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

The investment challenge behind Europe’s renovation targets

Renovating the building stock to high energy efficiency standards is one of the largest investment challenges of the European energy transition. According to the Commission’s 2026 report on energy efficiency financing in Europe, the EU’s total investment needs for energy efficiency are estimated at over €370 billion per year between 2021 and 2030. The largest share of these investment needs relates to building efficiency measures, including heating and cooling refurbishment, amounting to €242 billion per year from 2021 to 2030 to meet the 2030 energy efficiency targets. Most of the investments will focus on residential buildings, contributing to the availability of affordable and quality housing. Against those needs, roughly €200 billion a year was actually invested in energy efficiency across Europe between 2021 and 2023, leaving an annual investment gap of about €170 billion. EU and national public funding together cover only around 15% of estimated investment needs, highlighting the scale of private capital that will need to be mobilised alongside public resources.

The new Multiannual Financial Framework for 2028–2034, currently under negotiation, maintains several channels that can support building renovation, including national plans, the European Competitiveness Fund (ECF), the InvestEU Instrument, and the Social Climate Fund financed from emissions trading revenuesfinanced from emissions trading revenues (mainly the auctioning of allowances under the new ETS2 for buildings and road transport), with Member States contributing at least 25% of the estimated cost of their social climate plans. However, it does not yet guarantee. Recovery and Resilience Facility and Cohesion Policy. 

The revised EPBD strengthens the framework for financing building renovation, with particular attention to vulnerable households and worst-performing buildings. It also requires Member States to ensure access to one-stop shops, which can help building owners navigate technical, administrative and financing aspects of renovation. At the same time, the scale of the investment challenge means that public funding alone will not be sufficient. Public resources can therefore play an important role in structuring and de-risking investment and in mobilising additional private capital.

With the first wave of draft National Building Renovation Plans (NBRPs) now submitted, Member States are beginning to translate the revised EPBD into national renovation pathways. According to the Joint Research Centre’s assessment, reported annual energy renovation rates range from 0.7% to 5.7%, with most falling between 1% and 3%. These figures represent planned trajectories rather than achieved renovation rates: the EU’s deep renovation rate has remained at around 0.2% per year, compared with the approximately 2% considered necessary to meet the 2030 objectives.

The draft plans also reveal substantial differences in estimated investment needs across Member States. Public funding generally accounts for between 20% and 30% of renovation costs, while only seven draft plans explicitly address the mobilisation of private finance. Turning these plans into credible investment pathways will therefore be an important part of scaling up renovation.

Creating an investment-ready ecosystem

While BUILD UP’s previous overview, ‘Financial instruments for an energy-efficient building stock: from EU support to local action’, examined the funding mechanisms available for building renovation, attention is increasingly shifting towards implementation: turning available finance into viable projects and building investment pipelines at scale.

Despite the strengthened regulatory and financial framework, building renovation remains difficult to finance at scale. Many of the technical solutions are already available, but investment pipelines and local delivery capacity remain insufficient to support deployment at the pace required. Policy and regulatory, financial, technical, and social barriers are well documented and largely shared across Europe. Overcoming these hurdles requires an investment-ready ecosystem that no longer leans on public subsidy alone, but integrates all necessary elements: stable policy signals; one-stop shops that cut transaction costs by combining technical advice, financial guidance and contractor coordination; NBRPs that work as investment roadmaps rather than target lists; aggregation and project-development assistance that bundle small projects through municipalities, housing associations, ESCOs and district-scale renovation into the pipeline scale investors need; and grants reserved for vulnerable households and worst-performing buildings.

On the financing side, Cohesion Policy financial instruments and InvestEU Member State compartments can help Member States move beyond grants and mobilise private capital. The InvestEU Member State compartment allows countries to channel part of Cohesion Policy or Recovery and Resilience Facility resources into InvestEU, ring-fenced for national priorities such as sustainable infrastructure. Romania has used exactly this route to build an uncapped guaranteed framework for energy-efficiency lending, described in the case study below.

