Successful schemes & subsidies

09 June 2020 - Published by Deirdre Buist 2
Subsidies to support the energy transition are often a great success but many government agencies are more inclined towards loans and revolving funds. Measures to reduce energy consumption or generate renewable energy are investments that pay themselves back and this possibly contributes to the success of the ‘Energy Saving Loan’ in the Netherlands. But how come this works particularly well in Drenthe?

Ugo Leever, Senior Policy Advisor for the energy transition for the Province of Drenthe and partner in Stronghouse, has written a document with valuable insights regarding subsidies and successful loan schemes. We’ve extracted a few highlights to share, but you can read the full report here. It’s a recommended read!

Subsidies

Ugo: “In the Netherlands subsidies are generally relatively easy to access – and often seen as ‘free money’. But there are some catches:

  • The subsidy amount is small and exhaustive and the period open for application is limited

  • In effect, the subsidy is only available for early adopters

  • Government interference in the market isn’t always welcomed by companies.

  • Subsidies tend to be short term

Sustainability Loan

While most Dutch citizens are averse to debt (particularly in rural areas such as the province of Drenthe), there is less stigma when it comes to mortgages. “I was a little surprised that there was political support for a regional ‘Sustainability Loan’ scheme back in 2010. This was a kind of ‘Energy saving loan’, “ Ugo explains.

In 2011 more than 12% of the Dutch municipalities deposited between €200,000 - €500,000 into a special account for the implementation of their local ‘Sustainability Loan’ scheme.  With this energy saving loan, Dutch municipalities aimed to make the housing stock more sustainable while also stimulating a stagnating housing market. The loan scheme made it possible, in a time of financial crisis, to continue and speed up investments in energy saving and/or renewable energy, which couldn’t be financed under normal market conditions (by banks). In the first 3 years of the ‘Sustainability Loan’ scheme homeowners could borrow small amounts (€2.500 - €15.000) for a term of 5 or 10 years.

Success factors

Contributing factors to the success of the regional loan scheme were:

  • The possibility to combine with other national and/or regional and/or local grants.

  • A professional communication campaign was key to showing homeowners the benefits.

  • Communication was targeted for both general homeowners and specific groups. 

Personas

By conducting a small survey at the end of this loan scheme in 2015, the team in Drenthe now know the added value of working with ‘personas’ and this approach is used in a new multi-annual programme ‘Energy Expedition - towards energy neutral living in 2040’. Results of that survey showed that those making use of the loan scheme were:

  • Married homeowners (88%)

  • 50+ years old (70%)

  • Living in a detached house (76%)

  • Semi-detached (17%)

  • Afforded a loan of €200,000 - €400,000

They were motivated to invest in energy saving by using a loan as it boosted their financial possibilities to contribute to a better climate, improve their living comfort and add value to their property.

Energy Expedition

Leever: “When we started up our ‘Energy Expedition towards energy neutral living in 2040’, one of our goals was to make it possible for every resident in Drenthe to participate in the energy transition. So, we’re making the national energy saving loan more attractive and accessible for people in our region. Which is why the Province of Drenthe has decided to subsidise 1% - 1.5% of the national interest rate.”

Data & demographics

Using the available data to create personas has supported Drenthe’s approach when designing this energy programme. Demographics also play a role. The region is ageing (many 75+) and this group is growing, while generally still quite active and with a high life expectancy.Loans for 7, 10, 15 or even 20 years are possible. The debt can be transferred to the heirs or, if this is not possible, the Province of Drenthe may act as a guarantor, limiting financial risk.

In January 2017, homeowners in Drenthe could take out a loan for 15 years at 1,4% interest (instead of 2,9%).  Currently (May 2020) homeowners pay only 1% interest. Loans with terms of 20 and 30 years are more attractive, especially for apartment owners.

It is clear that by adapting subsidies, gearing loan schemes towards their regional dynamics and targeting the individual concerns of inhabitants, the Province of Drenthe has taken successful steps forward towards their goals for 2040. The ‘Energy Expedition’ continues…onwards and upwards!

Did you find this interesting? You can read Ugo Leever’s full report here.

Follow the Energy Expedition in Drenthe here (Dutch website)  https://www.provincie.drenthe.nl/energieexpeditiedrenthe/

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