BEEM-UP creatively overcomes regulatory barriers in Sweden and realises return on investment

by
Igor Taranic and Jorge Nunez-Ferrer
13 December 2016
Alingsås (Sweden) after BEEM-UP Interventions
Alingsås (Sweden) after BEEM-UP Interventions | © BEEM-UP

The main objectives of the BEEM-UP project, co-funded by the 7th Framework Programme for Research and Technological Development of the EU, were to demonstrate the economic, social and technical feasibility of retrofitting initiatives for drastically reducing the energy demand in existing residential multi-family buildings, obtain better indoor comfort conditions, and lay the ground for massive market uptake of such initiatives. The project ran from 2011 to 2014 and was developed in three demo sites – Alingsås (Sweden), Delft (The Netherlands) and Paris (France).

Our focus in this blogpost will be the Swedish demo site of BEEM-UP in Alingsås - the Brogården housing estate - where, despite achieving good results with energy savings in line with the initial goals, the project faced a serious regulatory barrier and, as a consequence, the return on investment could not be realised. According to the Swedish legislation, it is not legal to raise rent due to energy efficiency measures, i.e. the costs for a passive house renovation cannot be recovered by a rent increase. It is, however, fully legal to raise the rent due to ‘improvements to the living standard in the apartment’.

To overcome this legal obstacle and to demonstrate the improved living standard, the project partners in Sweden came up with a number of creative solutions:  

  • Before the renovation, heating was an important expense item. Due to the passive house technique, the cost for heating became minimal, resulting in radically decreased future expenses.
  • Before the renovation, the household electricity and hot water were included in the rent. After the renovation, these costs were transferred to the tenants (as specified lines on the rent invoice). To charge for the household electricity is normal Swedish procedure and before the renovation the Brogården housing estate was an exception. To charge for the hot water is a new Swedish standard. Owners do not earn any money by charging for water or electricity, however, they are relieved of a significant cost.
  • In order to address a significant thermal bridge, the original indented balconies were moved out in line with the façade. This meant that all apartments gained space of 4 m2. Owners could charge extra rent for the increased space. Owners were also able to create fully accessible bathrooms in all flats and could charge extra rent for accessibility. Furthermore, the deep renovation meant that all flats have new build standard – and thus they could charge extra rent for ‘improvements to the living standard in the apartment’. The fact that the apartments got significantly better indoor climate after the renovation can also be considered as ‘improvements to the living standard’, which makes it eligible for a rent increase.

A crucial element of the successful implementation of the project was the continuous dialogue with the tenants and the good collaboration within the procured partnership. The developer created a showroom apartment and together with the Swedish Union of Tenants held an open house every week for the tenants of the housing complex. A newsletter was distributed once a month with contributions from the building owners Alingsåshem, the Tenants’ Union and the construction company Skanska. In addition, understanding that these were not merely houses, but people’s homes where they tried to continue living their daily lives despite the renovation works made a difference.

For information on different regulatory, financial and social barriers, please see the Policy and Finance section of our website, which is gradually being developed. 

Igor Taranic works as an Associated Researcher at CEPS, where he has been involved in numerous projects on smart cities, circular economy and European energy policy. His previous working experiences include Israeli Prime Minister's Office and consulting to Israeli chemical industry companies.

Igor holds MA in Economics from the College of Europe, MA in European studies from Dusseldorf University and BA in international relations from IDC Herzliya. He is fluent in Russian, Hebrew, English and Ukrainian, and speaks some French, German, Romanian and Yiddish. 

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Jorge Nuñez-Ferrer has studied economics and agricultural economics in the London School of Economics, Wye College and Imperial College of the University of London. He is Independent consultant & Associate Research Fellow in the Centre for European Policy Studies (CEPS) in Brussels. His central area of work is the analysis of the implications of policy decisions on the economy, in particular those financed by the EU budget: the quality of the strategies, their efficiency and their appropriateness in the national context as well as the wider implications.

Between 2000 and 2004, he worked in the European Commission’s Directorate General for Financial and Economic Affairs in the areas of agricultural, rural development policies and structural funds. Since, he has been working as a consultant for a number of national and international organisations and think tanks. From January 2012 to end of 2013 he was the chair of the Finance Group of the EU's Smart Cities Stakeholder Platform, a governing body of the EU's Smart Cities and Communities initiative. Presently he is a policy and finance work package leader in the European Union's Smart Cities Information System (SCIS). He also works closely with a number of other organisations and teach at the Central European University in Budapest as visiting professor.

Follow him on Twitter @jnunez_ferrer