Bank aus Verantwortung

The financing of energy efficient

refurbishment: KfW‘s offer for

municipalities.

FORUM ANNUEL DU CFDD

Accélérer la rénovation énergétique des bâtiments

Brussels, 16.03.2017

Dr. Dominik Bach

1. KfW at a glance.

1948 – Financing reconstruction

Photo sources: See footnotes at the back

Promotional mandate defined by KfW Law

›3

More than 65 years of KfW

Financing with a public mission

› Promotional bank of the Federal Republic of Germany

› Established in 1948 as Kreditanstalt für Wiederaufbau

› Shareholders: 80% Federal Republic,

20% federal states

› Headquarters: Frankfurt am Main

Branches: Berlin, Bonn and Cologne

› Representative offices: 80 offices and representations

worldwide

› Balance sheet total 2015: EUR 503 billion

› Financing volume 2016: EUR 81.0 billion

› 5,966 employees (2015) 1

› Best long-term rating: AAA/Aaa/AAA

1) The average number of employees including temporary staff but without

members of the Executive Board and trainees

›4

Today – Improving economic, social, and ecological living conditions

Focus on three mega-trends

Globalization and

technical change

Demographic change

>EUR 150 milliondomestic lending volume per day

Climate and environmental

protection

›5

6

A bank with a wide array of functions

We promote

development

Promotion of

developing countries and

emerging economies

International business

We promote Germany

Promotion of housing construction

and refurbishment, improved

accessibility and education

Financing of municipal infrastructure

and global loans

Promotion of SMEs,

business founders,

start-ups, energy efficiency,

innovation

Domestic promotion

We support

internationalisation

International

export and project finance

Promotion of environmental and climate protection

Mittelstandsbank Kommunal- und

Privatkundenbank/Kreditinstitute

KfW IPEX-Bank KfW Development Bank,

DEG

2. KfW offer for municipalities and

municipal companies.

›7Annual Due Diligence Meeting on March 20, 2014

Germany consists of approximately:

› 300 (rural) districts,

› 100 urban districts,

› more than 11,000 municipalities

8

Administrative divisions of GermanyKfW promotes the municipal level

9

Loan Application ProcessHow to profit from KfW‘s promotional programs

Municipalities

Municipally-owned

enterprises, non-profit

organizations

Direct Application

No collaterals

Loan agreement and disbursement

Application via

customer‘s bank

Loan agreement

and

disbursement

Transfer of

approved

application to KfW

Refinancing loan

Customer‘s Bank

Passes credit through

Collaterals

Overlooking the Big PictureFocussing on quarters/neighbourhoods for urban energy refurbishment processes

Basis: Energy concept of the German Government (2010)

Targets of a KfW program: „initiate broad und locally adjusted investments in energy efficiency and

renewable energies (…)“

Neighborhood approach for energetic urban renovation is explicitly emphasized and corroborated in

the governmental „action program climate protection 2020“

(Federal Ministry for the Environment and Building, 2014)

Refurbishment of

Buildings

Energy Supply Systems

Renewable Energies

Urban Planning and

Construction

Real Estate Industry

Demographic Change

Integrated approach for promotion of energy efficiency in buildings KfW-Promotional programmes

›11

New building Existing building

Energy Efficient

Refurbishment- loans

- grants for investment

- grants for planning and

technical assistance/

supervision

Energy Efficient

Construction

Buildings (residential/ public/ commercial): promotion of energy efficiency measures

Investments

Residential building Non-residential building

New building Existing building

Energy efficient Construction and Refurbishment

(public buildings)

KfW- Energy Efficiency Programme (commercial

buildings)

KfW- Financing Initiative to support energy transition

Buildings: use of renewable energy

InvestmentsKfW-programs for renewable energy; EE construction/refurbishment

BAFA (market stimulation)

Concept Development: financial support / grants

Management: financial support / grants for implementation & co-ordination manager

Urban districts: concept development and implementation of energy efficiency measures

Investments: soft loans for the improvement of energy efficiency in energy supply

KfW‘s public sector programmes

Programs for the public sector / municipalities and municipal companies

Energy Efficient Urban Redevelopment

Integrated Neighbourhood Concepts and Implementation Management (Grant)

2016: EUR 10.2 m promotional volume

Efficient Supply in Urban Districts

Enhancement of supply systems‘ energy efficiency (heat, cold, water, sewage) (loans)

2016: 143.4 m

Energy Efficient Construction and Refurbishment

energy efficient construction and refurbishment of non-residential buildings in municipalities (loans)

2016: EUR 591.3 m

3. KfW offer for municipal buildings

specifically.

