Regional Development Agency ARLEG S.A.

Katarzyna Matijczak, Murcia, 17.10.2013

Location

of the practice

Country Poland

NUTS 1

NUTS 2 Lower Silesia

City Poland (good practice is

widespread in Poland)

Lower Silesia

Voivodeship

WHAT IS A THERMOMODERNISATION FUND

AND A THERMOMODERNISATION BONUS?

They are funds allocated from the State Budget

which are administered by Bank Gospodarstwa Krajowego

[National Economy Bank].

They are intended to support all eligible subjects in performing

actions aiming at lowering energy consumption

and the amount of energy carriers in both communal

and social & living resources.

WHAT IS A THERMOMODERNISATION FUND

AND A THERMOMODERNISATION BONUS?

Thermomodernisation of buildings is usually highly profitable,

yet it requires bearing substantial costs right from the beginning.

That is why, many building owners cannot carry out

thermomodernisation without extra financial support.

The Act on Supporting Thermomodernisation Investments creates

a system for bulding owners which aims at facilitating the process

of financing thermomodernisation so as to finally lower energy

consumption and costs of both heating buildings and producing

domestic hot water.

PRINCIPLES OF SUPPORTING THERMOMODERNISATION

The system of financial help includes thermomodernisation undertakings

in the following buildings:

- multi and single-family buildings irrespective of their legal form

of ownership which means: private, commonhold, housing associations,

company, city and other buildings except for those belonging to budget

entities,

- social collective accommodation buildings such as nursing homes,

halls of residence, dormitories, hostels, retirement homes and the like,

- buildings used for public activities of local government units such

as schools, commune offices and the like,

- local heat sources (housing estate boiler houses and thermal power

stations) or district heating substations and local heating networks

with the power of 11.6 MW.

PRINCIPLES OF SUPPORTING THERMOMODERNISATION

Provisions under the Act on Supporting Thermomodernisation

Investments are also connected with the overall and partial

replacement of an existing energy source with an unconventional

one e.g. solar panels, heat pumps, boilers using biomass

and the like.

The Act provides for a commercial bank loan to be the main source

of financing for thermomodernisation investments. The owner

of the building may finance 100% of investment costs by means

of such a loan. Both the share of the loan in overall costs

and the credit period shall be negotiated between the investor

and the bank granting the loan.

The thermomodernisation bonus is a form of help which an investor may

get from the State Budget and it constitutes 20% of the used loan yet there

are two conditions which must be met:

- it cannot constitute more than 16% of the overall costs

of the undertaking,

- it cannot constitute more than the expected value of two-year savings

determined by means of an energy audit.

There is a rule that forbids combining statutory loans with EU funding.

An energy audit is the ground for statutory funding. It is a document which

includes a technical & economical analysis which determines what shall

be improved in the building to be modernised. The audit points out

technical actions that may be taken and which ones of the planned

actions may bring best economic benefits (optimal solutions).

One can apply for a thermomodernisation bonus provided that such

thermomodernisation will substantially lower the yearly demand

for energy, especially:

- in buildings with only the heating system being modernised –

by at least 10%,

- in buildings which underwent thermomodernisation of the heating

system after year 1984 – by at least 15%,

- in remaining buildings – by at least 25%,

- in local heat sources and local heating networks – decreasing

annual primary energy losses by at least 25% and by replacing local

heat sources and heating networks with a connection

to a centralised heat source (of a city network) – lowering costs of

purchasing heat supplied to the building by at least 20% per annum.

Those who can apply for a thermomodernisation bonus include

owners and administrators of:

- residential buildings,

- collective accommodation buildings,

- public utility buildings owned by local government units

and used by them for performing their public tasks,

- local heating networks,

- local heat sources.

ACQUIRING A LOAN AND A THERMOMODERNISATION BONUS

After deciding upon thermomodernisation, a building owner submits

all necessary documents to the bank which is going to grant the loan.

The documents are as follows:

- a loan application with all annexes required by the bank,

- a thermomodernisation application, and

- an energy audit.