Blended finance and innovative instruments combine grants, long-term loans and guarantees with green mortgages, on-bill schemes and revolving funds, significantly lowering both risk and the cost of capital. Estonia’s KredEx revolving fund provides a well-established example of how Cohesion Policy resources can be used in this way and is included among the examples in Table 1 below.

Commercial banks are a key part of this financing ecosystem. The EPBD therefore promotes voluntary frameworks for financial institutions, including the forthcoming Mortgage Portfolio Standards, while revised State aid rules provide Member States with additional scope to support investment. However, green loans still account for only 4.5% of total lending. Commission Recommendation (EU) 2026/537 of 10 March 2026 also calls on Member States to strengthen national energy efficiency funds; 16 of the 27 Member States had one in place in 2024, alongside long-term public guarantee facilities and project-development assistance capable of aggregating small projects into investable portfolios.

Moving beyond financial instruments, industrialised, off-site renovation methods, including prefabricated façades and standardised heat pump packages, can reduce construction time and cost uncertainty, helping to make project performance more predictable and improve bankability. This approach is explored further in BUILD UP’s technical article on the DIGIFAB project.

Greater predictability also depends on reliable and comparable building data. BUILD UP’s technical article on the INBLANC Bankability Assessment Tool examines how technical information can be translated into standardised financial risk indicators and Composite Bankability Scores, helping lenders assess renovation projects more consistently and supporting access to different forms of public and private finance.

Good practices in action: matching investment barriers with financing solutions

Different barriers to renovation require different financing and delivery approaches. Table 1 maps some of the main barriers to renovation investment against the instruments and good practices designed to address them, together with examples already being applied across Europe.

_{Table 1. Barriers to renovation investment: the good practices and financing instruments that address them, and examples of each in practice. 
Source: IEECP, drawing on the European Commission’s guidance on EPBD Article 17 (financial incentives and market barriers) and Article 18 (one-stop shops).}

Five financing schemes in practice

The five schemes below illustrate different approaches to overcoming specific renovation investment barriers. Their implementation also provides insights into which elements could be replicated or adapted in other contexts.

• Romania. An uncapped InvestEU guarantee that moves risk off bank balance sheets. Romania channelled national EU funds into the InvestEU Member State compartment, where the European Bank for Reconstruction and Development (EBRD) uses them to issue €220.6 million of uncapped, unfunded portfolio guarantees to commercial lenders. The guarantee absorbs credit risk on newly generated portfolios of energy-efficiency, renewable-energy and sustainable-transport loans, so banks can lend to borrowers from households to large corporates on better terms and with lower collateral requirements; the EBRD expects the framework to mobilise more than €270 million of new green financing, with Libra Internet Bank the first institution onboarded and further banks expected to join. It is paired with technical assistance funded through the InvestEU Advisory Hub, without which most local banks would lack the capacity to originate eligible loans. The case illustrates how guarantees can encourage lending without requiring public authorities to provide the underlying capital, particularly where perceived risk rather than a lack of available capital is constraining investment.
• Wallonia (Belgium). RenoWatt: aggregation that makes public buildings investable. RenoWatt, supported by the EIB’s ELENA facility, acts as a one-stop shop for Belgian public authorities: it audits buildings, selects those worth renovating, pools them across municipalities into single tenders and structures the contracts – usually energy performance contracts in which an ESCO guarantees the savings and is paid from them. Close to a hundred municipalities, provinces, hospitals and emergency services have joined; signed projects represent more than €100 million in investment, and individual buildings are achieving 30–40% primary energy reductions. Aggregation is central to the model: pooling buildings across participating public authorities can create portfolios large enough to attract ESCOs and lenders and enable projects to be procured at scale. The model is particularly relevant to EPBD Article 18, as it illustrates how a one-stop shop can support project development and procurement in addition to providing advice.
• France. CoachCopro: a one-stop shop that scaled from a city to a country. Condominiums are among the hardest segments to renovate, because any decision needs a majority of owners with different finances and time horizons. CoachCopro, created by the Paris Climate Agency with the City of Paris and the French Agency for Ecological Transition (ADEME), gives condominium boards a single route through the process: a step-by-step method, cost benchmarks, a register of qualified professionals and a durable record of the building’s renovation history. More than a third of Paris condominiums are registered on it, and its operating costs are relatively limited compared with the investment required for renovation itself – roughly €200,000 to build and €80,000 a year to run. Its subsequent integration into the national France Rénov’ service illustrates how an established one-stop-shop model can be adapted and scaled beyond its original local context.

