REPORT 0N TASK 1 ANALYSE THE CURRENT STATE OF THE HOUSING STOCK

Transcription

1 REPORT 0N TASK 1 ANALYSE THE CURRENT STATE OF THE HOUSING STOCK PROJECT: «RUSSIAN URBAN HOUSING ENERGY EFFICIENCY PROGRAMME MODEL DEVELOPMENT» CONTRACT : С22341/GEF PREPARED FOR: THE EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT Moscow

2 Table of contents Table of contents... 2 List of Figures... 4 List of Tables... 6 List of abbreviations... 7 EXECUTIVE SUMMARY... 8 INTRODUCTION SECTION 1. REVIEW OF THE CURRENT STATE OF THE HOUSING STOCK IN THE RUSSIAN FEDERATION Dynamic and Structure of the Housing Stock in the Russian Federation Dynamics of the Level of Comfort of the Housing Stock in the Russian Federation Dynamics of the Needs for Capital Repairs and Capitally Repaired Housing Stock Volume and Pattern of Energy and Water Consumption by Residential Buildings Estimation of the Volumes and Conditions of Energy Savings Resulting from Capital Repairs of Residential Buildings Level of Affordability of Housing and Utility Services Cost of Capital Repairs of Apartment Buildings Conclusions SECTION 2. REGULATORY REQUIREMENTS TO CAPITAL REPAIRS OF APARTMENT BUILDINGS Regulatory Requirements to the Scope of Works on Capital Repairs of Residential Buildings Regulatory Requirements to Enhancement of Energy Efficiency of the Housing Stock as a Result of Capital Repairs Conclusions SECTION 3. CATALOGUE OF KEY MEASURES FOR CAPITAL REPAIRS OF RESIDENTIAL BUILDINGS Catalogue of measures for capital repairs of residential buildings Definition of packages of measures for capital repairs of residential buildings Package No 1 (minimum) Package No. 2 (realistic) Package No. 3 (energy - efficient) Resource saving as a result of implementation of packages of measures for capital repairs of residential buildings The procedure for estimating the amount of savings as a result of implementation of energy-saving and energy efficiency enhancement measures Estimation of the amount of utilities savings as a result of implementation of energy efficiency enhancement measures Conclusions SECTION 4. LONG-TERM FORECAST SCENARIOS FOR CAPITAL REPAIRS UNTIL

3 4.1 Description of key assumptions in scenarios «Sluggish Strategy» baseline «Improvement Strategy» «Like in Europe» Comparison of scenarios Conclusions SECTION 5. CAPITAL REPAIRS IN THE REGIONS OF THE RUSSIAN FEDERATION Quality of statictical data by regions The current situation about capital repairs by regions Evaluation of the scope of capital repairs and expenditures for capital repairs until 2035 by constituent entities of the Russian Federation Conclusions SECTION 6. EXPERT EVALUATION OF AVAILABILITY AND SCOPE OF GOVERNMENT OBLIGATIONS TO FINANCE CAPITAL REPAIRS OF APARTMENT BUILDINGS IN COMPLIANCE WITH THE HOUSING LEGISLATION OF THE RUSSIAN FEDERATION Obligations of the former landlord envisaged in the law on the housing stock privatization Persones responsible for implementation of capital repairs in apartment buildings, according to Law on privatization On the procedure of fulfilling the obligations of the former landlord with regard to capital repairs Judicial practice and its implications Option of the Constitutional Court of the Russian Federation Priority of stipulation of the Housing Code of the Russian Federation revisited Recommendations on refinement of the legislation Evaluation of the amount of state obligations towards capital repairs of apartment buildings Conclusions ANNEX 1. STATISTICAL DATA ON THE STATE OF THE HOUSING STOCK ANNEX 2. DETAILED ESTIMATION OF SAVINGS FROM MEASURES IN EACH OF THE THREE STANDART PACKAGES ANNEX 3. AN EVALUATION OF EXPENDITURES FOR CAPITAL REPAIRS UNTIL

4 List of Figures Figure 1.1 Factors determined the housing stock dynamics 20 Figure 1.2 Annual (average annual) growth of the housing stock floor space and dynamics of the dilapidated and unsafe housing share 21 Figure 1.3 Distribution of buildings and residential area by year of construction in Figure 1.4 Distribution of residential area by year of construction in Russian regions in Figure 1.5 Distribution of buildings by walling 24 Figure 1.6 Level of comfort of the municipal housing stock 25 Figure 1.7 Dynamics of the floor space of capitally repaired apartment buildings in Figure 1.8 Dynamics of the floor space of capitally repaired premises in apartments in Figure 1.1 Floor space of capitally repaired apartment buildings in 2009, by RF constitutional entities 28 Figure 1.10 Dynamics of the apartment buildings floor space by operating life, area of premises that need capital repairs, and average age of apartment buildings in Figure Dynamics of the area of facades and roofs capitally repaired in Figure 1.12 Pattern of energy consumption in apartment buildings of the energy efficient neighborhood in Tyumen in Figure 1.13 Standard distribution of residential buildings by unit specific consumption of heat energy for heating purposes ( slope of wasteful energy consumption ) 32 Figure 1.14 Correlation of unit specific energy consumption with year of construction of residential building 33 Figure 1.15 Dynamics of requirements to thermal protection of buildings in USSR and then in Russia depending on year of approval of the Building Code (SNiP) (the data are estimates, 1954=100%) Figure 1.16 Rating of residential buildings of the energy efficient neighborhood in Tyumen by unit specific energy consumption and energy saving potential 34 Figure 1.17 Share of rent and utility payments 36 Figure 1.18 Mechanism of financing capital repairs under projects implemented by the Fund for the Promotion of the Housing and Utility Sector Reform in Figure Dynamics of capital repairs costs by type of work in Figure 1.20 Capital repairs costs by regions of the Russian Federation in Figure 4.1 Factors determining the dynamics of the housing stock in the Russian Federation in Figure 4.2 Change in the age structure of the housing stock in the Russian Federation in Figure 4.3 Scope of capital repairs of apartment buildings according to the "Sluggish Strategy Scenario" 78 Figure 4.4 Scope of capital repairs by specific work items according to the "Sluggish Strategy" 80 Figure 4.5 Expenditures for capital repairs according to the "Sluggish Strategy" scenario 80 Figure 4.6 Structure of financing capital repair costs according to the "Sluggish Strategy" scenario 81 Figure 4.7 Scope of capital repairs of apartment buildings according to the "Improvement Strategy" scenario 84 Figure 4.8 Scope of capital repairs by specific work items according to the "Improvement 84

5 Figure 4.9 Figure 4.10 Figure 4.11 Russian Urban Housing Energy Efficiency Programme Model Development Strategy" scenario Expenditures for capital repairs according to the "Improvement Strategy" scenario Mechanism of financing capital repair costs according to the "Improvement Strategy" scenario Utility cost savings according to the "Improvement Strategy" scenario Figure 4.12 Scope of capital repairs of apartment buildings according to the "Like in Europe" scenario 89 Figure 4.13 Expenditures for capital repairs according to the "Like in Europe" scenario 89 Figure 4.14 Structure of financing capital repair costs according to the "Like in Europe" scenario 90 Figure 4.15 Utility cost savings according to the "Like in Europe" scenario 91 Figure 5.1 Percentage of dilapidated and unsafe residential buildings in the floor space of the housing stock 96 Figure 5. 2 Specific weight of regions in the floor space of rehabilitated buildings in Figure 5.3 Unit cost of capital repairs (Rubles/ m2)

6 List of Tables Table 1.1 Energy consumption by RF population in 2009 (TOE thousand) 31 Table 2.1 Standard (required) specific heat transmission resistance of residential 47 buildings envelope Table 3.1 Catalogue of measures for improvement of heat conductivity (heat 50 insulation) of residential buildings' envelopes Table 3.2 Scope of works at heat-, water-, power- and gas supply systems in 52 residential buildings Table 3.3 Attributes of Model Apartment Buildings in Russia 54 Table 3.4 Unit cost of Package No. 1 of measures per one m2 of the total building 57 floor space Table 3.5 Unit cost of Package No. 2 of measures per one m2 of the total building 61 floor-space Table 3.6 Unit cost of Package No. 3 of measures per one m2 of the total building 66 floor-space Table 3.7 Comparison of savings from packages of measures implemented during 71 capital repairs of residential buildings (relative amount of savings on some utility resources per one m2 of the total building floor space) Table 4.1 Main estimation results based on the "Sluggish Strategy" scenario 77 Table 4.2 Main estimation results based on the "Sluggish Strategy" scenario 82 Table 4.3 Main estimation results based on "Like in Europe" scenario 87 Table 4.4 Comparison of main estimation results by scenarios for Table 6.1 Basic Data for National (The Russian Federation) Housing Stock Forecast 112 Table 6.2 Evaluation of the Amount of State Obligations towards Former Tenants 115 with regard to Capital Repairs in Apartment Buildings (Abs)

7 List of abbreviations СEEU EMCRHS IDD CFL GSOP SNiP HWS CWS IRH ESCO Gcal TOE KgCe TCN Center for Efficient Energy Use Estimate Model for capital repairs of housing stock Input distribution devices Compact fluorescent lamp C per day of the heating period Building Code Hot water supply Cold water supply Individual Residential Houses Energy Saving Company Gigacalorie (1 Gcal 1163 kwh) Tonne of Oil Equivalent Kilogram of Coal Equivalent 1 KGce= 8.133kWh Regional Construction Norms

8 EXECUTIVE SUMMARY The section 1 includes an analysis of the current state of the RF housing stock performed on the basis of official statistical data. The dynamics of the housing stock s total area has been analyzed; the structure of the housing stock has been evaluated in terms of service life of buildings, their walling material, level of amenities provision, and forms of ownership of residential premises. The data with regard to the volume of done works of capital repair of national and regional housing stocks has been analyzed. The results of evaluated demand for capital repairs have been set out herein. The indicators describing energy consumption by and energy efficiency of the housing stock have been included in this section; the energy saving potential has been evaluated. Expert analysis of statistics and other available data revealed the following situation: The housing stock of the Russian Federation amounted to 19,650 thousand buildings of the total floor space 3,177 mln. m 2 as of 2009 year end, of which quantity 2,293 mln. m 2 (72%) accounted for urban settlements 1. In 1990th, the rate of growth of the housing stock area became significantly slower and remained at the low level until Then this parameter began growing and reached the average level of the 1980 th in Over the period from 2000 to 2009, the housing stock s area has increased by 14%. The annual increase of the housing stock makes up about 3 %. The greater part of residential premises consists of housing units in apartment buildings (70 % of the housing stock s total area). As of the end of 2009, the total number of apartment buildings (ABs) was estimated at 3,224 thousand buildings with the total area of 2,237 million sq. m. Individual buildings (IBs) equaled to 16,426 thousand units. Their total area was 974 million sq. m. Substantial service life and increased wear are typical for Russia s housing stock. The average life of a building in Russia is estimated at 42 years; In 2009 the service life surpassing 25 years had the buildings as follows: o 80.1% of IBs; o 75.8% of Abs In 2009, the multi-apartment housing stock older than 25 years accounted for 1,416 mln. m 2 and older than 40 years - for 751 mln. m 2, or, in percentage terms, for 63% and 34% of the multi-apartment housing stock respectively. 60% of residential premises served for more than a quarter of a century; 90% of buildings in 43 regions of Russia was constructed before 1995; Volumes of housing with the operating life exceeding 25 and 40 years will be systematically growing, and the average operating life of a residential building will increase up to 50 years by Indicators characterizing the living conditions of the population are generated on the basis of statistical survey forms: No.1-zhilfond The Housing Stock Data, No.4-zhilfond Data on Providing Residential Premises to Citizens, No.1-KR Data on Capital Repairs of the Housing Stock.