The bank which may grant a loan is the one which has an agreement with

Bank Gospodarstwa Krajowego [National Economy Bank] on granting loans

and procedures of transferring thermomodernisation bonuses provided for

in the Act. Detailed requirements concerning loan applications

and the form of loan collateral are determined individually by each loan-

granting bank.

EFFECTS OF THE THERMOMODERNISATION SUPPORT SYSTEM

EXAMPLE

Residential building of 11 storeys, total floor space 4,880 m2.

Thermomodernisation costs 612.,000 PLN, including:

Own funds 122.,000 PLN (20%)

Loan 490.,000 PLN (80%)

2 x monthly savings 132.2 thousand PLN

Thermomodernisation bonus 98,000 PLN (20% of the loan)

Monthly loan instalment with interest 3.9 thousand PLN (with interest at 12%)

Before thermomodernisation

annual costs of heating and domestic hot water 192.7 thousand PLN

After thermomodernisation

(in the first year of repaying the loan)

annual costs of heating and domestic hot water

126.6 thousand PLN

Annual loan service payments

(12 monthly instalments) 46.8 thousand PLN

Overall costs

(heating + loan service) 173.4 thousand PLN

After repaying the loan

annual costs of heating and domestic hot water 126.6 thousand PLN

EFFECTS:

After modernisation, during the loan repayment period, all expenses

connected with heating and domestic hot water are lowered by

around 10%, and they ultimately lower by 34% after the loan has been

repaid completely.

The thermomodernisation investments support system is beneficial to all interested parties. It allows an investor to start and carry out investments

which aim at improving conditions of using a residential building

and at the same time lower all the connected costs.

Starting thermomodernisation investments also directly influences the State by lowering the overall demand for heat. It indirectly leads to

improving ecological conditions and lowering CO2 emissions into

the atmosphere. Thermomodernisation is done using relatively low funds

from the State Budget, yet at the same time, some of the expenses come

back to the budget as taxes on purchased devices and materials as well

as taxes on contractors' income.

THE RULES OF SUPPORTING RENOVATIONS

The Act concerns supporting not only investments connected with

thermomodernisation but also with renovation. Help in form of

a renovation bonus is particularly directed at multi-family residential

buildings which have been used since earlier than 14 August 1961 and its

object is:

- overall renovation of a given building (without renovating flats),

- windows replacement and renovation of balconies even when the only

user is the owner of a given flat,

- alteration of a building leading to its improvement,

- providing building with installations and devices required in buildings

which are currently being open to use in accordance with technical

& construction regulations.

The Act does not concern renovations of single-family buildings.

The renovation bonus may be grated to an investor who is a natural person,

a housing association or a social housing association.

The bonus (as a form of help for the partial repayment of a loan) constitutes

20% of the used loan, yet no more than 15% of the cost of the undertaking.

It is granted if the following conditions are met:

- the renovation undertaking cost indicator is between 0.15 to 0.70 (the ratio

of renovation costs per 1m2 of floor space to the price of 1m2 determined for the purposes

of calculating the guarantee bonus).

- the renovation will lower the annual demand for energy necessary

for heating the building and heating water by at least 10% and when the cost

indicator is over 0.3 – by at least 25%. Lowering the demand for energy is not

required when the building meets the requirements connected with energy

savings determined in valid provisions of technical&construction regulations.

- it is impossible to get a renovation bonus if there is another bank loan with

a thermomodernisation or renovation bonus or if there is any other EU funding.

According to the hereinabove mentioned date for the buildings eligible

for a renovation bonus (year 1961), the Act concerns buildings built about

15 years after the II World War and some older ones, yet it does not concern

any newer buildings e.g. large-panel buildings.

For the buildings mentioned in the Act, there is a possibility of getting a bonus

sometimes more easily than as a thermomodernisation bonus. It is worth

highlighting, that almost any works carried out as thermomodernisation may

also be done as renovation.

The Act states that loans cannot be allotted for financing works for which

there has been granted another loan with a thermomodernisation

or renovation bonus. It means that the same scope of works cannot be

financed from two sources. However, there are no obstacles for using both

a renovation and a thermomodernisation loan for works in the same building,

as long as they are to finance different types of works.

Thank you for your attention!