Blended Green Finance for Affordable Homes
What is "Blended" or "Hybrid" Residential Green Finance?
This type of finance is typically targeted to benefit lower income or vulnerable households where
credit worthiness, residential project size - and accordingly the size of the loan -make pure private sector lending noneconomic due to high administrative costs relative to the size of the opportunity and high risk of default. A solution is that a government entity can provide support via grants and/or loan guarantees for a portion of the amount that a private bank would lend to enhance the “bankability” of servicing this market segment. This combination of private sector financing with government support is the “blending” (also referred to as "hybrid") of these two sources of resources critical to address low-income or vulnerable citizens’ needs.
Typical blended financing programmes combine the leveraging of private funds and a bank’s skill
with creating and administering loan products as an efficient way to implement government goals to address social challenges such as housing affordability and energy poverty.
Structure of private financing above and blended financing below
SMARTER4EU added the “Green” component – encouraging governments to tie loan support to
exemplary energy efficiency and other green criteria – which is effectively paid for by the reduced operating costs of the homes. This both improves the household’s finances to repay the loan and reduces a government’s future need to provide energy subsidies to low income / vulnerable households to heat or cool their home.
Similar to the Green Homes & Green Mortgages programmes that are 100% funded with private
financing, SMARTER4EU and the S4EU-ECoE performs the critical and complex activity to verify
energy performance and other green criteria and determine which residential projects qualify. The beneficiaries of this verification are the bank and the homeowner but now add the municipality and/or other government entities tasked with mitigating energy poverty and ensuring affordable housing options are available.
Meeting of municipalities organized by SMARTER4EU partners Habitat for Humanity and the Association "Energy Efficient Cities Ukraine“
What tools and research are available to leverage public private partnerships for affordable real estate development with innovative blended green residential finance?
Online Podcast: Place based hybrid finance to rebuild Ukraine and catalyze better building
standards everywhere produced in partnership with Zero Ambition.
A Published catalogue of EU- based good practice examples of pilot projects using blended /
hybrid green finance solutions with private sector banks for low income, new construction and
EE/Green renovations implementable in Ukraine.
A toolkit: Recommended Green Homes renovation solutions to mitigate energy poverty was
created and available. This full set of documents and guidance is focused on solutions for households experiencing Energy Poverty to describe recommended Green Homes renovation solutions to accommodate all relevant stakeholders (citizens, banks, government agencies, Green Homes Solution Providers (GHSPs).
Round table discussion on financing affordable green homes bringing together financial institutions, municipal councils and civil society from Ukraine, Portugal, Spain and Ireland (Better Homes Conference - SMARTER4EU segment, Dublin, Ireland - November 2024)
A policy brief: Incentives for low-income households to be integrated with privately financed
GHGM programmes including a summary of mechanisms to alleviate Energy Poverty, updated list of European policies and case studies from several European countries with a special focus on Portugal.
The SMARTER4EU consortium created a specialised blended green finance course dedicated to
the capacity building needs of municipalities. This course can be taken as a standalone course or
combined with the “Green Homes Accredited Finance Professional” programme described above to create a public sector version of the accreditation.
Specialised green finance course available online for 300 minutes of self-paced learning
Municipalities’ roles and actions taken (MoU’s/petitions signed)
SMARTER4EU's Let's Build Green and Elevate campaign encouraged both public and private
stakeholders to make a commitment for embedding hybrid green energy solutions into their
social/affordable housing programs. By the end of the project the campaign collected over 470
supporters from over 300 different entities from 25 countries worldwide.
Furthermore, over 200 municipal employees eager to mainstream green housing standards in their cities participated in 9 online courses available in English and Ukrainian. In total 12 municipal entities pledged to pilot-test green homes certification in their affordable housing projects.
Upon signing a memorandum of understanding (MoU), Smarter4EU provided/provides these
municipalities with individualized support, including expert consultancy on green housing standards.
In Ukraine, for instance, MoU signatories include cities such as Kovel, Mykolaiv, Vinnytsya and Rivne, alongside the Chernivtsi regional agency of municipal development and the Ivano-Frankivsk regional agency of municipal development; which brings together 118 municipalities from all parts of the country, an area inhabited by over 1 million of residents. Each of these SMARTER4EU municipal partners implements green housing principles in their distinctive context.
From sustainable emergency housing to plans of post-war redevelopment of damaged
neighborhoods into green communities, Ukrainian municipalities are turning to green certification as a part of their complex approach to resilient housing.
Activities with municipalities went beyond signing of memorandums and included opportunities for education and networking via online events, field trips to affordable green residential projects and conferences.
Petition of the "Let's Build Green and Elevate" campaign.