parameters 1st period (1996–2004) 2nd period (2005–10) 3rd period (2010–present)
Ministry of Environment as
Intermediate Body of Structural
Instruments;
Housing Energy Savings Agency
(subsidies management)
Financial Commercial Banks: Commercial Banks: Selected UDFs:
intermediaries AB Hermis bankas AB SEB Vilniaus bankas, (a) Commercial Banks
AB bankas SNORAS, AB Šiaulių bankas
AB Šiaulių bankas, AB Swedbank
AB PAREX bankas, AB SEB bankas
AB SAMPO bankas, (b) State owned institutions:
61
AB “Hansabankas” ir VIPA/CPVA
AB DnB NORD bankas
Implementing Public Institution Housing Budgetary organization Housing and HUDA until 2013;
Agency Credit Foundation (HCF) Urban Development Agency (HUDA) from 2013 Public Institution Housing
62
Energy Saving Agency (HESA)
Project Beneficiaries: HOA; Single Beneficiaries: HOA; apartment owners Beneficiaries: Apartment owners
eligibility and Family Home Owners (from 2009) represented by Administrator;
selection Majority of owners vote for Majority of owners vote for modernization Administrator of building acting in its
63
criteria modernization 50 percent plus 50 percent plus one own name but for the benefit of
65
one Constructed before 1993 apartment owners ; Municipal
66
Energy audit and investment
64
implementation if C class shall be entity
project assessment achieved Approved municipal program and
Investment Plan assessment selected buildings (optional
61
From 2013.
62
HUDA was replaced by HESA from 2013.
63
Some commercial banks require 100 percent of homeowner consent unless the loan is backed by a guarantee.
64
According to Building Energy Performance Certificate classification.
65
This option was available as of June 2012 following the amendment of the Law on State Support.
66
This option was available as of January 2013 following the amendment of the Law on State Support.
The Residential Energy Efficiency Program in Lithuania Page 31 | May 2014
Parameters 1st period (1996–2004) 2nd period (2005–10) 3rd period (2010–present)
Current debts of apartment owners introduced in 2013)
assessment Majority of owners vote for
67
modernization 50 percent plus one
Constructed before 1993
at least Energy Efficiency Class D
Investment Plan assessment
Current debts of apartment owners
assessment
Subsidy State grant of 30 percent of the 15–30 percent (2005–07) state support 15 percent of total investment into
parameters loan principal but not 15–30–50 percent (from 02.2007) energy-efficiency measures if at
exceeding US$12.5 (Lt. 50) per depending on energy efficiency measures least class C achieved
2
m of living area for energy efficiency measures Additional 25 percent from Climate
Low-income families could use implementation if C class68 will be Change Program;
existing heat subsidies to pay achieved Additional 15 percent in case of
for a portion of the loan 50 percent (until 03.2009) with limitation renovations in Zarasai, Ignalina,
repayment per square meter Visaginas municipalities under
Technical documentation preparation and Ignalina Program69
for expenses of supervision of works can 100 percent of costs for technical
70
receive 50 percent subsidy. documentation
100 percent to low-income families 100 percent costs of project
support for investment repayment from management costs
heat subsidy 100 percent to low-income families
support for investment repayment
from heat subsidy
67
At least 50 percent plus one; some financial intermediaries require 55 percent or 60 percent of the votes.
68
According to Building Energy Performance Certificate classification.
69
Ignalina Programme is EU financial instrument dedicated to support decommissioning of Ignalina Nuclear Power Plant and related measures in Lithuanian energy sector. Main
part of the support is given to Ignalina Nuclear Power Plant and particular state institutions. Remaining part thereof may be distributed to municipalities situated in the Ignalina
Nuclear Power Plant region.
70
50 percent of costs for technical documentation until 2013.
The Residential Energy Efficiency Program in Lithuania Page 32 | May 2014
Parameters 1st period (1996–2004) 2nd period (2005–10) 3rd period (2010–present)
Loan
parameters:
Interest 11 percent Variable VILIBOR/EURIBOR + ~1.5 percent Fixed 3 percent p.a.