13

KfW-Promotional programs for energy efficiency in buildingsOverview

loans

Municipalities /

Municipal companies

Non-residential Buildings

Corporates,

Self-employed

Residential Buildings

Energy -efficient

Construction &

Refurbishment

loans / grants

„Everyone principle“

KfW-Efficiency House and

Single Measures

customers

Program

available for

Energy -efficient

Construction &

Refurbishment

KfW-Efficiency House and

Single MeasuresKfW-Efficiency House and

Single Measures

14

15

Energy-Efficient Construction and RefurbishmentProgram facts

Main Targets

› Reduction of overall carbon

dioxide pollution and energy

expenditures for non-

residential buildings through

energy efficient renovation

and through energy-efficient

new buildings

Beneficiaries

› Municipalities, municipally

owned companies, non-profit

organizations

Designated Use

Investments in energy-efficient new buildings or in energy-efficient

refurbishments of non-residential buildings in municipalities (e.g.

schools, town halls, administrative buildings)

› single measures (e.g. thermal insulation of exterior walls, roof,

basement ceiling, modernization of heating system) or

› Full refurbishment according to legal energetic standards for a

comparable new building

› Combination of loan and - in case of full refurbishment – grant

(according to achieved energetic level)

16

Non-residential buildings – public sector clientsEnergy-efficient Construction and refurbishment for non-residential buildings (construction introduced in 10/2015)

KfW-Efficiency House 70

KfW-Efficiency House 70

KfW-Efficiency House 55

Promotional Level based

on the Energy Efficiency

Ordinance

KfW-Efficiency House 100

KfW-Efficiency House

Monument

Single Measures

--

17,5 %max. 175 EUR/sqm

5%

max. 50 EUR/sqm

7,5%max. 100 EUR/sqm

10 %max. 100 EUR/sqm

5%max. 50EUR/sqm

--

17,5 %max. 175 EUR/sqm

5%

max. 50 EUR/sqm

7,5%max. 100 EUR/sqm

10 %max. 100 EUR/sqm

Interest RatePartial Debt

Relief

Risk-adjusted

interest rate

from 1% p.a.

effective*+

Promotional Loan

Risk-adjusted

interest rate

from 1% p.a.

effective

*

+

*as per

08.03.2017

Co

nstr

ucti

on

Re

furb

ish

me

nt

Promotional

volume

2016:

EUR 458m

Volume 2016:

EUR 133m

Risk-adjusted interest rate

From 1% p.a. effective

• Only small differences compared to promotional offer for corporate sector non-residential buildings:

• Municipalities: direct loans from KfW (no on-lending) from 0.05% p.a. effective interest rate (without ceiling)

• Public companies/non-profit companies: on-lending, conditions based on risk-adjusted interest rate

• Collateral in line with usual banking requirements

• Maturities 10/20/30 years; amortisation-free period 1-3 years

Up to

EUR 25m

per

investment

rest

Up to

EUR 25m

per

investment

interest

16

The higher the level of

energy efficiency

achieved, the higher

the level of promotion

Defining a KfW Energy Efficiency House› 1. reduction of complexity to two factors as a basis for standardisation

Transmission heat loss HT´energy loss of the building through its

components (building envelope)Annual Primary energy

demand QP

(required energy demand for

heating, ventilation and hot

water; considering the

energy source, heat

generation, storage,

distribution etc.)

17

Defining a KfW Energy Efficiency House

› 2. Standard setting + creating a brand (here for residential buildings)

18

Energy

efficiency Transmission

heat loss (HT´)

70 %55 %

Annual primary

energy demand (QP)

(in % of the reference building of EnEV 2007)

KfW-EH 55

KfW-EH 70

KfW-EH 100

85 %70 %

100 %85 %

115 %100 %

KfW-EH 85

130 %115 %KfW-EH 115

Heritage 175 %160 %

The photo shows an example for advertising a new construction, the EH standards refer to refurbishments, except EH 55, which is at the same

time today the minimum standard for new buildings, the others being EH 40 and EH 40plus.