9 In 2009, 66-percent-wear had 6% of IBs and 8.7% of ABs (or 3.7% of the total area of residential buildings). After 2005 the area of a dilapidated housing has been diminishing till it reached 80 million sq. m. in However, the growth of the area of an emergency housing stock has not been able to be kept down. In 2009, its area was 19.4 million sq. m. In 2009, the proportions of IBs and ABs were 4.5% and 2.5%, respectively. Most part of Russia s housing stock - over 84% - is privately owned. In this Russia largely outpaces many developed countries. In fact, 97 % of IBs and 76% of housing units in ABs are reported to be in private ownership. The housing stock in Russia has a rather high level of amenities. An average of 61.4% of housing is provided with all the amenities. In 2009, 89% of urban housing stock had access to water supply, 87% - to sewerage, 92% - to heat supply, and 80% - to hot water. Russia housing stock of apartment buildings is in desperate need of capital repairs which stems from the fact that in the 1990s the volumes of housing stock s capital repair dropped drastically. Yet there is an upward trend in place from 2008 when through the implementation of regional programmes financed mostly by the Housing and Utilities Fund the volume of capital repairs of apartment buildings has risen. Nevertheless, in 2009 the volume was 5.5 times below the level achieved in According to Rosstat, approximately thousand apartment buildings (i.e. 9% of the total number of apartment buildings) needed capital repairs as at the beginning of Expert analysis revealed that these figures are based on the average operating life of an apartment building prior to capital repairs on it and equals almost 40 years. According to calculations made, as of 2009 the comprehensive capital repairs were required by: 2,120-2,196 thousand apartment buildings with an average service life of 25 years (i.e., 1,314-1,361 million sq. m.); 1,374-1,398 thousand apartment buildings with an average service life of 40 years (i.e., million sq. m.). This level of demand for capital repairs will persist in future given that, annually, at least 2% of the total area of apartment buildings housing stock undergoes comprehensive capital repairs. If capital repairs are made at a slower rate, the demand for them will grow. According to statistical reporting in 2009 capital repairs were carried out in 72.3 thousand apartment buildings, which accounts for 25.6% of the need for capital repairs estimated on the basis of Rosstat data. According to statistical reports in 2009 the costs of repairing the housing stock were estimated at billion rubles (3.47 billion euro), including billion rubles (3.32 billion euro) for capital repairs of apartment buildings. In 2009, the average cost of capital repairs per one square meter was 3.3 thousand rubles (79.6 euro). Under the regional programmes co-financed by the Housing and Utilities Fund the average unit cost of repair was 800 rubles (19.3 euro) in 2009, 810 rubles (18.6 euro) in This suggests that mostly selective works of capital repair took place. Uneven distribution of the scope of capital repairs among Russian regions in The leaders are Moscow, Tatarstan, and Bashkortostan with a 25% share in all capital repairs. In 2009, 8.5% of the whole housing stock were capitally repaired in Chelyabinsk Oblast, 8% in Ivanovo Oblast; in 15 regions this parameter exceeded 3% and in 44 regions it was less than 1%. 9

10 The aggregate energy consumption in the housing stock, including non-residential premises and consumption for the general needs of buildings can be estimated at the level of TOE 165 mln in The structure of energy consumption by Russia s population is similar to that in European countries: heat makes up about 62% of the total energy consumption, hot water - 20%, other sources - about 19%. The specificity of the Russian heat consumption is that centralized supply dominates the supply of heat (56%) and the supply of hot water (69%) whereas the share of centralized supply in Europe is only 12%. The energy efficiency of the Russian housing stock is, on the whole, low: In 2009, a specific consumption of all types of energy in a building was, on average, 47 kilograms of oil equivalent (KOE) per square meter (382.2 kwt*hour / m 2 per year): The indicators of energy efficiency of a building depend on a year of its construction. Reduced specific consumption of energy is typical for new buildings, because their thermal protection has been designed in line with new construction standards; The energy efficiency of windows is estimated at 20-30% - for the entire housing stock and 30-40% in urban areas. As of 2009, the equipment of Russia s housing stock of apartment buildings with meters was, on the whole, inadequate: Communal heat energy meters are installed in 8% of apartment buildings (ABs), cold water meters - in 11% of ABs, hot water meters in 7% of ABs, electricity meters in 21% of ABs, and gas meters in 0.9% of ABs. Domestic heat energy meters are installed in 1% of housing units, cold water meters in 22% of them, hot water meters in 19% of apartments, electricity meters in 80% of apartments, and gas meters in 5% of apartments. Energy savings potential of apartment buildings is considered to be sufficiently high: that with regard to heat energy - 40%, electricity 37%, natural gas -30%, water - 25%. Having achieved a complete use of energy saving potential the reduction of a specific consumption of energy down to 29.2 KOE/m 2 per year, or by 40%, can be attained in all residential buildings. The section 2 reviews the regulatory and legal acts which contain the requirements to safety of buildings and to their energy efficiency. The lists of works and energy efficient measures performed within capital repairs of apartment buildings, as well as the requirements with regard to construction standard applied, when designing new buildings and developing the projects of capital repair of existing buildings, are included herein. Relationships in the area of capital repairs are governed by a number of regulatory legal acts integrated in the Russian legislation. Existing lists of capital repair works are not mandatory for owners of buildings. However, once they make their decision on capital repairs and on type of works within capital repairs, as a result of performance of relevant works, the observance of energy efficiency requirements and of requirements to equipping the buildings with meters of energy resources should be ensured. Legislation of the Russian Federation establishes requirements to safety and energy efficiency of residential buildings over their service life. At the same time, those requirements cannot be applied to buildings which have been put into operation before 10

11 the former became effective, but the requirements can be applied when the rehabilitation or the capital repairs are taking place. After the adoption of Federal Law #261-FZ, capital repairs of buildings are correlated to and should comply with the standards of energy efficiency enhancement and energy saving. The law prohibits the commissioning of capitally repaired buildings and structures non-compliant with the requirements of energy efficiency and the requirements for use of the energy consumption meters. Requirements contained within current construction standards and within sets of rules allow ensuring energy efficiency of buildings which are being constructed, repaired and rehabilitated. There is a need not so much in developing new regulatory requirements with regard to capital repairs of apartment buildings, as in a larger harmonization of current regulatory requirements. The section 3 contains model lists of measures that can be carried out as part of capital repairs of buildings to reduce heat losses via walling and losses of utility resources in systems of heat-, water-, electricity-, and gas supply. There are three packages of measures to be performed within capital repairs of apartment buildings. These packages - baseline, realistic and energy efficient - vary according to tasks and cost of repair. The cost of each package of measures has been calculated for four most wide-spread types of apartment buildings. Herein are included the results of calculation of savings of various types of utility resources attained by means of implementing three different packages of measures in each of four types of apartment buildings On the basis of effective regulatory and legal documents and relying on available Russian and international practice the Consultant has put forward three packages of measures which may be implemented within capital repairs of apartment buildings, and which vary according to tasks and amounts of financial resources for capital repairs. These are baseline, realistic and energy efficient packages: Package #1 (baseline) aims at supporting a building in a serviceable state. There are 15 measures included into the package. Package #2 (realistic) is oriented towards the reduction of physical wear and tear and obsolescence, the enhancement of operational characteristics of a building, as well as the improvement of living conditions of residents. The total number of measures in this package is 20. Package # 3 (energy efficient) will help to reduce physical wear and tear, and obsolescence, enhance operational characteristics of a building, and also considerably reduce consumption of energy resources and water, and improve living conditions of residents. Four most wide-spread, in Russia, types of apartment buildings have been chosen to calculate the cost of each of the packages. These packages differed by the number of floors, total area and other architectural characteristics and structural performance of a building. The unit cost of these packages of measures - which are recommended for implementation within capital repairs varies according to the type of an apartment building, and is as follows: For package # 1 from 3,310.9 RUR/m 2 to 1,516.2 RUR/m 2 ; For package # 2 from 5,193 RUR/m 2 to 2,849.1 RUR/m 2 ; For package # 3 - from 6,706.7 RUR/m 2 to 4,056.7 RUR/m 2. 11

12 On the basis of the calculations it is clear that the highest unit cost of repair of each package is typical for low-rise buildings (those with up to 4 floors, and with total area of up to 750 m 2 ), while the lowest unit cost of repair for high-rise buildings (those with and more floors). The calculations show that an average specific saving of utility resources (per one sq. m.) increases while passing from package #1 to package #3, and varies within the packages according to the type of a building. The higher value of specific saving of utility resources has been calculated for buildings with fewer floors. For buildings of the 1 st type (with up to 4 floors) and for packages #1, #2, #3, respectively, the saving will be as follows: Heat 12.4%, 21.0%, 26.6% Electricity 7.7%, 7.7%, 10.5%; Gas 14%, 14%, 18%; Water 13%, 16%, 22%. For buildings of the 2 nd type (with 5-8 floors) and for packages #1, #2, #3, respectively, the saving will be as follows: Heat 10.3%, 20.8%, 25.7%; Electricity 8.8%, 8.8%, 11.3%; Gas 12%, 12%, 15%; Water 10.5%, 13.0%, 17.5%. For buildings of the 3 rd type (with 9-12 floors) and for packages #1, #2, #3, respectively, the saving will be as follows: Heat 10.5%, 20.6%, 24.4%; Electricity 8.0%, 8.0%, 10.3%; Gas 10%, 10%, 12%; Water 8%, 10%, 13%. For buildings of the 4 th type (with floors) and for packages #1, #2, #3, respectively, the saving will be as follows: Heat 7.4%, 20.4%, 23.8%; Electricity 2.4%, 2.4%, 4.0%; Gas 8%, 8%, 9%; Water 5.5%, 7.0%, 6.5%. The section 4 reviews three scenarios of capital repair dynamics which differ from one another by planned annual volumes of capital repairs and the proportion of comprehensive repairs embracing energy saving measures: Momentum Strategy, Enhancement Strategy, As in Europe. For each scenario with accepted assumptions the demand for capital repairs of apartment buildings, the volume of undertaken capital repairs and the costs funded from various sources of financing have been calculated for a period until Analizing the needs in funding required for capital repairs and towards this end it reviews the following three scenarios for the capital repairs dynamics 12

13 "Sluggish Strategy", i.e. a scenario extrapolating existing trends in recent years in the field of capital repairs and serving as a "base line". In this scenario it is assumed that 2% of the total floor space of apartment buildings would undergo capital repairs each year, primarily those apartment buildings which have been in operation for 40 years, of which at least 50% should undergo comprehensive capital repairs according to plans which do not stipulate requirements with regard to reduction of energy consumption; "Improvement Strategy", i.e. a scenario according to which it is assumed that starting from % of the total floor space of residential buildings will undergo capital repairs each year, primarily apartment buildings which have been in operation for 40 years, of which at least 75% should undergo comprehensive capital repairs according to plans stipulating requirements with regard to reduction of energy consumption by at least 15%; "Like in Europe", i.e. a scenario in which it is assumed that starting from % of the total floor space of residential buildings will undergo capital repairs each year, of which at least 90% should undergo comprehensive capital repairs according to plans stipulating requirements with regard to reduction of energy consumption by at least 30%. All calculations were performed using a estimate model developed by the Consultant for capital repairs of housing stock in Russia. The comparison of estimation results in various scenarios reveals that: According to the "Sluggish Strategy" scenario it is not possible to noticeably reduce the percentage of the floor space of apartment buildings which have been in operation for over 40 years and did not undergo comprehensive repairs. The implementation of this scenario leads to a situation when about a third part of the housing stock feels a steady need for comprehensive capital repairs. Yet the state of the housing stock is not improving. Momentum Strategy serves only to prevent the possibility of its noticeable deterioration. The scenario Enhancement Strategy is essential to reduce the proportion of the housing stock - which does not need comprehensive repairs - down to 12%, while the implementation of the scenario As in Europe would help to make capital repairs to all the buildings of over 40 years before 2035.For this purpose the scopes of capital repairs must be at least doubled or even tripled as compared to the "Sluggish Strategy" scenario This can be achieved by increasing the percentage of the annually overhauled living space in apartment buildings to 3-4% and by increasing the percentage of comprehensive capital repairs to 75-90%; Applying three different packages of capital repair measures has a rather moderate impact on the average unit costs of capital repairs per one m 2 The increment in expenditure on capital repairs according to the "Improvement Strategy" and "Like in Europe" scenarios is achieved mainly by an increase in physical quantities of capital repairs; The implementation of the "Like in Europe" scenario alone will make it possible to practically and substantially improve the condition of apartment buildings and to implement capital repairs of all buildings in operation over 40 years and a major part of buildings in operation over 25 years until This large-scale programme of capital repairs requires that the structure of their financing should be changed. Only a part of costs will be covered by way of introducing monthly mandatory payments to be made by residents. On the assumption that the amount of financing by governments at all levels is declining, and amid limited possibilities of financing the capital repairs via ESCO, the role of loans is becoming a determinant one. 13

