Authors

Giulia Pondrano, EU Research Project Manager, R2M Solution Srl | LinkedIn profile

Massimo Fuccaro, Adjunct Professor at Service Management, Quantitative Analysis and Finance, and Data Science on University of Udine | LinkedIn profile

(Note: Opinions in the articles are of the authors only and do not necessarily reflect the opinion of the European Union)

The European Union's ambitious decarbonisation goals demand an unprecedented acceleration of deep building retrofits. Following the transition from mapping EU funding mechanisms in 2025 to the actual implementation of draft National Building Renovation Plans (NBRPs) in 2026, the critical bottleneck has shifted from defining ambitions to overcoming the operational 'implementation gap'. While building owners and technical experts focus on energy efficiency parameters, financial institutions evaluate projects based on risk profiles, cash flow predictability and capital return. This cultural and methodological misalignment creates significant friction, frequently stalling viable retrofit initiatives before they secure private funding.

To address this challenge, within the framework of the Horizon Europe INBLANC project , R2M Solution is developing a Bankability Assessment Tool, alongside a complementary Financial Instrument Matching Tool that connects assessed projects with the funding mechanisms best suited to their profile. Currently available as an alpha version running as a standalone application, with a web release planned by the end of 2026, the tool translates technical project inputs and qualitative risk factors into standardised financial indicators, culminating in a clear Composite Bankability Score. By providing a transparent framework for project evaluation, the tool aims to build confidence among lenders and investors while simplifying the assessment process for asset managers and owner communities that often lack in-house financial expertise.

This article explores the core rationale behind the INBLANC bankability assessment framework, highlighting how it addresses key financial bottlenecks in the building sector. Furthermore, it outlines how the tool connects initial project evaluations with compatible financing options, supporting the broader transition from energy performance goals to bankable investment pipelines.

The renovation bottleneck: bridging technical reality and financial language

As established in previous BUILD UP analyses on building energy efficiency financing, 'bankability' represents the composite risk-value profile determining whether a project can successfully secure third-party capital. In the context of building retrofits, bankability is frequently misunderstood or conflated with technical merit or environmental impact: while technical excellence is a prerequisite for deep renovation, risk perception dominates investment decisions. Building renovation projects face a persistent cultural and methodological divide between technical professionals and financial institutions. This divide manifests across key risk dimensions critical to underwriting renovation investments, such as construction and performance risk, operational risk, cash flow predictability and governance and legal structure. The challenge is compounded in residential settings, where fragmented ownership among owner-occupiers and limited in-house financial expertise make it difficult for homeowners' associations to structure a bankable investment case on their own. To scale building retrofits across Europe, technical data must be converted into standardised, transparent risk metrics that lenders can benchmark consistently across projects. The INBLANC Bankability Assessment Tool addresses this operational bottleneck by serving as a translation layer between technical building realities and financial underwriting standards, a challenge shared by public authorities and private owners alike across every EU Member State currently drafting or implementing its NBRP.

Conceptual methodology: overview of the tool

The INBLANC Bankability Assessment Tool is structured to provide an objective, automated evaluation of a renovation project's financial viability and risk structure. Built around an analytical engine, the tool processes baseline technical data and qualitative risk parameters through a standardised evaluation matrix, producing results that are consistent across projects and countries. 

_{Figure  1 : Tool system architecture. Source: authors’ elaboration.}

The tool is designed to be usable by non-specialists, including municipal officers and owner-community representatives who may never have prepared a financing dossier before. To reduce administrative burden and user friction, the tool operates on a tiered data input structure. Users provide a Minimum Viable Dataset comprising core project variables, including estimated capital expenditure (CAPEX), anticipated operational expenditure savings, baseline energy consumption and project timeline. This allows even early-stage projects, without a completed technical audit, to obtain an indicative bankability profile quickly. Optional parameters can then be added to refine the evaluation: residual asset value and mid-life component replacement costs from the life-cycle cost model developed within INBLANC and additional service revenues estimated by partner tools. These inputs enter the cash flow projection and therefore propagate to the relevant indicators.  