8.5 percent (from 26-10-2014) margin or fixed
Maturity Up to 10 years Up to 20–25 years Up to 20 years
Currency Litas Litas/Euro Euro
Down- Minimum 10 percent which could Minimum 5 percent Up to 5 percent of the project value from
payment be replaced by investment already apartment owners
made
Credit risk Government assuming credit Credit can be insured in the state owned Loan tied to the apartment, not the
risk of the loans to HOA; insurance company UAB “Busto pasklolu owner
Commercial banks bearing full draudimas”;
credit risk for lending to owners In some cases, banks do not require to
of single family homes and insure credit, but instead 100 percent
individual apartments owners renovation decision
Insurance fee depends on percentage of
owners who took renovation decision: if
50–60% vote, the insurance fee is 0.52%;
if 60–70% vote, the fee is 0.44%; if more
than 70% vote, the fee is 0.37%
Number of 700 (multi-apartment buildings 375 (multi-apartment buildings) 83 loan agreements ~€8.1 million (by
projects renovated) 2013)
implemented 25 (private building owners) During 2013 after approval of
or pipeline alternative ESCO type model:
status for 1332 projects approved by HESA
ongoing 917 project apartment owners took
programs decisions
490 projects approved by UDF
The Residential Energy Efficiency Program in Lithuania Page 33 | May 2014
Parameters 1st period (1996–2004) 2nd period (2005–10) 3rd period (2010–present)
322 projects started procurements
194 projects started renovation
71
works
Average Loans averaged close to One multi-apartment building ~€290,000 (Lt. 1 million)
72
investments US$1,000 per apartment and One apartment €5.800 (Lt 20,000)
US$31,500 per building
2
Energy Decreased household energy Energy savings of 62–65 kWh/m per year (~30–46 percent);
savings consumption by 13–24 percent 82.25 GWh/year (8.22 percent of the Program objective of 1000 GWh year)
73
CO2 reduction N/A 20,880 tons/year (9.08 percent of the Program objective of 230,000 tons/year)
71
Renovacija: kaip sekasi jūsų savivaldybei? http://www.am.lt/VI/index.php#a/14046
72
Based on projects implemented before 2103.
73
Stebėsena (Monitoring) http://www.atnaujinkbusta.lt/index.php/lt/p/atnaujink-busta/apie-programa/stebesena
The Residential Energy Efficiency Program in Lithuania Page 34 | May 2014
Annex D. The Energy Efficiency/Housing Pilot Project 1996–2004:
Implementation Mechanism
World Bank
€ Credit line € Credit line
repayments
Subsidies
Ministry of Finance
International
National Budget
Donors € Tranches of Credit line € Tranche
repayments
€ Subsidy
€ Subsidy allocations Financing Intermediaries
allocations
€ Technical Assistance Municipality Participating Banks
€ Heating Cost Subsidy € Renovation
loan € Loan repayments
for Low Income People
Technical
Assistance Facility:
TA package, advice/ Multi-apartment Buildings Renovation Projects
Implementing
guidance/training (estimated savings as recourses of loan repayments)
Agency (Housing
Credit Foundation)
BORROWERS:
HOA, Single Family Homes Owners
€ Subsidy € Invoice
up to 30% of investment payment
Energy Audit,
Investment Project, Renovation
Technical Works
Supervision Services
Engineers-
Contractors
Consultants
The Residential Energy Efficiency Program in Lithuania Page 35 | May 2014
Annex E. Multi-Apartment Buildings Renovation Program, 2005–10:
Implementation Mechanism
Subsidies Ministry of Environment, Housing
Modernization Program
National Budget
State guarantee,
€ Subsidy equity investments
€ Subsidy
allocations allocations Loans from Commercial
State Owned Banks
Housing Loans
Insurance Company
Participating Banks
Municipality
Loan Insurance
Competence € Renovation € Loan repayments
Center: projects appraisal, monitoring and control, loan
Implementing publicity, advice/training
Agency (HUDA),
€ Low Income People;
Subsidy for: heating,
down-payment,
insurance fee,
loan repayment
and interest Multi-apartment Buildings Renovation Projects
(estimated savings as recourses of loan repayments)
€ Subsidy up to 50% (until 2009.09)
€ Subsidy up to15% (from 2009.09) BORROWERS:
+ € Subsidy for project preparation € Invoice
HOA, Apartment Owners under Joint Agreement payment
Investment Project,
Renovation
Technical
Works
Supervision Services
Engineers-
Contractors
Consultants
The Residential Energy Efficiency Program in Lithuania Page 36 | May 2014
Annex F. JESSICA: Implementation Mechanism
European Commission
DG REGIO
Subsidies
€ ERDF
National Budget; Ministry of Finance
Privatization Fund; LEIF Climate Change ERDF Managing Authority / OP recourses
20% of energy Program (2007-13); Ministry of Environment
products excise duty Intermediary for OP priority
€ Subsidy € ERDF+National
€ Subsidy up to 15% (from 2012.01)
allocations
€ Subsidy up to 25% (from 2013.06)
Holding Fund (manager EIB)
€ Subsidy
allocations Tranches of € ERDF+National € Tranche
Municipality repayments
€ Heating Cost Subsidy Financial Intermediaries UDF
for Low Income People to repay credit
(Can be decreased in case refuse
to take renovation decision upon Selected Selected Public Financial
Municipal proposal) Commercial Banks Institution (VIPA/CPMA)
Competence
Center: municipal program assessment, monitoring and € Renovation
Implementing control, publicity, guidance/training loan € Loan
Agencies (ESHA), repayments
€ Subsidy up to 15% ;
+ € Subsidy for project preparation Multi-apartment Buildings Renovation Projects,
and management; (difference from estimated-fixed energy consumption
and actual is used for loan repayment)
Central BORROWERS:
Procurement Procurement of Consulting HOA, Apartment Owners, Buildings Administrators or
Organization services and Renovation works Municipal Entities under ESCO type model
e-catalog
€ Invoice
payment
Investment Plan,
Renovation
Technical
Works
Supervision Services
Engineers-
Contractors
Consultants
The Residential Energy Efficiency Program in Lithuania Page 37 | May 2014