The economics of the project

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A different economic balance

The economic balance of a BBC-effinergie building must be strictly analyzed compared with the economics of a standard project.
The project owner has to free himself from the idea of constantly looking for a minimum investment. This short-term argument leads to a disproportionate cost of the building management all its life long.

So, analyzing the cost of a project, including all the elements pertaining to the project during all its life cycle (especially the service charges or the risk of delinquent rent, long-term property value,…) enables to anticipate future in the choices made today.

_{(12) 590 € = average energy expenditure of a French household in 2006 – INSEE Source}

Very different overinvestments according to the approch

A BBC-effinergie building could be considered as a standard building in which we would have simply used more efficient products. This would necessarily lead to significant overinvestments.

The recommended approach consists in thinking differently with regards to the design of the housing to aim at the objective.
A better exposure of the building, a restriction of the setbacks, a more compact construction,… are architectural elements that may induce a significant reduction of the costs as well as a better energy performance.

Reducing the loss of the building will enable to reduce the size and, therefore, the cost of the heating system. We can even choose – like the stakeholders of a passive construction – to over-insulate to such a point that we no longer need a distribution network and heating transmitters that go through ventilation. There can be a source of saving.

On the other hand, a bypass ventilation, triple glazing and a hot water production require overinvestments that will have to be optimized according to the specific needs of the housing.

In order to reach intelligent compromises for each process, a more comprehensive thermal analysis will have to be financed. This preliminary investment guarantees less important and well-adapted overinvestments.

Financial and banking approaches of a BBC-effinergie project

A BBC-effinergie property development project has different financial characteristics from a standard project.
In fact, the BBC-effinergie label is often justified because of its attractive global cost. Based on a higher initial investment than that for a standard project, this investment is largely compensated by a saving of expenses and utilization (water, energy,…). This saving is higher with regards to this same standard project and it is pretty important with time.

The financial approach may be delicate. In fact, it is based on the investment point in order to estimate the indebtedness of the project initiator. Besides, the saving of expenses are estimated as from the project and not during and after the project that minimizes its impact (the evolution of the energy costs are not taken into account). A BBC-effinergie project may be estimated – for the project initiator – as a property development project requiring an additional investment compared with a standard project. It implies a more significant indebtedness for this project initiator and it is particularly risky for the project.
In fact, a longer period of return on investment can present freezing risks for the financial part in a BBC-effinergie project. To compensate this freeze, the local authority may sometimes subsidize the project to reabsorb the extra costs of the construction. These subventions are allocated according to each project and they initiate pilot projects.

Besides, a more important investment has an impact upon the sales conditions of a housing, with a m2 cost higher than that of the market which is risky for the market as the housing is sold at a loss.

The bank response for new housing:

The proposition of the bank – for new ecological BBC-effinergie housing – is generally quite recent and it is presented by some pioneer banks.
In order to facilitate the housing construction and marketing for the project initiator, these banks offered adapted financing like the low-interest loans. A private buyer can therefore obtain a loan at a preferential rate compared with the market. This financial system reabsorbs all or part of the overinvestment linked to the housing. The Banque Populaire group (for the private buyers) and the Consignments and Loans Fund (for the local authorities) are the first banks to offer this kind of loan for new housing. Few banks still announce today ecological loans for new housing. It is therefore important to agree with his banker about an adapted offer that takes into account the characteristics of the market in order to facilitate the sale of these properties.

It is also possible – in the case of a new housing – to combine these loans with other bank financing initiated by the regional councils, or local authorities or the 1% housing institutions. Their characteristic consists also in low-interest loans that better reabsorb this longer period of return on investment. Some regional councils or other local authorities begin to extend these low-interest loans in association with banks for the new housing. These loans concern renewable energies and/or insulation.

In the case of an apartment building, it can be useful to work long before with the syndic of co-owners. The latter – implied in the project before the deposit of the building permit – can be well-informed about the maintenance of the new equipments. A plan of third-party financing may be also studied by the syndic of co-owners in order to finance separately, for example, the part of the energy equipment. In other cases, the part of the photovoltaic is studied separately from the remainder of the financing.

The ADEME (Agency for the Environment and Energy Management) a set up a system that compares the propositions of banks on www.ademe.fr.

Financial assistance from the Government and the region councils

At the time of the editing of this guide, there are now talks – in the framework of the Grenelle Environnement – about a a financial assistance that will be associated to the construction of a BBC-effinergie buildings.

Many Region Councils have initiated regional requests for proposals in partnership with the ADEME in order to experience the implementation of the BBC-effinergie label and to compensate part of the investment extra costs.

The effinergie website keeps up to date recent information on the subject.

Significant expenses saving

The energy saving admitted by a BBC-effinergie housing lead to a reduced operating cost for the housing.

Example of an economic approach for a detached house of 120 m2 :
A house generally becomes a \low-energy. one thanks to an overinvestment of 150 ./m2 of living area. With a 10-year ecological loan (percentage rate of 3,8%), the total amount to refund would be about 22 000 . for a 120 m2 house.

At constant euros and according to three scenarios regarding an annual increase of the energy cost of 3, 6 to 9%, the saving made in the á energy â budget for a period of 30 years . between a house in conformity with the Thermal Regulation 2005 and a BBC-effinergie house . vary from 25 000 . to 75 000 ., for an average energy cost of 0,07 ./kWhpe for the first year (see the diagram).

A household owner would make therefore a good transaction as from an increase of the energy cost of 3% (lower rate compared to the rate noticed for fuel oil for during the last years).

A less expensive and easy to find building lot

Getting the BBC-effinergie label allows to benefit from an increase of the land coefficient (COS). To this end, you can build an identical house with a lower expenditure for the building lot, or you can build a larger surface area on a given building lot.

Some town councils or developer contractors have specific requirements about the quality of buildings. It may still be easier to have access to real restate for BBC-effinergie housing.

Less turn-over and a lasting solvency of the tenants

The increase of the energy cost may imply financial problems for most of the tenants and this can increase the risk of delinquent rent.

Renting BBC-effinergie housing limits considerably these risks and the turnover of the tenants which is oftenly met when the housing is not comfortable and/or the charges are too important.

An opportunity of rescale and a significant rise in value

The increase of comfort and quality gained lead to a higher housing value at the time of the resale. In Switzerland, bankers think that the Minergie® housing (Swiss equivalent of effinergie) have a resale value 2 % higher than a standard housing, for an average investment extra cost of 6%.

Besides, the BBC-effinergie housing are better adapted to the evolution of demand and it will be easier to rent or resale them because of the energy, increasing regulations and a better readability of the energy performance of buildings (energy label).

A regular source of income

Nowadays, the implementation of photovoltaic systems connected to a network will enable to resale electricity at a rate fixed in advance.

The agreed overinvestment – for the installation of such a system – may be considered as an investment. Its rate of return has a value similar to the investments in banks.