The backend engine calculates core financial key performance indicators essential for credit underwriting, translating raw project figures into the metrics lenders are trained to read:  

• Net Present Value (NPV): assessing absolute value creation over the project life cycle; in the score it is expressed relative to the net investment (NPV ratio), so that projects of different sizes can be compared.
• Internal Rate of Return (IRR): measuring expected return and, in the score, its spread over the discount rate adopted as the cost of capital.
• Debt Service Coverage Ratio (DSCR): evaluating the project's capacity to cover debt obligations from net operating savings.
• Savings-to-Investment Ratio and Payback Periods (simple and discounted): quantifying economic efficiency and capital recovery horizons.

Recognising that financial formulas alone do not capture operational realities, the methodology incorporates a qualitative risk assessment matrix. Users rate three risk dimensions: operational risk (construction and performance delivery, contractor capacity, governance of owner communities), regulatory risk (permitting, stability of incentives and compliance requirements) and market risk (sensitivity to energy prices and demand). The three ratings are combined into a risk score with weights of 35%, 35% and 30% respectively. The four financial indicators (NPV ratio, IRR spread, payback ratio and DSCR) are normalised and combined into a financial score. The two blocks are then aggregated with a 70% weight on the financial score and 30% on the risk score, so that projects with similar CAPEX but different delivery risks receive different, more realistic results. Because the weighting scheme is explicit, every score can be traced back to its components, which is a precondition for its use in a dialogue with lenders.

The central output of the evaluation is the Composite Bankability Score, a normalised index ranging from 0 to 100. This single score encapsulates the project’s overall investment readiness:  

• High scores (70–100): indicate robust cash flow predictability, low risk and a profile that can be presented to commercial lenders or investors under standard financing structures.  
• Moderate scores (40–69): highlight viable projects that require specific risk-mitigation measures, such as credit guarantees or blended finance structures.  
• Low scores (<40): point to high-risk or economically unviable proposals needing significant restructuring, higher grant intensity or technical assistance.

The score is a preliminary screening instrument: it structures and standardises the information that lenders need, but it does not replace the credit assessment and due diligence carried out by financial institutions.

Streamlining the user journey: from data to decision

To ensure widespread adoption among diverse stakeholders – ranging from municipal asset managers to private portfolio owners and owner communities acting collectively – the INBLANC tool prioritises user experience and intuitive workflow navigation. The user journey is structured into three distinct phases: input – processing – output, each designed to minimise the financial literacy required from the user.

The tool supports flexible data entry mechanisms to accommodate varying levels of digital maturity among project developers. In the current version, a guided form offers an interactive, step-by-step path featuring embedded contextual tooltips that explain financial and technical terms in accessible language; the web release will allow users to upload of standardised data templates if they already have structured technical audits.  

During data processing, the tool performs validation checks to ensure input consistency and mathematical plausibility, flagging outliers such as unrealistic payback periods before they propagate into the final score.

Upon execution, the platform renders an interactive dashboard displaying the Composite Bankability Score alongside visual gauges for key financial metrics, letting users test how changes in CAPEX, savings assumptions or risk factors move the overall result. To support formal dialogue with lenders, the tool produces a standardised executive bankability report. This document summarises project assumptions, risk ratings and financial projections in an underwriter-friendly format, giving asset owners and public authorities a consistent reference point for discussions with banks, guarantee funds or private investors.  

To ensure real-world applicability across diverse market contexts, the calculation logic and user workflows have been evaluated across multiple pilot facilities within the INBLANC project framework. These pilot applications encompass buildings at different stages of their lifecycle, ranging from early-stage screening to advanced retrofit design. They demonstrate the tool's versatility in evaluating investment readiness with varying levels of initial data availability.  

_{Figure 2: Results extract. Source: alpha version of the tool.}  

From assessment to capital: the financial matching approach

Identifying that a project is 'bankable' is an essential step, but securing capital requires connecting that project with the appropriate financial products within a fragmented, fast-evolving landscape of EU, national, regional and market-based instruments. As highlighted by the implementation provisions of Articles 17 and 18 of the recast Energy Performance of Buildings Directive (EPBD), scaling renovation requires linking public de-risking mechanisms with private capital allocation.

