Unlocking the energy efficiency potential in the rental & multifamily sectors

While the rental and multifamily sectors are associated with a significant energy efficiency potential, it is widely recognised that these are difficult sectors to tap into. Asymmetric information and split incentives are typically regarded as major barriers to fostering energy efficiency upgrades in rented and multi-unit properties both in the private and public as well as residential and commercial sectors. As Article 19 of the Directive 2012/27/EU on energy efficiency calls for Member States to take appropriate measures addressing this barrier, increased interest is drawn on how to design policies and measures that unlock the energy efficiency potential in these difficult-to-access sectors. Current solutions vary in nature, ranging from revised rent acts, green leases, on-bill finance mechanisms, minimum energy performance standards, use of inclusive rents and others.

On-going policy dialogue needs to address the following questions:

• Can regulations offer a silver bullet solution (e.g. by setting minimum energy performance standards in the rental sector)?
• Do we need energy rating schemes for occupancy use?
• What can be the role of smart meters in overcoming relationship asymmetries associated with traditional lease structures?
• Can innovative financial mechanisms such as on-bill finance mechanisms work in the EU?