14 With no budget financing or limited budget financing of capital repairs, the percentage of loans raised for these purposes, the debt service burden and the percentage of mandatory payments for capital repairs by the population will grow with the increasing percentage of buildings which have undergone capital repairs; Savings on utility bills gained as a result of implementation of comprehensive capital repairs will allow to cover 11-18% of the total capital repair costs until 2035 within the period and, if the benefits from capital repairs are sustained for 25 years, 39-65% of the total capital repair costs may be recovered. Increase in the percentage of comprehensive capital repairs and implementation of institutional transformations allowing to significantly raise motivation for practical implementation of technically achievable energy saving benefits will substantially improve this indicator. The section 5 contains the results of the analysis of the 2009 statistical data on the area of dilapidated and emergency housing in the subjects of the Russian Federating, the total area of residential buildings which underwent capital repairs, and the unit cost of done capital repairs. The results of calculations of forecast evaluation of the volumes of capital repairs and the relevant costs for the period until 2035 for the subjects of the Russian Federation for each of three possible scenarios of capital repairs (divided into comprehensive repairs and selective repairs) has been included herein. The housing stock is unevenly distributed across the subjects of the Russian Federation. The highest figures are encountered in Moscow, the Moscow Oblast, the Krasnodar Krai and St. Petersburg. The lowest figures are encountered in the Nenets Autonomous Okrug, the Chukotka Autonomous Okrug, the Republic of Altai, the Jewish Autonomous Oblast and the Republic of Tuva. The oldest housing stock among regions is in St. Petersburg (42 years), in the Vladimir Oblast and Tula Oblast (42 years), in the Trans-Baikal Krai, in the Arkhangelsk Oblast, in the Ivanovo Oblast and in the Ryazan Oblast (41 years), in the Kaliningrad Oblast, in the Tambov Oblast and in the Tver Oblast (40 years). The "most recently built" housing stock is in the Republic of Ingushetia (19 years), in the Khanty-Mansijsk Autonomous Okrug (23 years), in the Chelyabinsk Oblast (25 years), in the Republic of Tatarstan (27 years), in the Yamalo-Nenets Autonomous Okrug, in the Republic of Sakha (28 years), in the Chuvash Republic and the Chukotka Autonomous Okrug (29 years). Among the regions the highest percentages of unsafe and dilapidated housing stock are encountered in the Republic of Ingushetia (20.8%), Republic of Dagestan (20.1%), Republic of Tuva (18.8%), Republic of Sakha-Yakutia (15.1%), the Magadan Oblast (11.1%) and the Astrakhan Oblast (10.1%). The lowest percentages of unsafe and dilapidated housing stock among federal districts are encountered in the Central Federal district (2.0%) and Southern Federal District (2.1%); Such figures being among regions for Moscow (0.3%), the Chechen Republic (0.4%), the Kursk Oblast (0.7%), St. Petersburg (0.7%), the Stavropol Krai (0.8%) and Lipetsk Oblast (0.9%) The largest floor areas of buildings undergone capital repairs are encountered in Moscow (9.0%), for the Republic of Tatarstan (8.4%), for the Republic of Bashkortostan (6.7%), for the Chelyabinsk Oblast (5.6%) and for the Perm Krai (5.6%). The smallest renovated floor areas were encountered among the regions in the Karachayevo-Cherkessian Republic, the Republic of Karelia and the Republic of Kalmykia, the Stavropol Krai, the Tambov Oblast and the Bryansk Oblast. 14

15 According to statistical data, in 2009, the highest unit costs for capital repairs were registered in the Penza Region, the Kirov Region, the Arkhangelsk Region, the Novosibirsk Region, and the Krasnoyarsk Territory. The lowest unit costs were found in the Tomsk Region, the Republic of Tuva, the Chechen Republic and the Ivanovo Region. Although it is doubtful whether the statistical data on the cost of capital repairs could be considered reliable. The forecast estimates of the volumes of capital repairs and the costs of capital repairs over the period until 2035 have been calculated for the subjects of the Russian Federation for three possible scenarios set out in Section 4. The section 6 is dedicated to the review of regulatory and legal documents with regard to state obligations toward capital repairs of apartment buildings, and to the practice of application of relevant documents. The recommendations on amending the law on privatization of housing stock have been proposed to ensure a more clear regulation of obligations of a former landlord of privatized premises. On the basis of the accepted assumptions, the amount of state obligations with regard to financing capital repairs of apartment buildings housing stock has been evaluated in monetary terms. The Russian Federation has found itself in an ambiguous legal situation with regard to the government obligations to finance capital repairs of apartment buildings. Expert evaluation of the current legislation with regard to the obligations of the former owner of privatized residential premises (the former landlord the state or a municipality) in the context of financing capital repairs revealed the following: The Constitutional Court arrived at a conclusion that "regulations governing the issues related to common property maintenance in an apartment building and establishing mandatory cost sharing for residential property owners in an apartment building for maintenance and repair of common property in an apartment building, are designed to maintain buildings in a state corresponding to sanitary and technical requirements and to meet the common interests of residential property owners and can not be regarded as violating the constitutional rights of the applicant." The discrepancy between the Housing Code and the Law on Privatization as well as the absence of a procedure establishing obligations of former landlords (municipal and public authorities) entailed an unreasonably broad interpretation of Art. 16 of the Law on Privatization. It resulted in the emergence of the following public opinion: local selfgovernance bodies are obliged to conduct capital repairs of all apartment buildings, which had belonged to municipal (state) housing stock prior to privatization. This public opinion is reflected in the current judicial practices. Article 16 of the Law on Privatization can not be currently applied in the meaning it had at the time of adoption and subsequent amendments. Application of Art. 16 of the Law on Privatization is possible only insofar as it is not contrary to the stipulations of the Housing Code of the Russian Federation on the procedure for implementation of capital repairs of apartment buildings (by resolutions of general meetings of residential property owners in apartment buildings) and Federal Law No. 131-FZ dated October 6, 2003 "On General Principles of Local Governance Organization in the Russian Federation", it means that not mandatory but eventual co-financing of expenditures on capital repairs of apartment buildings from the budget is established. In other words, municipalities have no obligation to, they rather can co-finance capital repairs of apartment buildings out of budget funds. 15

16 Obligations of a former landlord to carry out capital repairs exist as long as the Law "On Housing Stock Privatization in the Russian Federation" is in force, and, as of today, it implies the period until March 1, It is recommended to define the obligations of former landlords more precisely via making amendments to the Law on Privatization specifying the parties towards which such obligations emerge and the way and extent of fulfillment of such obligations. According to the estimates, state obligations have not been met with regard to capital repairs of the total of 289 million sq. m. of apartment buildings (i.e., 13% of apartment buildings housing stock) According to the estimates, as of the end of 2010, the amount of state obligations, in monetary terms, was as mentioned below: 956 billion rubles towards capital repairs undertaken to eliminate dilapidation; 1,444 billion rubles towards capital repairs which involved the fulfillment of requirement to energy efficiency improvement. 16

17 INTRODUCTION The present report has been prepared in accordance with requirements set forth in the Terms of References for Consultancy Contract No: C22341/GEF of July 18, 2011 concluded by the European Bank for Reconstruction and Development (hereinafter EBRD) and the Institute for Urban Economics under the Russian Urban Housing Energy Efficiency Programme Model and Regulatory Framework Development (hereinafter Project). Project is implemented by the Institute for Urban Economics (IUE) of the Russian Federation in association with, Russia, Housing Initiative for Eastern Europe (IWO e.v.), Germany, and the Institute of Housing (Institute Byvania), Slovakia (hereinafter Consultant). In compliance with the Terms of Reference (ToR), Phase I of the Project envisages the development of mechanisms of financing and expert analysis of their potential impact on public expenditures and condition of the housing stock. The first Task under this Phase shall be the expert analysis of the current condition of Russian housing stock (Task 3.1, according to the ToR). Expert analysis shall comprise the following components: The analysis shall include: 1. A prognosis of the dynamics of the future requirements concerning the capital repairs, access to utilities and an increase of the energy efficiency of the housing stock. 2. The total cost forecast of repairing the housing stock in Russia to modern international standards. The costs should be broken down by type (capital, maintenance, operation), region and type of dwelling. The cost forecast should have a specified timeline for implementing the repairs. 3. Specification of the size of the state obligations concerning capital repairs of the housing stock resulting from the privatization of the housing stock in accordance with Article 158 of the Housing Code of the Russian Federation and Law No dated 4 July 1991 entitled On the Privatization of the Housing Stock of the Russian Federation. The present Report describes the results of the expert analysis. All analytical calculations and projections are based on the official statistics. In a number of cases we used the data of the Fund for the Promotion of the Housing and Utility Sector Reform. In addition, we took into account the requirements set forth in regulatory documents for the list of works and minimum effectiveness of works relating to capital repairs of residential buildings. On this base a list of key activities relating to capital repairs was composed, and such activities were divided into three packages. For each package expenditures were estimated with a breakdown by types of works and types of residential buildings, and the level of utility resources saving was assessed, which is attained through the implementation of these packages of activities. A scenario forecast was made for execution of works relating to capital repairs. Three scenarios of the scope of capital repairs and their dynamics were reviewed: sluggish development strategy, improvement strategy and Like in Europe strategy. 17

18 The forecast contains a schedule for repair works execution, distribution of expenditures timewise and their breakdown by possible sources of financing. In addition, projected scope of works relating to capital repairs and relevant expenditures were estimated with regard to various regions of the Russian Federation. The expert analysis of Russian legislation, which specifies the obligations of the state (municipalities) as former landlords of residential premises in the privatized housing stock with regard to financing capital repairs of apartment buildings, revealed an ambiguous interpretation of the current legislation and discrepancies between the provisions of the Housing Code and the Law on Privatization of the Housing Stock, as well as highlighted the necessity of making amendments to the Law on Privatization to clarify the obligations of the former landlord. On the basis of statistical data and accepted assumptions the amount of state obligations towards capital repairs of apartment buildings, which were undertaken by the state, being the former landlord of privatized residential premises, have been calculated. 18