Photo Credits/References

Title slide: full-page image / KfW / Stephan Sperl

Slide 2: KfW-Bankengruppe / Historisches Konzernarchiv

Slide 3, KfW-Bankengruppe / Historisches Konzernarchiv

Slide 4, left: KfW-Bildarchiv / Thomas Klewar

Slide 4, middle: KfW-Bildarchiv / Thomas Klewar

Slide 4, right: KfW-Bildarchiv / photothek.net

Slide 13, KfW Photo Archive / Thomas Klewar

Slide 16, left: KfW picture library / Thomas Klewar

Slide 16, right: KfW picture library / Thomas Klewar

Slide 19, http://www.blohm-bau.de/images/news/aktionshaus-fam-130-pop-up.jpg

›19

Bank aus Verantwortung

Dr. Dominik Bach

KfW Bankengruppe

Liaison Office to the EU

Square de Meeûs 37

1000 Brussels, Belgium

dominik.bach@kfw.de

Thank you for your attention!

Bank aus Verantwortung

Back-up slides

Energy Efficient Urban Redevelopment

Target: Holistic solutions for energy-efficient urban areas

Public funding: Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety

Beneficiaries: Municipalities, municipal companies, non-profit organizations

Grant Program (Pr. 432)

› Promoting integrated neighborhood strategies and implementation management

Promotional Loan Program (Pr. 201/202)

› Promoting efficient supply in urban areas via investments in heat/cold, water supply/wastewater disposal

infrastructure

Promotional loans and grants

2015 2016

Number Volume (mio. EUR) Number Volume (mio. EUR)

Pr. 201 - Loan

(municipalities)39 30.4 36 33.1

Pr. 202 - Loan

(municipal

companies, non-

profit organizations)

22 48.2 29 110.4

Pr. 432 - Grant

(municipalities)153 9.9 169 10.2

Energy Efficient Urban Redevelopment (Grant)Program facts

Beneficiaries

› Municipalities (directly)

regardless of their size, urban

and rural quarters alike

› Other urban protagonists,

particularly municipally-

owned companies, housing

companies, private building

owners (indirectly via the

municipality)

Application Entitlement

› Municipalities only

Designated Use

Pre-investment measures for

energetic urban renovation:

› A. Concept development:

max. 65 % of the costs (no

ceiling); promotional period: 1

year

› B. Refurbishment

Management:

max. 65 % of the cost of

personnel; max. 150.000

EUR over 3 years (extendible

to 5 years upon application)

Efficient Supply in Urban DistrictsProgram facts

Main Targets

› Incentivize district-based

investments in heat and

water supply infrastructure

and take advantage of

potential for efficiency

enhancement

Beneficiaries

› Municipalities, municipally

owned companies, non-profit

organizations

Designated Use

Sustainable enhancement of

energy efficiency with regard to

municipal supply systems in

urban quarters

› Heat and cold supply (highly

efficient combined heat and

power generators based on

natural gas or biogas, heat

accumulators and heat grids)

› Water supply (substitution of

older engines and pumps)

› Wastewater disposal (e.g.

drain water heat recovery

systems)

Energy Efficient Building Construction and Refurbishment

KfW Efficiency House 70

KfW Efficiency House 100

KfW Efficiency House Heritage

Protection

Single Measures

17,5 %max. 175 EUR/sqm

10,0 %

max. 100 EUR/sqm

7,5 %

max. 75 EUR/sqm

5,0 %

max. 50 EUR/sqm

Efficiency Investment

Loan

Partial debt relief Energy Costs

Same

subsidized

interest rate

applies for all

promotion

levels

+

-Co

nstr

uction 5,0 %

max. 50 EUR/sqm

KfW Efficiency House 70

KfW Efficiency House 55

Re

furb

ish

men

t

Same

subsidized

interest rate

for all

promotion

levels

+

Programs for the public sector / municipalities and municipal companies