The Bankability Assessment Tool integrates directly with a specialised Financial Instrument Matching module. Once the bankability assessment is complete, the project's financial profile, location, asset class and risk score are designed to be passed to the matching tool without manual data re-entry; in the alpha version, the matching has been implemented for the Spanish demonstration case and will be generalised in the web release. The matchmaking logic cross-references the project profile against a structured taxonomy of European, national and regional financing instruments:

• Public subsidies and grants: non-repayable support that closes the viability gap, from the Recovery and Resilience Facility and European Regional Development Fund (ERDF) to national incentive schemes and, from 2026, the Social Climate Fund. They are decisive for low-scoring projects and for social housing.
• Concessional debt and soft loans: loans at below-market rates or with longer tenors from the European Investment Bank (EIB) and national promotional banks, often channelled through intermediated credit lines, national energy efficiency funds or revolving financial instruments under cohesion policy. They suit moderate scores, where debt capacity exists but the DSCR is too tight on commercial terms.
• Guarantee frameworks: portfolio or project guarantees, such as those under InvestEU or national guarantee funds, which transfer part of the credit risk away from the lender and lower the cost of capital. They are the main lever to move a conditionally bankable project into the bankable range.
• Commercial green finance: green mortgages and loans aligned with the EU Taxonomy and the Energy efficient Mortgages Action Plan (eMAP) framework, green bonds, energy performance contracts delivered by energy service companies (ESCOs) and on-bill repayment schemes. They are appropriate for high-scoring projects with predictable savings.

• Technical assistance: project development support such as the EIB's European Local Energy Assistance (ELENA) facility, which does not finance the works but covers the preparation costs that turn a low-scoring idea into a bankable investment programme.

   

_{Figure 3: Illustrative extract from the financial matching tool output; project-specific data anonymised.  
Source: authors’ elaboration.}

By bridging the gap between initial risk assessment and financial instrument selection, this integrated approach reduces transaction costs, streamlines due diligence and assists project developers, from municipal officers to owner communities, in structuring a capital stack tailored to their ownership and risk profile.

An illustrative application: the Joven Futura demonstration case

The INBLANC Spanish demonstration case, the Joven Futura residential complex in Murcia (1,232 dwellings, around 95,000 m²), has been used to test the full workflow on an illustrative dataset built on the main parameters of the pilot. With grants covering roughly two thirds of the investment, the project obtains a financial score of 64.9 and a risk score of 82.5, which combine into a Composite Bankability Score of 70.2 (Figure 2): just above the bankability threshold, with a positive but modest NPV and an IRR below 4%. This is the typical profile of a residential retrofit whose viability rests on public support and on a low-risk delivery model. The matching module then returns a tiered set of instruments consistent with this profile: NextGenerationEU funds channelled through the Spanish Recovery Plan (Royal Decree 853/2021) and IDAE programmes, together with the ERDF regional programme of Murcia for the grant layer; ICO green credit lines and EeMAP-aligned green mortgages for the debt layer; energy performance contracting through ESCOs and collective self-consumption under Royal Decree 244/2019 for the operational layer; and ELENA technical assistance to structure the overall investment programme. The case shows that a score close to the threshold is not a verdict but a map: it indicates which layers of the capital stack must be secured for the project to proceed.

Conclusions

Addressing the European building renovation gap requires moving beyond high-level decarbonisation targets towards the creation of actionable, investment-ready project pipelines. By establishing a shared evaluation methodology between technical project developers and financial institutions, the INBLANC Bankability Assessment Tool addresses a fundamental market barrier. Translating complex technical parameters into standardised financial indicators and an intuitive Composite Bankability Score brings transparency, consistency and efficiency to the underwriting process. As the Joven Futura case illustrates, coupling this assessment with financial instrument matchmaking turns a generic renovation ambition into a structured, tiered financing plan grounded in real EU, national and market instruments. Such digital decision-support tools provide a scalable pathway to de-risk investments, mobilise private capital and accelerate the transition towards a fully decarbonised European building stock, particularly for the fragmented, owner-occupied residential segment that represents the bulk of Europe’s renovation challenge. The next development steps are the web release, planned by the end of 2026, and integration with the INBLANC platform and with the partner tools that feed the assessment.