19 SECTION 1. REVIEW OF THE CURRENT STATE OF THE HOUSING STOCK IN THE RUSSIAN FEDERATION This section includes an analysis of the current state of the RF housing stock performed on the basis of official statistical data. The dynamics of the housing stock s total area has been analyzed; the structure of the housing stock has been evaluated in terms of service life of buildings, their walling material, level of amenities provision, and forms of ownership of residential premises. The data with regard to the volume of done works of capital repair of national and regional housing stocks has been analyzed. The results of evaluated demand for capital repairs have been set out herein. The indicators describing energy consumption by and energy efficiency of the housing stock have been included in this section; the energy saving potential has been evaluated. 1.1 DYNAMIC AND STRUCTURE OF THE HOUSING STOCK IN THE RUSSIAN FEDERATION The housing stock of the Russian Federation amounted to 19,650 thousand buildings of the total floor space 3,177 mln. m 2 as of 2009 year end, of which quantity 2,293 mln. m 2 (72%) accounted for urban settlements and 884 mln. m 2 (28%) for rural areas 2. The housing stock included 3,224 thousand apartment buildings of the total floor space 2,237 mln. m 2 and 16,426 thousand individual residential houses of the total floor space 974 mln. m 2. In , the whole housing stock increased by 14%. Its dynamics determined by the commissioning and retirement of residential premises for different reasons (Fig. 1.1). The housing stock grew faster (+15.3%) in rural areas than in urban settlements (+13.5%), whereas the number of individual residential houses increased at a higher rate than the number of apartment buildings. In 2000, the rate of growth of the housing stock was 0.6% but in this value came to % or mln. m 2 per annum. The average per capita housing occupational rate in 2009 amounted to 22.4 m 2, however in urban settlements this figure accounted for 22.1 m 2 vs m 2 in rural areas. As compared to 2000, the average per capita housing occupational rate increased by 17% not only due to the commissioning of completed housing but also as a result of population decline. The average size of the total floor space was approximately 700m 2 in an apartment building and 60m 2 in an individual residential house. That is, according to the housing stock statistics, an average apartment building in Russia includes apartments. The total area of the housing stock does not include country houses (dachas) and garden cottages for summer accommodation. It does not include non-residential premises in residential buildings either. The area of residential premises in a typical residential building makes up approximately 75% of the building floor space. The remaining percentage falls on common areas and nonresidential premises. In other words, the floor space of residential buildings exceeds the housing stock floor space by approximately one third. Consequently, neither the floor space of residential buildings (72.5 mln. m 2 ) nor the floor space of apartment buildings (59.9 mln. m 2 ) commissioned in the Russian Federation in 2009 determine gain in the residential stock floor space due to housing production but the balance sheet indicator used to determine the current status of the housing stock the growth of the housing stock due to newly constructed units. 2 Indicators characterizing the living conditions of the population are generated on the basis of statistical survey forms: No.1-zhilfond The Housing Stock Data, No.4-zhilfond Data on Providing Residential Premises to Citizens, No.1-KR Data on Capital Repairs of the Housing Stock. 19

20 Figure 1.1 Factors determined the housing stock dynamics thou.m Non-residential units moved to the residential category Housing stock growth for other reasons Housing stock growth due to stock-taking New housing production Housing retired due to stock-taking Housing demolished in line with the master plans Housing destructed in the result of natural disasters Dilapidated and unsafe housing demolished Housing retired for other reasons Residential units moved to the non-residential category Housing stock growth Source: Rosstat data. Form 1-zhilfond Besides newly constructed units, the housing stock grows in the result of moving non-residential premises to the category of residential ones, stock-tacking, and for other reasons. Only in case of the former the housing stock area actually grows. The area of residential premises decreases due to demolition of dilapidated and unsafe buildings, destructions caused by natural disasters, demolitions carried out in line with master plans and other town planning documentation, change of the residential premises status from residential to non-residential, retirement for any other reasons, as well as in the result of stock-tacking. Only in the first three cases buildings cease to exist. The rate of the residential premises growth due to moving non-residential premises to the residential category is % per annum. That is, the housing stock dynamics is essentially determined by the ongoing processes of housing production and demolition (Fig. 1.1). In 1990th, the rate of growth of the housing stock area became significantly slower and remained at the low level until Then this parameter began growing and reached the average level of the 1980 th in 2007 (Fig. 1.2). 20

21 Figure 1.2 Annual (average annual) growth of the housing stock floor space and dynamics of the dilapidated and unsafe housing share Source: Rosstat data Annual (average annual) growth ratio of the housing stock area and dynamics of the dilapidated and unsafe housing stock share. The house commissioning dynamics affected the distribution of residential buildings by operating life with the distribution curve dip in (Fig. 1.3). Individual residential buildings whose operating life in 2009 exceeded 25 years accounted for 80.1%, apartment buildings of the same age for 75.8%, whereas the total floor space of residential premises being in use for over 25 years 60%. The less percentage of the last indicator is due to a noticeably larger average floor space available in newly built residential houses. The percentage of buildings constructed prior to 1995 exceeds 90% in 43 regions of Russia. Of this quantity, residential houses built prior to 1970 dominate (Fig. 1.4, Annex 1 table1). It is natural that a slower rate of housing production led to ageing of the housing stock, whereas quasi-capital repairs of the latter caused the growth of the share of dilapidated and unsafe housing up to 3.1%. The average age of Russian buildings equals to 42 years. This figure is significantly higher than the same indicator in Japan (30 years), comparable to the same indicator estimated for USA and Germany (44 years), but much lower than that in Great Britain (approx. 60 years) 3. In 2009, 6% of individual residential houses and 8.7% of apartment buildings, both amounting to 3.7% of the floor space of all residential buildings, were deteriorated at more than 66%. 3 Promoting energy efficiency investments. Case studies in the residential sector. OECD/IEA. Paris

22 Figure 1.3 Distribution of buildings and residential area by year of construction in 2009 Source: Rosstat data After 2005 the area of dilapidated housing began going down and in 2009 it came to 80 mln. m 2. However they failed to stop the growth of the unsafe housing share which amounted to 19.4 mln. m 2 in The share of dilapidated and unsafe individual residential houses in 2009 equaled to 4.5%, whereas the share of apartment buildings to 2.5%. The highest percentage of dilapidated and unsafe housing can be seen in the Republic of Ingushetia (20.8%), Republic of Dagestan (20.1%), Republic of Tyva (18.8%), Republic of Sakha (Yakutia) (15.1%), Magadan Oblast (11.1%), Astrakhan Oblast (10.1%), Sakhalin Oblast (9.9%), Nenets Autonomous District (9.4%), Amur Oblast (9.1%), Republic of Komi (9.0%), Yamal-Nenets Autonomous District and Jewish Autonomous Oblast (8.6%). In 2009, 2.9 mln. m 2 of dilapidated and unsafe housing (i.e. 2.9% of the total area of the dilapidated and unsafe housing stock) were demolished in the Russian Federation.

23 Figure 1.4 Distribution of residential area by year of construction in Russian regions in 2009 Chukotka Autonomous District Yamal-Nenets Autonomous District St. Petersburg Republic of Dagestan Republic of Sakha (Yakutia) Republic of Tatarstan Republic of Bashkortostan Republic of Buryatia Tomsk Oblast Kaliningrad Oblast Belgorod Oblast Southern Federal District Republic of Kalmykia Volga Federal District Republic of Tyva Russian Federation Republic of Kabardino-Balkaria Kaluga Oblast Chelyabinsk Oblast Far Eastern Federal District Perm Krai Siberian Federal District Vladimir Oblast Altai Krai Kemerovo Oblast Nenets Autonomous District Krasnoyarsk Krai Volgograd Oblast Zabaikalski Krai Nizhni Novgorod Oblast Novosibirsk Oblast Penza Oblast Republic of Khakassia Saratov Oblast Kirov Oblast Khabarovsk Krai Orlov Oblast Tver Oblast Yaroslavl Oblast Murmansk Oblast Ryazan Oblast Tambov Oblast Amur Oblast Smolensk Oblast Jewish Autonomous Oblast 2009 Source: Rosstat data and Consultant s estimates 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% before after 1995 Over 84% of the residential stock in Russia is privately owned, of which quantity 81% became citizens ownership due to privatization. Individual residential houses accounted for 31% of the

24 residential stock in Most of these houses (97%) belong to citizens by the right of ownership. Privately owned apartments in apartment buildings account for 76%. The share of the private residential stock on the whole and especially the share of privately owned apartments in apartment buildings is much higher than in most developed countries, which makes it difficult for many households to get approval for carrying out capital repairs and implementing energy efficiency projects. Early in 2000 th the share of privately owned housing accounted for 43% in Germany, 60% in Japan, and 56% in France. In the latter case, of this quantity, privately owned individual residential houses accounted for 80%, whereas only 25% of apartments in apartment buildings were citizens ownership. The share of social housing in apartment buildings made up 37%. Approximately only 20% of households in France reside in co-ownership housing, which is four (4) times less than in Russia 4. Estimates by the number of buildings show that wooden individual residential houses, whose share in the housing stock comes to 47% (Fig. 1.5), prevail over all other residential buildings. Wooden houses along with apartment buildings account for 54% of the housing stock; however, the share of wooden houses in residential floor area comes to 21% only. Figure 1.5 Distribution of buildings by walling Source: Rosstat data. Form 1-zhilfond Estimates by residential floor area show the domination of buildings made of brick and stone whose share in the total floor space of the housing stock comes to 40%. Prefabricated panel and block houses account for 25.8% and 5.4% of residential floor area respectively. The share of stone, brick, prefabricated block, and monolith houses is steadily growing, whereas the share of wooden and prefabricated panel houses is going down due to demolition and for other reasons. 4 Promoting energy efficiency investments. Case studies in the residential sector. OECD/IEA. Paris

25 1.2 DYNAMICS OF THE LEVEL OF COMFORT OF THE HOUSING STOCK IN THE RUSSIAN FEDERATION The average nationwide share of comfortable housing (equipped with the systems of water supply, sewage disposal (sewerage), heating, hot water supply, gas supply or floor standing electrical stoves) comes to 61.4%. In , this share increased by 12 percentage points. The level of comfort in apartment buildings can fairly enough be defined through indicators of the municipal housing stock comfortability (Fig. 1.6). In 2009, 89% of the municipal housing stock were connected to the main water supply system, 87% - to the sewerage mains, 92% - to the heating mains, and 80% - to the hot water supply system. The lowest level of comfort can be seen in apartment houses built prior to Only 1-2% of them are equipped with hot water supply. For houses built within this share goes up to 45% and for those built within comes to approximately 67%. Figure 1.6 Level of comfort of the municipal housing stock Source: Rosstat data 1.3 DYNAMICS OF THE NEEDS FOR CAPITAL REPAIRS AND CAPITALLY REPAIRED HOUSING STOCK The problem of the housing stock deterioration should be solved through its capital repairs and upgrade. In Russia, the main source of data on capital repairs of the housing stock is the statistical Form No.1-KR Data on Capital Repairs of the Housing Stock to be submitted by legal entities management companies. This Form reflects mainly the scope of works and expenditures for capital repairs of apartment buildings. Only 5-10% of capital repairs account for individual residential houses. There are various definitions of what is capital repair of a residential building. Generally, it is understood as a package of repair and construction works aimed to eliminate defects in deteriorated building parts, to repair or replace them in order to restore the usability of the building with its performance characteristics being improved, which is to ensure an adequate level of the building reliability and comfort for living.

