Public-private partnerships: a promising solution for increasing the pace of home renovation but difficult to set up

5 July 2022

If Europe wants to increase its buildings’ renovation rate, private finance has to be mobilised to complement public funds. Ideally through public-private partnerships that are still difficult to set up.

The European Commission launched the ‘NextGenerationEU’ programme to accelerate the post-Covid recovery in Europe. In its core: the renovation of the building stock. Significant public investments and subsidies are planned to boost the renovation, seeking both social and economic benefits.  But the injection of public resources is not sufficient. Aware of this problem, the Commission advocates for public-private collaboration as a vehicle capable of increasing the pace of renovation.

One-stop-shops for home renovation such as those involved in the ORFEE project would definitely benefit from such partnerships. They could help them optimizing their financial structure thanks to well-structured standardized processes and pooling of the capital.

Public-private partnerships face three main challenges

But today, the environment for the creation of public-private partnerships (PPP) is not yet fully favorable. Actors, who attempt to set up such collaborations, face different challenges among which the following stand out:

  1. Administrative and bureaucratic procedures:  Although regulatory frameworks and administrative processes vary from one country to another, it seems that the process of setting-up a PPP is complex and lengthy in most of the EU member states. A simplification of these procedures, especially for the part of public authorities, would make the whole process smoother and less time consuming.  The European Union aims at facilitating public-private interaction and, ultimately, the citizen-government relationship through different tools, including one-stop-shops for home energy renovation.
  2. Reliance on public funding: today it is very hard for one-stop-shops to become economically viable. They need public subsidies as homeowners are not willing to pay for their services and they don’t reach sufficient volume of renovation works. This dependency on public funding complicates the one-stop-shops replication around Europe. PPP could help OSS reach their economic viability without public funding. In other words, they could value and monetize the services offered in public interest.
  3. Political cycles: The risk related to changes of political priorities is a challenge that must be resolved with a broad consensus among all involved stakeholders. Both, social and political actors, must be considered to ensure the durability of partnerships regardless of future political changes.

The ‘NextGenerationEU’ programme brings the opportunity to boost a new emerging market of the housing renovation. Public-private partnerships are key to reaching the objectives established in the Green Deal. However, these main challenges have to be addressed urgently in order to incentivize private participation and mobilise private resources.

Photo by Palden Gyamtso on Unsplash