Luxembourg: The European Court of Auditors (ECA) has highlighted shortcomings in the design and monitoring of residential energy renovation measures in Cyprus, as detailed in a recent special report. These measures were financed through the Recovery and Resilience Facility (RRF), and the findings raise questions about the reported energy-saving benefits in Cyprus, suggesting that they fall below the 30% minimum threshold required.
According to Cyprus News Agency, the ECA's report specifically notes that Cyprus was unique among the four sampled Member States, which include Belgium, Italy, and Lithuania, for choosing deep renovation projects under a dedicated measure, representing 20% of allocated renovation funds. However, the auditors' calculations, derived from data on actual buildings, indicate that the energy savings reported by Cyprus would not meet the necessary 30% threshold.
The report further reveals that 88% of Cyprus's reported energy savings come from photovoltaic (PV) panel installations, funded through the "Promotion of Individual Energy Efficiency Measures" measure. While PV panels contribute to reducing carbon dioxide emissions and are counted as energy savings under the Energy Performance of Buildings Directive, they do not lower a building's real energy consumption.
The ECA also found that beneficiaries of the national Net Metering Scheme in Cyprus, who typically see a payback period for installation costs of 3.5 to 5 years, sometimes use energy credits generated to either maintain or increase their energy consumption. Additionally, a study of Cyprus's methodology for calculating building energy performance found significant differences between estimated and actual final energy consumption, with estimates being two to three times higher. Another study reported discrepancies as high as 377%.
The report highlights concerns about cost-effectiveness, stating that Cyprus will need approximately £24 million to reach its deep renovation measure target, which is 81% of the allocated budget. This suggests that the original cost estimates were inflated. The ECA also flagged Cyprus's deep renovation measure as "at risk of delay" due to a reduction in the target from 1,100 to 800 renovations by November 2025. This target adjustment did not reflect actual progress, as Cypriot authorities had informed auditors of 263 completed projects and 1,465 signed contracts by that month.
In comparison, Belgium's criteria for renovation funding did not require poor energy performance ratings, leading to funding for medium or low-impact projects. Italy's "Superbonus" program was deemed the costliest and least cost-effective, costing nearly £10 per kilowatt-hour saved. Lithuania's national recovery plan revision reduced its renovation target by 40%, risking only 77% of the revised target being achieved.
At the EU level, the ECA identified a lack of explicit reference to deep renovations in the RRF. Only Romania among the 27 Member States linked a measure to a specific deep renovation target. Overall, 83% of the expenditure was for medium-depth renovations, with the remaining 17% not subject to any minimum energy-saving requirement.
The ECA has recommended that the European Commission improve targeting of renovation measures for the next Multiannual Financial Framework (MFF), ensure transparent reporting of energy savings, and evaluate renovation measures by 2026 and 2028, respectively. The Commission was also advised to enhance performance monitoring by December 2027.
The EU Commission welcomed the report's conclusion that the RRF has broadly supported energy efficiency improvements in residential buildings. It noted the mechanism's support for over 400 energy-efficiency reforms and investments valued at around £80 billion, with approximately £44 billion dedicated specifically to residential renovations.
In response to the lack of focus on deep renovations, the Commission stated that the RRF Regulation did not mandate such measures in national plans. It also noted that Member States generally chose schemes aiming to reach a broader range of households and buildings, allowing for more rapid and large-scale renovations.
The Commission partially accepted recommendations for strengthening renovation measures under the next MFF, referencing a proposed Performance Regulation to create a harmonised framework for monitoring expenditure. It stated that future arrangements would depend on interinstitutional negotiations on the next MFF.
Regarding reported energy savings and Energy Performance Certificates (EPCs), the Commission maintained that these are based on the methodology in the Energy Performance of Buildings Directive and are a reliable tool for assessing improvements. It noted that exact measurement of actual energy savings is neither legally required nor technically feasible due to variables like occupancy, user behavior, and weather. The Commission partially accepted the recommendation to improve performance monitoring.
On common monitoring indicators, the Commission explained that these track overall progress towards RRF goals rather than evaluating specific measures. It reiterated that Member States are responsible for reporting underlying data, while the Commission committed to further informing the methodology used for the energy savings indicator.
Finally, the EU executive acknowledged delays in complex renovation measures, attributing them to the challenging implementation environment during the pandemic, geopolitical tensions, energy crisis, inflation, and supply chain issues. It affirmed its commitment to achieving the RRF's objectives within the legal timetable.