26 Capital repairs can be comprehensive and selective. Comprehensive capital repairs cover the whole building or facility, deteriorated parts are replaced by new and the most up-to-date ones. Alteration of the building interior may be carried out at the same time so as to enhance the level of comfort. Selective capital repairs include the repairs or replacement of some building parts or a certain utility system, as well as the scope of other works that cannot be postponed until comprehensive capital repairs. Unfortunately, the Russian statistics does not distinguish comprehensive and selective capital repairs. Implicitly, the share of comprehensive repairs can be concluded from the ratio of the floor space of capitally repaired premises in apartments indicator to the floor space of capitally repaired residential buildings. This share grew up to 40% in 2009 (Fig. 1.7). According to the Year 2010 Report submitted by the state corporation The Fund for the promotion of the Housing and Utility Sector Reform, the share of comprehensive capital repairs in the Fund s projects accounted for 13% in Since the average cost of capital repairs of residential building under the Fund s projects amounted only to 800 RUR/m 2 in 2009 vs. the average nationwide value under all capital repairs projects equal to 3,340 RUR/m 2, it is evident that the share of comprehensive capital repairs in the nationwide statistics is higher than in the Fund s projects. First of all, this is due to Moscow city program of apartment buildings capital repairs which is not co-financed by the Fund. Nevertheless the figure 40% for nationwide comprehensive capital repairs in 2009 obviously looks overstated. Figure 1.7 Dynamics of the floor space of capitally repaired apartment buildings in Source: Consultant s estimates based on Rosstat data The operating life of buildings and facilities is determined by the endurance capability of the main load bearing structures: foundations, walls, ceilings. By the durability factor residential buildings divide into six groups, with the average operating life ranging from 15 to 150 years. Operating life of parts of residential buildings differs greatly. Thus, the minimum operating life 5 Year 2010 Annual Report of the state corporation The Fund for the Promotion of the Housing and Utility Sector Reform. The Fund for the Promotion of the Housing and Utility Sector Reform

27 of parts of a residential building prior to its capital repairs is defined as follows: from 30 to 80 years for foundations, walls, ceilings, frames, stairs, doorsteps; from 30 to 150 years for foundations; from 3 to 30 years for interior finishing; from 10 to 30 years for roofs, roofing, and entrance doors 6. Depending on the materials of main building parts and operating conditions, the minimum duration of efficient use of residential buildings varies from 10 to 25 years prior to scheduled capital repairs and from 2 to 5 years prior to scheduled current repairs. The statistics gives two indicators for capital repairs: the floor space of capitally repaired residential buildings and the floor space of capitally repaired premises in apartments. The latter is also known as the capitally repaired floor space in residential buildings indicator used in some statistical publications, which causes confusion. In s, this indicator accounted for approximately 3% of the whole housing stock (Fig. 1.8). In 1990s the scope of works on capital repairs of the housing stock sharply went down. They began growing after establishing the Fund for the Promotion of the Housing and Utility Sector Reform in 2007; however, even in 2009 the scope of works on capital repairs of apartments was 3.2 times lower than in The rate of capital repairs of the housing stock reduced to % in the mid2000s and grew up to 0.55% in 2009, still remaining 5.5 times lower than in In s residential buildings were capitally repaired once every 30 years on average, but in s rarer than once every 100 years. It should be noted that capital repairs of apartments is not a meaningful indicator today because the most of apartments are privately owned and the owners do not submit information on capital repairs of their apartments. In the soviet time apartments were owned by the state. They were provided to citizens under tenancy agreements and housing organizations were responsible to carry out capital repairs of apartments and report on that to the state statistics authorities. Figure1.8 Dynamics of the floor space of capitally repaired premises in apartments in Source: Rosstatdata Fig. 1.9 (Annex 1 Table 2) shows uneven distribution of the scope of capital repairs among Russian regions in The leaders are Moscow, Tatarstan, and Bashkortostan with a 25% share in all capital repairs. In 2009, 8.5% of the whole housing stock were capitally repaired in Chelyabinsk Oblast, 8% in Ivanovo Oblast; in 15 regions this parameter exceeded 3% and in 44 regions it was less than 1% (Annex 1 table 2). 6 Departmental building regulations ВСН (р) (State Committee for Architecture and Town Planning Order No.312 as of ). 27

28 Figure 1.9 Floor space of capitally repaired apartment buildings in 2009, by RF constitutional entities Source: Consultant s estimates based on Rosstat data According to the Rosstat s data (Form No.1-KR Data on Capital Repairs of the Housing Stock ), approximately thousand apartment buildings (i.e. 9% of the total number of apartment buildings) needed capital repairs as at the beginning of The need for capital repairs can be estimated differently: by minimum, i.e. assuming that the average operating life of

29 an apartment building is 40 years or by maximum, i.e. assuming that the average operating life of an apartment building is 25 years. The size of the housing stock whose operating life exceeds 25 and 40 years will steadily grow and the average operating life of a residential building will extend to 50 years by 2035 (Fig. 1.10). The dynamics of buildings that need capital repairs will depend on the dynamics and the type of capital repairs in The dynamics of the floor space that need capital repairs is estimated on the assumption that 2% of the apartment buildings floor space is capitally repaired every year under comprehensive capital repairs projects. Figure Dynamics of the apartment buildings floor space by operating life, area of premises that need capital repairs, and average age of apartment buildings in Source: Consultant sestimates The Consultant made estimates using the estimate model of capital repairs of housing stock, which takes into account the dynamics of the housing stock, its age structure, and capital repairs done before. In 2009, the residential space in apartment buildings of over 25 years accounted for 1,416 mln. m 2 and 751 mln. m 2 in buildings whose age exceeded 40 years or, in percentage terms, 63% and 34% of the multi-apartment housing stock respectively. In the case when the operating life of an apartment building prior to capital repairs is taken as 40 years, 1,374-1,398 thousand apartment buildings or mln. m 2 required comprehensive capital repairs and thousand apartment buildings or mln. m 2 required selective capital repairs in The figures of comprehensive capital repairs are higher because selective repairs of some building parts and utility systems dominated in s. The average value in the last range is comparable to the figure of 283 thousand apartment buildings stated in Form No.1-KR. It means that actually the need for capital repairs of apartment buildings is estimated on the basis of the average operating life of an apartment building prior to capital repairs equal to 40 years and considering selective capital repairs completed before. If the average operating life of an apartment building is taken 25 years, comprehensive capital repairs are required for 2,120-2,196 thousand apartment buildings or 1,314-1,361 mln. m 2, whereas selective capital repairs are 29

30 required for 1,400-1,219 thousand buildings or mln. m 2. If the rate of comprehensive capital repairs is 2% of the apartment building floor space per annum, it is possible to keep the residential space subject to capital repairs close to Year 2009 level. With the less percentage value, the residential space subject to capital repairs will rise. In 2009 capital repairs were carried out in 72.3 thousand apartment buildings, which accounts for 25.6% of the need for capital repairs estimated on the basis of Rosstat data. Capital repairs of 60% (or 43.7 thousand) of apartment buildings were carried out with the support of the Fund for the Promotion of the Housing and Utility Sector Reform. The rest 28.6 thousand apartment buildings were repaired with the use of funds of regional and local budgets as well as owners of residential premises. The scope and type of capital repairs are regulated by Clause 3, Article 15 of Federal Law No.185-FZ On the Fund for the Promotion of the Housing and Utility Sector Reform. The statistics makes it possible to estimate the actual volumes only of repaired facades and roofs (Fig. 1.11) 7. Figure 1.11 Dynamics of the area of facades and roofs capitally repaired in Source: Consultant s estimates based on Rosstat data 1.4 VOLUME AND PATTERN OF ENERGY AND WATER CONSUMPTION BY RESIDENTIAL BUILDINGS Energy consumption by the RF residential buildings is registered within the two lines of the unified fuel and energy balance of Russia: population (residential stock) insofar as it applies to the energy use in the residential premises and services provided insofar as it applies to energy use by non-residential premises and for the general residential purposes. Energy consumption by the population in 2009 is given in Table 1.1. The non-residential and general purpose consumption account for 10-12% of the total residential consumption, i.e. the total 2009 residential consumption would be TOE 165 mln. Nearly 62% are accounted for by the heating, another 20% - by the hot water supply, while other needs account for approximately 19%. The structure of the EU energy consumption by the population is quite similar: heating 67%, hot water supply 18%, other needs 15%. Russia s distinguishing characteristic is that the heating (56%) and hot water supply (69%) are dominated by the central heating, while the same accounts for 12% 8 only in Europe. 7 Statistical form 1-KP contains data on capital repairs in physical units only with regard to facades, roofings and elevators. 8 Promoting energy efficiency investments. Case studies in the residential sector. OECD/IEA. Paris

31 Table 1.1 Energy consumption by RF population in 2009 (TOE thousand) Coal Petroleum products Natural gas Other fuels Electric power Heating Total Share, % Heating 2,805 36, ,804 92, % Hot water 449 8, ,330 29,268 supply 19.7% Other needs % Total 2, , ,898 72, , % Share, % 1.9% 0.5% 38.7% 0.4% 10.0% 48.4% 100.0% Source: Consultant s estimates The pattern of energy consumption in residential buildings could be illustrated by a selection of the data on the 44 residential buildings of the energy efficient neighborhood in Tyumen (Fig. 1.12). It is dominated by the heating energy accounted for by 85.7%, followed by the electric energy consumption (13.7%), natural gas (0.5% only). Heating of the buildings accounts for 53.8%, ventilation - for 1%, hot water supply for 30.6%, cooking - for 2.3%, lighting of the common areas - 0.8%, other operation of the tenants and owners electrical appliances. Figure 1.12 Pattern of energy consumption in apartment buildings of the energy efficient neighborhood in Tyumen in 2009 Source: Consultant ssestimates An integral indicator of energy efficiency of residential buildings is unit specific consumption of all types of energy in the building for all purposes calculated to 1 m 2 of the general area per annum. Average decline of unit specific consumption in Russia was minor: from 49 kgce.m 2 a year (398.5kWh/m 2 a year) in 2000 to 47 kgce.m 2 a year (382.2 kwh/m 2 a year) in Such decline recalculated to degree per day of the heating period was 9% only. Energy efficiency improvement was partially offset by enhancement of the housing quality, higher use of domestic appliances and growth of low-rise construction share. 31

32 Distribution of residential buildings on the basis of their energy efficiency level for heating purposes is described by the standard slope of wasteful energy consumption function (Fig. 1.13). Figure 1.13 Standard distribution of residential buildings by unit specific consumption of heat energy for heating purposes ( slope of wasteful energy consumption ) kwh/m2/year number of apartment buildings least efficient moderate efficiency energy efficient Source: Consultant s estimates Consultant s many years of experience show that such functions of distribution of the building per their energy efficiency level are standard. They are comprised of three components. The first component describes lower unit specific consumption of the most energy efficient buildings constructed during the latest years under the new Building Code (SNiP). The second reflects practically linear distribution of the buildings by energy efficiency parameters in the middle part of the graph depending on the heat-retention properties of the buildings, number of floors, compactness, term and duration of operation, etc. The third high unit specific consumption of a relatively small share of the least energy efficient buildings (as a rule, this is dilapidated and unsafe housing). This distribution corresponds to distribution of the buildings by year of construction including the differences in walling, the number of floors (Fig. 1.14) and distribution by time of tightening of the requirements to thermal protection of the constructed buildings (Fig. 1.15). As the energy balance of the residential buildings is dominated by heat energy consumption, it is only natural that the lowest unit specific energy consumption is characteristic of new buildings where heat insulation was designed in accordance with the requirements of SNiP Thermal protection of buildings and the Regional Construction Norms (TCN) and that are equipped with the bulk meters. On the contrary, unit specific energy consumption of the buildings of the earlier mass series is relatively high. 32

33 Figure 1.14 Correlation of unit specific energy consumption with year of construction of residential building Source: CENEf sestimates Share of old buildings decreases and that of the new, more efficient buildings, increases as the new buildings are constructed and dilapidated buildings are demolished. Thus, the averageweighted specific energy consumption for heating purposes decreases accordingly. Heat energy losses of the existing residential buildings change due to degradation of the residential buildings envelope (as these deteriorate), as well as due to insulation and repair of the envelope within the framework of comprehensive capital repairs and equipment of the buildings with the metering and control units. Figure 1.15 Dynamics of requirements to thermal protection of buildings in USSR and then in Russia depending on year of approval of the Building Code (SNiP) (the data are estimates, 1954=100%) Source: Consultant s estimates 9 An important component of the capital repairs is equipment of the buildings and apartment with the meters. Coverage of the Russian apartment buildings with bulk meters in the mid-2009 was 8% in terms of heating, 11% - cold water supply, 7% - hot water supply, 21% - energy supply, 9 Calculated in accordance with the data presented inyu.а.matrosov.energy Saving in Buildings.ProblemandSolutions.NIISF Italsopresentsareviewoftherequirementstothermalprotectionandclimatologyofthebuildings erected in the USSR in 1929, 1932, 1936, 1939, 1946, 1954, 1958, 1962, 1972, 1979, and then in Russia in 1999, 2003 and 2004.

