Retrofitted building in Estonia uses an innovative financing scheme to reduce energy consumption by 60% without increasing the monthly cost for residents.
Estonia faces a common challenge with many other European countries. Around 70% of their housing stock was built between 1960-1990, when specific priority for energy efficiency in construction was almost non-existent and the modernist "super-block" apartment building typology was widespread. Likewise, around 98% of housing stock is in private ownership and family income levels do not allow for the self-financing of energy retrofitting projects.

Sõpruse was the first building in Estonia to apply a new KredEx Fund mechamism to finance an residential energy retrofit of multi-family dwellings. Administered using funds from Estonia's Regional Operational Programme, KredEx is a two-component scheme: a 15%, 25% or 40% reconstruction grant is offered to associations or communities depending on the depth of the retrofit being planned. The remaining capital is provided through a preferential loan offered by multiple national banks.

Individual members of the housing associations are the main beneficiaries of the KredEx scheme. The associations are collectively responsible for the loans, which are designed to be paid off using the financial savings created by the retrofit project. The objective for the building owners is to significantly reduce energy consumption and improve living quality without raising their monthly cost of living. Estonia's green economy also benefits through job creation and the green building know-how that is created.

Resources needed

Approx. 12,000 Euro per apartment to achieve a 60% energy consumption reduction in Sõpruse 202. Combined grant and loan scheme implements European Structural Funds through the KredEx Scheme. KredEx was established in 2001 to improve financing for energy efficiency improvement in Estonian homes.

Evidence of success

The 60% energy saving achieved in the Sõpruse 202 project speaks for itself. On a more general level, the fact that an additional 406 applications for a combined grant and preferred loan have been submitted is a clear signal that building owners have understood the opportunity available to them. 212 housing associations and communities have now been approved for funding by October 2017, which is a clear example of success in Estonia.

Difficulties encountered

Slow start-up caused by the novelty of the application scheme and negative inertia caused by less successful financing schemes previously applied. Free consulting and training to associations applying for funding was applied.
Also, retrofits often take a backseat to new construction projects.

Potential for learning or transfer

While the concept of a housing retrofit grant and preferred loan is not a new in itself, European regions have had little success in mainstreaming similar approaches. The Estonian success of creating KredEx as a governing institution that can comprehensively develop and administer this type of funding mechanism is a key component of its own success and it should be followed by other member states.
The nuances of greening the European housing sector are important to recognize for policy makers. The potentials are seemingly limitless. In principle, economical improvements to the building facade and heating system using well-established technologies can have a major impact. But while a main challenge is the lack of disposable capital for investing retrofitting, KredEx shows the rapid scaling of a financing scheme and it's an excellent example of applying European funds to the private sector in order to achieve regional policy goals.

Please login to see the expert opinion of this good practice.

Main institution
Eesti, Estonia (Eesti)
Start Date
January 2015
End Date


Ryan Weber Please login to contact the author.