• Greece. Exoikonomo: ranking applications by the cost of the energy they save. Greece has implemented the EXOIKONOMO residential renovation programme through eight rounds over 13 years, moving from National Strategic Reference Framework (NSRF) and European Regional Development Fund (ERDF) resources to the Recovery and Resilience Facility and supporting more than 200,000 energy interventions. The programme combines subsidies of between 50% and 100%, depending on income and social criteria, with interest-free loans provided through four banks. Eligible projects must achieve an improvement of at least three EPC energy classes, reach a minimum EPC class B, and deliver primary energy savings of more than 30%.

  The programme combines several features designed to address common renovation barriers: tenants as well as owners may apply, one of the few practical answers to the landlord–tenant split incentive, and applications are ranked by comparative assessment combining income and social criteria (earthquake-affected households, families with a disabled member, families with three or more children), with heating degree days and the levelised cost of energy saved (the cost of the works per kWh expected to be saved, prioritising the most cost-effective solutions). Eligible costs include both energy performance certificates and a technical advisor, while the programme offers interest-free loans.

• Ghent (Belgium). ICCARus: lending to owners who cannot service a loan. Ghent’s problem was what the city calls ‘captive owners’: households on low incomes who own one poor-quality home and have no capacity to borrow against it. The City and its public welfare centre answered with a fund that advances €15,000–45,000 per house, drawn from €4.8 million of ERDF resources, and defers repayment entirely until the property is sold or the owner stops living in it, secured by a mortgage on the building. Households also receive technical guidance before and during the works. By November 2023, 118 homes had been renovated, and 57 more were in progress; in the Dampoort pilot, the energy score fell from 519 to 244 kWh/m², saving some 6.5 tonnes of CO2 per dwelling a year and removing 95% of identified health risks. The available evidence also highlights some of the scheme’s limitations: 61% of participants found the works took longer than expected, 30% had to move out temporarily, and post-renovation labels clustered at C and D, short of the Flemish 2050 target of under 100 kWh/m². The scheme therefore provides an example of how renovation can be financed for owner-occupiers who have limited capacity to service conventional debt.

Conclusions 

With the revised EPBD and its supporting financing framework in place, attention is increasingly shifting towards implementation. Public funding alone cannot close Europe’s renovation investment gap, making its ability to mobilise and de-risk private capital increasingly important. NBRPs can play a central role in this process if they translate renovation targets into credible investment roadmaps, identifying priority building segments, financing needs, project volumes and delivery mechanisms.

The examples examined in this article show that there is no single financing model for building renovation. Revolving funds can extend the impact of public resources; guarantees can address perceived lending risks; aggregation can bring small projects to an investable scale; and one-stop shops can reduce complexity for both building owners and market actors. At the same time, industrialised renovation and better building data can improve predictability and strengthen project bankability.

Closing Europe’s renovation investment gap will therefore depend not only on the amount of capital available, but also on the structures that turn funding into investable projects and projects into completed renovations. The next challenge is to build those pipelines at the scale and pace required by Europe’s renovation objectives.

BUILD UP invites its community to contribute to this transition by sharing knowledge, practices and insights that help turn renovation targets into viable projects and mobilise investment at scale.