34 0.9% - gas supply. Coverage with apartment meters was 1% for heating, 22% for cold water supply, 19% for hot water supply, 80% for energy supply and 5% for gas. 10 Capital repairs of the residential buildings in Russia use more and more energy efficient windows and heat insulation materials. In the European Union the energy efficient windows in 2004 was 47%, while in Germany and Austria around 90%. Energy efficient windows share in Russia is around 20-30% in general and 30-40% in the cities. 1.5 ESTIMATION OF THE VOLUMES AND CONDITIONS OF ENERGY SAVINGS RESULTING FROM CAPITAL REPAIRS OF RESIDENTIAL BUILDINGS Capital repairs under comprehensive energy-saving projects allow partial cutting of the wasteful energy consumption slope and significant reduction of the red zone. As heat energy accounts for 80-86% of the entire energy consumption by an apartment building, the principal objective of capital repairs is reduction of the heat energy consumption. The average energy saving potential of apartment buildings is equal to or exceeds the heat energy indicator by 40%, electric power by 37%, natural gas by 30%, water by 25%. It is lower for the new buildings and is significantly higher for the older buildings (Fig. 1.16). Its relative value is affected by the number of floors in the building, material of the walls, its condition and quality of the heat and energy supply regulation. Figure Rating of residential buildings of the energy efficient neighborhood in Tyumen by unit specific energy consumption and energy saving potential Source: CENEf sestimates 10 Residential sector and provision of everyday services to the population in Russia Statistics Book. Rosstat

35 Average-weighted consumption of all energy types in the residential buildings equals 48.7 kgce/m 2 /year. Full implementation of the energy saving potential may reduce unit specific energy consumption in all residential buildings to 29.2 kgce/m 2 /year or by 40%. It is not only savings potential that is of importance but also the conditions of its implementation as a result of capital repairs. Heat energy consumption measurements taken in Moscow after comprehensive capital repairs of residential buildings showed that only one third of the potential is realized. While the expected energy saving is 40-60% 11, actual saving is only 14-17%, i.e. approximately 30% of the design savings are lost during operation of a residential building. Comprehensive capital repairs projects must provide for reduction of the heating radiators surface. If it is ignored, then the design-level savings could be attained through a change of temperature charts in the controllers of the automatic control unit or the domestic heating plant. Experience of resetting the controller to a varied temperature chart shows that this measure may result in savings close to the design-level figures 12. Furthermore, the experiment of full implementation of the designed energy saving measures showed that if thermostatic regulators are installed, heat energy consumption for heating purposes in the capitally repaired buildings exceeded the design level by 30-40% as the maximum setting of the thermostatic regulators is +26 о С, these are not adjusted to the internal temperature degrees and are not used by households for temperature regulation in the residential buildings. Cost estimates of the capital repairs projects are overstated as they include excessive equipment. Thus, according to Mosgorekspertiza estimates, cost of an automatic control unit could be reduced three-fold 13. Economic interest of both managing companies and owners of the residential premises in energy savings resulting from capital repairs are required to ensure full potential economy. 1.6 LEVEL OF AFFORDABILITY OF HOUSING AND UTILITY SERVICES Possibility of introduction of additional payment for capital repairs largely depends on the existing level of affordability of housing and utility services. Share of such costs within the total expenditure of the population increased from 4.6% in 2000 to 8.7% in Over the last three years it increased for all income groups (Fig. 1.17). 11 А.М. Filippov. Energy efficiency balance of residential buildings. Theory and Practice. Energosberezheniye. No. 4, V.I. Livchak and А.D. Zabegin. Bridging the gap between energy efficiency policy and actual saving of energy resources. «Energosberezheniye». No. 4, Ibid. 35

36 Figure 1.17 Share of rent and utility payments Source: Consultant s estimates based on Rosstat data 1.7 COST OF CAPITAL REPAIRS OF APARTMENT BUILDINGS According to statistics, cost of capital repairs of the housing was RUR bln in 2009, including RUR bln capital repairs of the apartment buildings. In cost of capital repairs of the apartment buildings increased by 2.6 times. Given doubling of the construction work cost over this period, the expenditure growth rate in comparable values equals to 30%. According to the Fund for the Promotion of the Housing and Utility Sector Reform, expenditures for capital repairs of apartment buildings under the Fund s projects in 2008 was RUR 57.9 bln, RUR 93.4 bln in в 2009 and RUR 70.6 bln in Of financing mechanisms, the Fund s resources dominated, which share was increasing (Fig. 1.18). Figure 1.18 Mechanism of financing capital repairs under projects implemented by the Fund for the Promotion of the Housing and Utility Sector Reform in Source: Year 2010 AnnualReportoftheStateCorporation The Fund for the Promotion of the Housing and Utility Sector Reform.The Fund for the Promotion of the Housing and Utility Sector Reform, 2011

37 In 2009, prior to adoption of Law No.261 On Energy Saving and Enhancement of Energy Efficiency, the share of utility equipment in the capital repairs scope increased noticeably (Fig. 1.19). Figure 1.19 Dynamics of capital repairs costs by type of work in Source: Rosstat data Moscow was the leader of the regional structure of the capital repairs costs followed far behind by the rest of the regions (Fig. 1.20, Annex 1 table 3). Moscow accounted for 15% of the total costs. The first 10 regions accounted for 45% of the total capital repairs costs in 2009 while the last 40 accounted for 17% only. Scale of upgrade of the apartment buildings to enhance the level of comfort for living is minor. In 2009, thousand m 2 of the total floor space of residential buildings were commissioned after upgrade in the RF (in thousand m 2 ), which accounted for 1.0% of the total floor space commissioned in 2009 (net of individual residential houses). According to Form No.1-KR Data on Capital Repairs of the Housing Stock, the average per 1 m 2 cost of capital repairs was RUR 3.3 thousand in 2009 (in 2008 RUR 2.7 thousand). According to the Fund s data, the average unit specific cost of repair of 1 m 2 of residential space was RUR 490 in 2008, RUR 800 in 2009 and RUR 810 in This means that mainly selective capital repairs (87%) were performed under the Fund s projects. Thus, according to the Rosstat data, the nationwide average unit specific cost of facades repair in 2009 was RUR 1,033, roof repair RUR 814, utility equipment repair - RUR 1,401 and of structural elements repair and replacement - RUR 224. Information on unit specific cost of capital repairs for the RF regions is not reliable. Result of division of the capital repairs costs into the scope of such repairs in some regions significantly exceeds new construction cost 14. The average unit specific cost for Russia in 2009 was RUR 3,341 while for Moscow where comprehensive capital repairs dominated - RUR 5,517. According to the official statistics, only in three Russian regions the average unit specific cost of capital repairs was lower than the figure given by the Fund for the Promotion of the Housing and Utility Sector Reform. 14 Housing and Public Utility Services for the Population Rosstat. М

38 Figure 1.20 Capital repairs costs by regions of the Russian Federation in 2009 Source: Rosstat data

39 CONCLUSIONS 1. The housing stock of the Russian Federation amounted to 19,650 thousand buildings of the total floor space 3,177 mln. m 2 as of 2009 year end, of which quantity 2,293 mln. m 2 (72%) accounted for urban settlements.over the period from 2000 to 2009, the housing stock s area has increased by 14%. The annual increase of the housing stock makes up about 3 %. 2. The greater part of residential premises consists of housing units in apartment buildings (70 % of the housing stock s total area). As of the end of 2009, the total number of apartment buildings (ABs) was estimated at 3,224 thousand buildings with the total area of 2,237 million sq. m. Individual buildings (IBs) equaled to 16,426 thousand units. Their total area was 974 million sq. m. 3. Substantial service life and increased wear are typical for Russia s housing stock. The average life of a building in Russia is estimated at 42 years; In 2009 the service life surpassing 25 years had the buildings as follows: o 80.1% of IBs; o 75.8% of Abs In 2009, the multi-apartment housing stock older than 25 years accounted for 1,416 mln. m 2 and older than 40 years - for 751 mln. m 2, or, in percentage terms, for 63% and 34% of the multi-apartment housing stock respectively. 60% of residential premises served for more than a quarter of a century; 90% of buildings in 43 regions of Russia was constructed before 1995; Volumes of housing with the operating life exceeding 25 and 40 years will be systematically growing, and the average operating life of a residential building will increase up to 50 years by In 2009, 66-percent-wear had 6% of IBs and 8.7% of ABs (or 3.7% of the total area of residential buildings). After 2005 the area of a dilapidated housing has been diminishing till it reached 80 million sq. m. in However, the growth of the area of an emergency housing stock has not been able to be kept down. In 2009, its area was 19.4 million sq. m. In 2009, the proportions of IBs and ABs were 4.5% and 2.5%, respectively. 4. Most part of Russia s housing stock - over 84% - is privately owned. In this Russia largely outpaces many developed countries. In fact, 97 % of IBs and 76% of housing units in ABs are reported to be in private ownership. 5. The housing stock in Russia has a rather high level of amenities. An average of 61.4% of housing is provided with all the amenities. In 2009, 89% of urban housing stock had access to water supply, 87% - to sewerage, 92% - to heat supply, and 80% - to hot water. 6. Russia housing stock of apartment buildings is in desperate need of capital repairs which stems from the fact that in the 1990s the volumes of housing stock s capital repair dropped drastically. Yet there is an upward trend in place from 2008 when through the implementation of regional programmes financed mostly by the Housing and Utilities Fund the volume of capital repairs of apartment buildings has risen. Nevertheless, in 2009 the volume was 5.5 times below the level achieved in 1980.

40 According to Rosstat, approximately thousand apartment buildings (i.e. 9% of the total number of apartment buildings) needed capital repairs as at the beginning of Expert analysis revealed that these figures are based on the average operating life of an apartment building prior to capital repairs on it and equals almost 40 years. According to calculations made, as of 2009 the comprehensive capital repairs were required by: 2,120-2,196 thousand apartment buildings with an average service life of 25 years (i.e., 1,314-1,361 million sq. m.); 1,374-1,398 thousand apartment buildings with an average service life of 40 years (i.e., million sq. m.). This level of demand for capital repairs will persist in future given that, annually, at least 2% of the total area of apartment buildings housing stock undergoes comprehensive capital repairs. If capital repairs are made at a slower rate, the demand for them will grow. 7. According to statistical reporting in 2009 capital repairs were carried out in 72.3 thousand apartment buildings, which accounts for 25.6% of the need for capital repairs estimated on the basis of Rosstat data. According to statistical reports in 2009 the costs of repairing the housing stock were estimated at billion rubles (3.47 billion euro), including billion rubles (3.32 billion euro) for capital repairs of apartment buildings. In 2009, the average cost of capital repairs per one square meter was 3.3 thousand rubles (79.6 euro). Under the regional programmes co-financed by the Housing and Utilities Fund the average unit cost of repair was 800 rubles (19.3 euro) in 2009, 810 rubles (18.6 euro) in This suggests that mostly selective works of capital repair took place. Uneven distribution of the scope of capital repairs among Russian regions in The leaders are Moscow, Tatarstan, and Bashkortostan with a 25% share in all capital repairs. In 2009, 8.5% of the whole housing stock were capitally repaired in Chelyabinsk Oblast, 8% in Ivanovo Oblast; in 15 regions this parameter exceeded 3% and in 44 regions it was less than 1%. 8. The aggregate energy consumption in the housing stock, including non-residential premises and consumption for the general needs of buildings can be estimated at the level of TOE 165 mln in The structure of energy consumption by Russia s population is similar to that in European countries: heat makes up about 62% of the total energy consumption, hot water - 20%, other sources - about 19%. The specificity of the Russian heat consumption is that centralized supply dominates the supply of heat (56%) and the supply of hot water (69%) whereas the share of centralized supply in Europe is only 12%. 9. The energy efficiency of the Russian housing stock is, on the whole, low: In 2009, a specific consumption of all types of energy in a building was, on average, 47 kilograms of oil equivalent (KOE) per square meter (382.2 kwt*hour / m 2 per year): The indicators of energy efficiency of a building depend on a year of its construction. Reduced specific consumption of energy is typical for new buildings, because their thermal protection has been designed in line with new construction standards; The energy efficiency of windows is estimated at 20-30% - for the entire housing stock and 30-40% in urban areas. 10. As of 2009, the equipment of Russia s housing stock of apartment buildings with meters was, on the whole, inadequate: 40

