|Financing Solution Name||Financing Models for Housing Associations|
|Financing Solution Description||One of the challenges implementing energy retrofitting measures in housing associations is to get the projects financed. ESCO is financing by private funds provided by private companies, where the realized energy savings in the specific apartments are used to repay the investment. This financing method does not demand increase in the rent in apartments and does not demand financial guaranties from the Municipality. However by this method the tenants do not save energy costs, until the investment is repaid. An example of ESCO financing can be building integrated solar cell projects, which typically have a payback period of 10 years and have a lifetime of 25 years.|
During the first 10 years the tenants will not get any reduction in their energy costs, but from year 10 to year 25 the tenants will get reduction in energy costs without having an increase in the apartment rent.
During the last years the ESCO companies have also started financing energy saving measures with a payback period up to 20 years (insulation works etc).
One of the barriers with ESCO financing compared to traditional financing methods is, that the ESCO financing is not very transparent. In traditional projects the housing associations know the specific costs for administration, financing, consulting, implementation. In ESCO projects the financing company takes care of all costs connected to the energy retrofitting, and the housing association has not knowledge to the specifications, as they are used to have.
|Financing Solution Reference||https://go-happi.dk/happi-d3-2-financing-models-for-housing-associations/|
|What type of financial instrument is it?||ESCO|
|Does the Financing Solution targets any of these asset classes?||Housing Associations|
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