Industrialized envelope with BIPV, BIST, energy and fresh air distribution for Public Social Housing
Public social housing often requires upgrades to improve energy efficiency. This includes better insulation, energy-efficient windows and doors, and modern heating and cooling systems. Moreover, the buildings need to meet current safety standards, including fire safety, structural integrity, and accessibility for people with disabilities.
Industrialised building renovation can be an answer to these needs. However, an aspect that must be prioritised is the cost-effectiveness. This means finding solutions that provide the best value for money, including long-term savings on maintenance and energy costs.
A solution for public housing organisation needs to align with the goal of providing safe, comfortable, and affordable living conditions for residents, and at the same time keeping the costs down.
The product
The Industrialized Passive Envelope with Integrated Photovoltaics (BIPV) and Solar Thermal (BIST), combined with Energy and Fresh Air Distribution and an Adaptable Building Management System (aBMS) is solution that integrates several technologies to improve the energy efficiency of buildings.
- Integrated solar panels provide electricity and enhance building appearance, lowering energy costs. They are integrated in the panel that insulates the building, keeping the building warm in the winter and cool in the summer, which reduces the need for heating and cooling and lowers bills costs.
- The Energy and Fresh Air Distribution system is a ventilation system that integrates air intake, heat recovery, and heating or cooling generation. This system uses energy efficiently within the building while circulating fresh air, providing a comfortable environment.
- The Adaptable Building Management System (aBMS), is a digital system that connects all technologies, to monitor and control the usage. The aBMS can adapt to weather conditions and user preferences, making sure the performance of the building is always optimal.
Value proposition
Low energy consumption and bills
Reducing energy costs is key for social housing tenants who may struggle with high bills. However, the split incentive problem arises: the public housing company covers renovation costs, but only tenants benefit from lower bills. It's important to explore ways for owners to recover investments, such as sharing revenue from onsite energy production or small rent increases permitted by law.
Reduced intervention time and no displacement
This approach minimises tenant displacement and disruption, benefiting both tenants and owners by avoiding relocation costs. It may also be required in renovation tenders for such buildings.
Cost certainty and reduced onsite variations
Public entities typically operate within strict annual budgets: deviations require exceptional approval and can create significant administrative challenges. The prefabricated approach reduces uncertainty in building renovations.
Improved indoor comfort
Funded by the owner, this benefit aligns with social housing organisations' aim to provide healthy living environments for tenants and can enhance overall quality of life.
Assembly-disassembly or replicable design processes
If social housing organizations manage large stocks of similar buildings, economies of scale can be created across renovation projects.
Financing and costs
Public Social Housing organizations can only be approached by integrated façade providers through formal calls for tenders.
- To minimize renovation costs, it's advisable to issue targeted tenders specifically for envelope-integrated modules, which encourages competitive pricing compared to one-stop-shop solutions where cost efficiency is harder to verify.
- If full funding isn't available, Public Private Partnerships (PPP) allow collaboration with Utility or Energy Service Companies (ESCO) under Energy Performance Contracts (EPC).
- After renovation, these contracts maintain the relationship with housing organizations through maintenance plans, performance monitoring during the warranty period, and sometimes include energy supply.
How can ESCOs support building renovation?
Public administrations often face financial constraints that make it challenging to fund large-scale building retrofit projects aimed at improving energy efficiency. Traditional financing methods may be insufficient, necessitating the exploration of alternative financing mechanisms. The most used alternatives include:
- Public-Private Partnerships (PPPs), that is collaborations between government entities and private sector companies to pool resources and expertise for retrofit projects.
- Grants and subsidies, funds from national and international organizations, such as the European Union, that do not need to be repaid.
- Dedicated energy efficiency funds: these are established by governments, financial institutions, or public-private initiatives to support energy-saving initiatives.
- Commercial financing, such as loans or bonds from banks and private investors, often at favorable terms due to expected long-term energy savings.
A particularly effective strategy is leveraging Energy Service Companies (ESCOs) and Energy Performance Contracts (EPCs).
- ESCOs provide comprehensive energy solutions, including design, implementation, and financing, and guarantee energy savings.
- EPCs are agreements where the ESCO undertakes the retrofit project and guarantees a certain level of energy savings, transferring technical and financial risks to the ESCO.
There are several advantages to this approach.
- EPC contracts are multi-years contracts that involve also the maintenance service and the energy supply, allowing the building owner to have a unique supply contract with the ESCO.
- The mechanism considers that the building owner pays to the ESCO an annual fee that is approximatively equal to the costs for energy and maintenance paid before the retrofit intervention, hence the ESCO covers the investment with the guaranteed savings.
- Public administration benefits from a simplified process, with the ESCO serving as a single point of accountability and managing the project from design through maintenance.
- ESCOs offers technical support for energy efficiency projects, helping public administrations lacking internal expertise or resources.
In summary, without an ESCO, the building owner must cover the initial capital expenditure through their own liquidity or private debt. With an ESCO and an EPC contract, the ESCO covers the investment, and the public administration repays the ESCO with an annual fee. Although this may result in an extra cost over time, it enables interventions that might not be possible otherwise and simplifies the process for public administrations.
Interested in knowing more about this business model?
Read the report Stakeholder-centred value propositions and business models.