41 Communal heat energy meters are installed in 8% of apartment buildings (ABs), cold water meters - in 11% of ABs, hot water meters in 7% of ABs, electricity meters in 21% of ABs, and gas meters in 0.9% of ABs. Domestic heat energy meters are installed in 1% of housing units, cold water meters in 22% of them, hot water meters in 19% of apartments, electricity meters in 80% of apartments, and gas meters in 5% of apartments. 11. Energy savings potential of apartment buildings is considered to be sufficiently high: that with regard to heat energy - 40%, electricity 37%, natural gas -30%, water - 25%. Having achieved a complete use of energy saving potential the reduction of a specific consumption of energy down to 29.2 KOE/m 2 per year, or by 40%, can be attained in all residential buildings. 41

42 SECTION 2 REGULATORY REQUIREMENTS TO CAPITAL REPAIRS OF APARTMENT BUILDINGS This section reviews the regulatory and legal acts which contain the requirements to safety of buildings and to their energy efficiency. The lists of works and energy efficient measures performed within capital repairs of apartment buildings, as well as the requirements with regard to construction standard applied, when designing new buildings and developing the projects of capital repair of existing buildings, are included herein. 2.1 REGULATORY REQUIREMENTS TO THE SCOPE OF WORKS ON CAPITAL REPAIRS OF RESIDENTIAL BUILDINGS Relation in the sphere of capital repairs are regulated by a number of legal acts of the Russian legislation. Among such acts are: Housing Code of the Russian Federation, the Town Planning Code of the Russian Federation; Federal Law No.184; FZ dated 27 December, 2002 On Technical Regulation ; Federal Law No.384-FZ dated 30 December, 2009 Technical Regulations on Buildings and Structures Safety ; Federal Law No.261-FZ On Energy Saving and Enhancement of Energy Efficiency and on Amendment of Certain Legislative Acts of the Russian Federation dated 23 November, 2009; Rules of maintenance of common property in an apartment building approved by the RF Government Decree No.491 dated 13 August, Meaning of capital repairs is to a certain degree defined in Article 48.1 of the RF Town Planning Code, which establishes that capital repairs of capital constructions are repairs that affect structural and other characteristics of integrity and safety of such facilities. Previously, the legislation (Federal Law No.185-FZ dated 21 July 2007 On the Fund for the Promotion of the Housing and Utility Sector Reform ) understand capital repairs of apartment buildings as performance of the work provided for by the said Federal Law (Article 15.3) required for elimination of defects of the worn structural elements of common property of the apartments owners (hereinafter referred to as common property of the apartments owners), including restoration or replacement thereof for the purposes of enhancement of the operating characteristics of such common property of the apartment owners. This law does not regulate the relations of capital repairs of apartment buildings. Its subject-matter is the procedure of cofinancing of capital repairs of the buildings repaired within the framework of the regional and municipal programs approved under this law only. Article 15.3 of the Federal Law On the Fund for the Promotion of the Housing and Utility Sector Reform establishes types of work performed in capital repair of apartment buildings (these are discussed in more detail below). Under Article of FZ-185, types of work performed in capital repair of apartment buildings referred to in Article 15.2 of FZ-185 must be performed in compliance with the energy efficiency requirements applicable to apartment buildings commissioned after capital repairs in accordance with the legislation on energy saving

43 and enhancement of energy efficiency provided that the permits for capital repairs of the apartment buildings were issued subsequent to enactment of the energy efficiency requirements. According to Article of the Federal Law On the Fund for the Promotion of the Housing and Utility Sector Reform, capital repairs of apartment buildings covered by the municipal and regional target programs must include installation of collective (bulk) meters to measure resource consumption and of control units (thermal energy, hot and cold water, electric power, gas), with the exception of the cases when a relevant apartments building is equipped with such meters and control units. Standard schedule of the work performed in capital repairs is provided for by Article 15.3 of FZ -185 and includes: 1. Repair of the in-building utility systems: electric power, heating, gas, water supply and sewage disposal; 2. Repair or replacement of the elevators equipment recognized unfit for operation, repair of elevator shafts, if required; 3. Roof repairs; 4. Repair of the basements that are common property of the apartment owners; 5. Thermal insulation and repair of the facades; 6. Installation of collective (bulk) meters and control units of the in-building utility systems (thermal energy, hot and cold water, electric power, gas); 7. Repair of the apartment buildings foundations, including pile-supported, located in the regions of Extreme North and equivalent areas. Another scope of works on capital repairs of apartment buildings is presented in Resolution No.170 dated 27 September, 2003 of the RF Gosstroi On Approval of the Rules and Norms of Housing Operation. According to Attachment No.8 to the said Resolution, the standard schedule of work on capital repairs of the housing stock includes: 1. Examination of the residential buildings (including total examination of the housing stock) and development of the design and cost estimate documentation (regardless of the repair work period); 2. Repair and construction works to replace, restore elements of residential buildings (except full replacement of the stone and concrete foundations, bearing walls and frames); 3. Modernization of residential buildings in the course of capital repair thereof (alteration based on subdivision of multi-room apartments, construction of additional kitchens and bathrooms, living area expansion on account of service areas, improvement of the living area s solar exposure, liquidation of windowless kitchens and entrances to the apartments through kitchens, including, if required, inbuilt or attached areas for staircases, bathrooms or kitchens); replacement of stove heating by central heating, including construction of boiler rooms, heating lines and heating stations; roofmounted and other autonomous thermal energy sources; re-equipment of the stoves for gas or coal; installation of cold and hot water supply, sewerage, gas supply systems, including connection to the existing trunk networks if the distance between the inlet point and the point of connection to the trunk systems is less than 150 m, construction of exhaust ducts, feed water pumps, boiler rooms; comprehensive replacement of the existing central heating, hot and cold water supply systems (including mandatory use 43

44 of the upgraded heating equipment and plastic, reinforced plastic piping, etc. and prohibition to install steel piping); installation of electrical stoves instead of gas or wood/coal stoves; installation of elevators, garbage chutes, pneumatic garbage removal systems in the buildings with the upper-storey staircase landing elevation of at least 15 m; transfer of the existing power supply system to higher voltage; repair of common TV aerials, connection to the telephone and radio networks; installation of house intercoms, electrical locks, installation of the fire safety and smoke removal control equipment; automation of the elevators, heating boiler houses, heating systems, utility equipment; redevelopment of yard territories (paving, asphalting, landscaping, installation of the fencing, wood-sheds, equipment of playgrounds and utility areas). Repair of roofs, facades, pre-fabricated buildings joints up to 50%. 4. Heat insulation of residential buildings (enhancement of thermal protection properties of the enclosing structures, installation of triple-glazing window frames, construction of external airlocks); 5. Replacement of the intra-neighborhood utility networks; 6. Installation of bulk meters to measure heat energy consumption for heating and hot water supply, consumption of cold and hot water per building, as well as installation of apartment hot and cold water meters (if utility networks are replaced); 7. Rebuilding of the non-ventilated overlapping roofs; 8. Field supervision by the design institutes of the residential buildings capital repairs, including full or partial replacement of the floors and redevelopment; 9. Technical supervision if the local government, organizations have established divisions of technical supervision of capital repairs of the housing stock; 10. Repair of the inbuilt premises in buildings. Both schedules are not mandatory for the owners of the premises in apartment buildings as the schedule of works on capital repairs of the apartment building given in Article 15 of the Federal Law On the Fund for the Promotion of the Housing and Utility Sector Reform becomes mandatory only if apartment buildings are included in the municipal and regional target programs. The schedule of works on capital repairs of apartment buildings specified in the Rules and Norms of Housing Operation approved by Resolution No.170 dated 27 September, 2003 of the RF Gosstroi in accordance with the requirements of Article 4 of Federal Law No.184-FZ dated 27 December 2002 On Technical Regulation does not regulate the requirements. Federal law # 384-FZ Technical Regulations on Safety of Buildings and Structures (Article 36) established as follows: Safety of buildings and structures during their service life should be ensured on the basis of technical maintenance, routine inspections and checks, and (or) via the procedures of monitoring the state of their foundation, structural units, engineering systems and via routine overhaul of a building and its structures; Parameters and other characteristics of structural units and engineering systems of a building or a structure, in the course of its service life, should meet the requirements of design documents; Operation of buildings and structures should be arranged in such a manner as to ensure the compliance of buildings and structures with the requirements to their energy 44

45 efficiency, and the requirements to equipping buildings and structures with the meters of energy resources over their entire service life of buildings and structures. By Federal Law # 384-FZ (Article 6) the Government of the Russian Federation establishes a list of national standards and sets of rules (parts of such standards and sets of rules), which should be applied in a mandatory manner in order to ensure the observance of baseline requirements to safety of buildings and structures, and of processes of designing (surveying), construction, assembling, adjustment, operation, disposal (demolition) of buildings and structures. The requirements to buildings and structures set out by Federal Law #384 are not applied until takes place the rehabilitation or the capital repair of a building or a structure put into operation before such requirements became effective (Article 42, FZ# 384). Thus, legislation of the Russian Federation does not establish a mandatory list of works to be performed within capital repairs, but this envisages the requirements which ensure, in a mandatory manner, the safety of buildings over their service life, while energy efficiency of buildings is reckoned among safety issues. 2.2 REGULATORY REQUIREMENTS TO ENHANCEMENT OF ENERGY EFFICIENCY OF THE HOUSING STOCK AS A RESULT OF CAPITAL REPAIRS Once FZ-261 has been passed, capital repairs of the buildings became closely tied to the energy efficiency and energy saving enhancement norms. Under Article 11 of FZ-261 the requirements to energy efficiency of the buildings and structures must include: requirements to separate parts of the buildings, structural elements of the buildings and structures and to the properties thereof, to the devices and technologies employed within the buildings and structures, as well as the requirements to the technologies and materials included in the design documentation and employed in construction, refurbishment, capital repairs of the buildings and structures that ensure prevention of non-rational use of energy resources in the process of capital repairs of the buildings and structures, as well as in the process of operation thereof. All requirements of the new energy efficiency legislation requirements are applicable to the capitally repaired buildings. Capital repairs, together with refurbishment are often the legal circumstance and the turning point that signifies application of the new requirements to the building. Article 11.6 of FZ-261 prohibits commissioning of the capitally repaired buildings and structures non-compliant with the requirements of energy efficiency and the requirements for use of the energy consumption meters. Article 11.7 of FZ-261 specifies that the developers must ensure compliance of the buildings and structures with the requirements of energy efficiency and the requirements for use of the energy consumption meters by selection of the optimal architectural, functional and technological, structural and engineering and technical solutions and due implementation thereof in capital repairs. Article of FZ-261 states that if non-compliance of a building, structure or separate elements or structures thereof with the requirements of energy efficiency and (or) requirements to installation of the energy consumption meters due to non-compliance by the developer with the said requirements, if identified, owner of the building or structure, owners of apartments in an apartment building shall have the right to demand, at their discretion, of free-of-charge elimination within a reasonable term of the identified non-compliance or compensation of the costs of elimination of the identified non-compliance. Such requirement could be imposed on the developer in the event of identification of the said fact of non-compliance during the period 45

46 when, according to the energy efficiency requirements, compliance therewith must be ensured at the stage of design, construction, refurbishment, capital repairs of the building or structure. Under Article 13.7 of FZ-261 apartment buildings commissioned since 01 January, 2012 upon capital repairs must be equipped with the individual heat meters if such installation is possible. Owners of energy consumption meters must ensure due operation of such meters, security and timely replacement thereof. The State shall implement measures targeting compliance with the requirements for due maintenance of the apartment buildings, supplementing Article 7.22 of the RF Code of Administrative Offences. Article 37 of FZ-261 introduces amendments to the Code of Administrative Offences of the Russian Federation: Article 9 was supplemented by Chapter 9.16, under which non-compliance in the course of capital repairs of buildings and structures with the energy efficiency requirements, requirements of equipment with the energy consumption meters shall entail an administrative fine on the officials in the amount of RUR 20,000-30,000; persons engaging in non-corporate business from RUR 40,000 to RUR 50,000; legal entities from RUR 500,000 to RUR 600,000. Requirements of the new energy efficiency legislation shall be applied to the buildings that underwent capital repairs. Prior to 2011, the basic levels of buildings heat insulation were regulated by SNiP introduced by the Gosstroi of Russia in 2003 Thermal protection of buildings. An annex to the above document SP Code Design of thermal protection of the buildings was issued in Under such regulatory documents, capital repairs, refurbishment, as well as new construction of residential buildings must be carried out in accordance with the enhanced requirements for thermal protection of the buildings envelope. SNiP Thermal protection of the buildings and SP Design of thermal protection of the buildings establish the regulatory requirements to: reduced heat transmission resistance of the building envelope (R о, m 2 ºС); thermal capacity of the building envelope and premises inside during the cold period of the year; protection of the building envelope from excessive moistening; air permeability of the enclosures and premises of the buildings; prevention of moisture condensation on the internal surfaces of the buildings envelope; unit specific indicator of heat energy consumption for heating of the buildings; enhancement of energy efficiency of the buildings subsequent to capital repairs or refurbishment, as well as of the newly constructed buildings. Given the new regulatory requirements, the required heat transmission resistance of the envelope must be not less that the regulatory value, which depends on ºС per day of the heating period (GSOP, ºС per day). Use of the GSOP indicator accounts for the climatic factor for various regions of the Russian Federation. Standard (regulated) values of heat transmission resistance of the residential building s envelopes depending on the value of ºС per day of the heating period are given in Table

47 Table 2.1 Standard (required) specific heat transmission resistance of residential buildings envelope Envelope type ºС per day of the heating period, GSOP Regulated (required) values of specific heat transmission resistance of the envelopes, m 2 ºС/W External walls 2, , , , , , External doors 2, , , , , , Windows and balcony doors 2, , , ,000 0,7 10, , Attic floors, as well as the floors over nonheated basements 2, , , , , , Roofs 2, , , , , , Source: SNiP Thermal protection of buildings As per Article 15 of FZ-261, upon capital repairs a state construction supervision agency in accordance with the rules for determination of energy efficiency of apartment buildings approved by the authorized federal body of executive power and requirements to which are established by the Government of the Russian Federation, shall determine energy efficiency class of the apartments buildings. Energy efficiency class of the apartment building being commissioned is stated in the report of the state construction supervision agency on compliance of the constructed, refurbished, capitally repaired apartment building with the energy efficiency requirements. Energy passports for buildings and structures commissioned after capital repairs may be developed on the basis of design documentation. Requirements to the rules for determination of energy efficiency class of apartment buildings are established by the RF Government Resolution No.18 dated 25 January, 2011 On approval of the Rules for establishment of energy efficiency requirements of buildings and structures and requirements to the rules for determination of energy efficiency class of apartment buildings. According to Part 1, these requirements apply to refurbished or capitally repaired buildings. According to Part 2, energy efficiency requirements for the capitally repaired buildings are

48 established on a differentiated basis, depending on the capital repairs type. However, Part 7 of the RF Ministry for Regional Development Resolution No.262 dated 28 May 2010 On Energy Efficiency Requirements of Buildings and Structures states that for the refurbished buildings and economy-class dwellings reduction of the regulated unit specific energy consumption for the heating and ventilation purposes by energy efficiency Class B ("high") must be 15% of the basic level from 2016 and additional 15% from 2020 on. Another provision is that reduction of unit specific water consumption in residential buildings must not exceed 175 l/person by 2020, including hot water l/person. Part 1 of the Resolution in question established that the requirements are the minimal allowable and must be observed in designing, expert assessment, construction, acceptance and operation of new, refurbished, capitally repaired and upgraded heated residential buildings. There is a contradiction between the two documents reviewed above: Government Resolution No.18 dated states that the energy efficiency requirements applicable to the capitally repaired buildings are differentiated depending on the capital repairs type while the Order of the RF Ministry for Regional Development sets rigid objectives with regard to reduction of the unit specific consumption of resources upon capital repairs. As a result of capital repairs, as provided for by Clause 14 of Decree No.262 dated May 28, 2010 of the RF Ministry of Regional Development, a building must be equipped with: 1) Heating devices used in common areas of the energy efficiency class not less than the first two (if such class is identified); 2) Elevators of the energy efficiency class not less than the first two (if such class is identified); 3) Central heating controllers installed at the inlet to the building, structure, as well as along the facade or part of the building; 4) Thermostates and heat energy consumption meters installed at heating devices of the vertical heating systems, thermostates and heat transfer agent flow meters in the horizontal heating systems in apartments of the total floor space of up to 100 sq.m, or heat meters in apartments of a larger floor space; 5) Hot water supply automatic heat exchangers installed at the inlet to the building or part of the building; 6) Electric engines for the ventilation systems, elevators, water transport within the local heating, hot and cold water supply, air conditioning systems. 7) Energy and water meters installed at the inlet to the building, in apartments, common areas and leased areas; 8) Devices optimizing operation of the ventilation systems (air channels of the windows or walls that ensure automatic supply of the outdoor air as required, exhaust air recovery systems for heating of the induced air, use of recirculation); 9) Pressure regulators of the cold and hot water supply systems at the inlet to the building, structure (for apartment buildings at the inlet to the building, apartments, common areas); 10) Devices of automatic temperature reduction in the public buildings premises during the non-business hours in the winter period; 11) Devices ensuring reduction of the peak load within the refrigeration supply system by using the refrigerated floors for cold accumulation in the night time; 48

49 12) Energy-efficient lighting in common areas; Russian Urban Housing Energy Efficiency Programme Model Development 13) Equipment ensuring switching off of the lighting in the common areas in the absence of people (motion sensors, switches); 14) Power factor correction units; 15) Door brakes (in apartment buildings all doors in the common areas); 16) Second door for the entrance airlocks ensuring the minimum thermal energy loss, or revolving doors; 17) Window brakes (for apartment buildings in common areas; apartments). In this regard, by Resolution #262, issued by the RF Ministry of Regional Development on May 28 th, 2010, a vast list of energy saving measures within capital repair works is established. It is worthy of note that certain contradictions exist between various legislative acts which regulate the relations with regard to capital repairs. Thus, for example, the Government s Resolution #18, dated January 25 th of 2011, states that the requirements to energy efficiency of buildings - which underwent capital repairs vary according to the type of capital repair, while Resolution #262, dated May 28 th of 210, strictly assigns the task of achieving the reduction of specific consumption of energy via capital repairs. In the event that similar conflicts occur, one should be, normally, governed by the principle of priority of legislative acts with a higher legal status. In this particular case, the RF Government s Resolution has a higher legal status. CONCLUSIONS 1. Legislation of the Russian Federation establishes requirements to safety and energy efficiency of residential buildings over their service life. At the same time, those requirements cannot be applied to buildings which have been put into operation before the former became effective, but the requirements can be applied when the rehabilitation or the capital repairs are taking place. 2. Existing lists of capital repair works are not mandatory for owners of buildings. However, once they make their decision on capital repairs and on type of works within capital repairs, as a result of performance of relevant works, the observance of energy efficiency requirements and of requirements to equipping the buildings with meters of energy resources should be ensured. 3. Requirements contained within current construction standards and within sets of rules allow ensuring energy efficiency of buildings which are being constructed, repaired and rehabilitated. 4. There is a need not so much in developing new regulatory requirements with regard to capital repairs of apartment buildings, as in a larger harmonization of current regulatory requirements. 49

50 SECTION 3. CATALOGUE OF KEY MEASURES FOR CAPITAL REPAIRS OF RESIDENTIAL BUILDINGS This section contains model lists of measures that can be carried out as part of capital repairs of buildings to reduce heat losses via walling and losses of utility resources in systems of heat-, water-, electricity-, and gas supply. There are three packages of measures to be performed within capital repairs of apartment buildings. These packages - baseline, realistic and energy efficient - vary according to tasks and cost of repair. The cost of each package of measures has been calculated for four most wide-spread types of apartment buildings. Herein are included the results of calculation of savings of various types of utility resources attained by means of implementing three different packages of measures in each of four types of apartment buildings 3.1 CATALOGUE OF MEASURES FOR CAPITAL REPAIRS OF RESIDENTIAL BUILDINGS In order to fulfill requirements for energy efficiency and structural heat conductivity after capital repairs of residential buildings a package of energy saving measures must be implemented and energy-efficient building services must be installed. An indicative catalogue of energy saving measures allowing to reduce heat loss through structural heat transmission which can be implemented during capital repairs of residential buildings is specified in Table 3.1. Activities shown in Table 3.1 are stipulated by effective regulatory legal documents on the improvement of energy performance in buildings after capital repair works on them (figures for the reduced total heat transfer and reduced total thermal resistance of building envelopes grow; unit specific consumption of thermal energy in buildings for heating purposes declines). The above-mentioned regulatory legal documents are as follows: Building Codes «Thermal Protection of Buildings»; Building Codes «Designing Thermal Protection of Buildings»; Order #262 by the Ministry for Regional Development of the RF, dated «On Requirements to Energy Efficiency of Buildings, Structures and Facilities»; Order #61 by the Ministry for Regional Development of the RF, dated «On the Approval of a Tentative List of Energy Saving and Energy Efficiency Improvement Activities». All activities shown in Table 3.1 are technically feasible. Table 3.1 Catalogue of measures for improvement of heat conductivity (heat insulation) of residential buildings' envelopes No. of activity Description of activity Effect of implementation Applied technologies, equipment and materials 1) Reduction of transmission heat loss Energy-efficient insulation through floors and basement walls materials (polyurethane, foam 2) Reduction of frost penetration into boards, polystyrene boards, floors and basement walls (increase mineral wool slabs) of operating life) 1 Thermal insulation of floors and basement walls contacting soil 2 Thermal insulation (insulation) and waterproofing of garret floors 1) Reduction of transmission heat loss through garret floors 2) Reduction of frost penetration into garret floors (increase of operating life) Energy-efficient insulation and waterproofing materials 50

51 Description of activity Effect of implementation Applied technologies, equipment and materials 3) Reduction of moisture penetration (water leaks) into residential and nonresidential rooms of a building 3 Heat insulation of external walls: 1) Reduction of transmission heat loss "Suspended ventilated facade"- through external walls technics; slabs of mineral wool 2) Reduction of heat consumption to or polystyrene foam warm up cold outdoor air infiltrating into a building through external walls 3) Reduction of frost penetration into external walls (increase of operating life) No. of activity 3.1 Thermal insulation of external walls by insulation plates with subsequent plastering 3.2 Thermal insulation of external walls using suspended ventilated facades 3.3 Thermal insulation of external walls by spraying polyurethane foam (PU foam) or an asbestosperlite mixture 4 Repair and sealing of external wall joints 5 Repair of existing windows, single and/or double glazing in wooden window casements 5.1 Installation of seal gaskets between window casements and building walls 1) Reduction of heat consumption to warm up cold outdoor air infiltrating into a building through external wall joints 2) Reduction of frost penetration into external walls 1) Reduction of heat consumption to warm up cold outdoor air infiltrating into a building through leakages in window apertures "Insulated joint"-technics; heatinsulation gasket seals, joint fillers, mastic compounds Seal gaskets of polyurethane foam; glue with increased water resistance 5.2 Installation of third window panes or application of a film on panes in existing timber window frames 6 Installation of state-of-the-art energyefficient triple glazed windows in plastic window frames 7 Sealing (insulation) of external door apertures with the installation of door closers (providing automatic door closing) 8 Installation of heat-reflecting screens behind heating radiators Source: Consultant Reduction of transmission heat loss through windows 1) Reduction of transmission heat loss through windows 1) Reduction of heat consumption to warm up cold outdoor air infiltrating into a building through leakages in window apertures 1) Reduction of heat consumption to warm up cold outdoor air infiltrating into a building through leakages in door apertures or through open doors Reduction of transmission heat loss through external walls (reduction of heat energy wasted to warm walls behind heating radiators) State-of-the-art energy-efficient triple-pane windows in PVC frames Seal gaskets of polyurethane foam; automatic door closers The scope of energy saving and the payback period of each activity shown in Table 3.1 depends on the following factors: Climatic conditions of the region where buildings are located (number of degree-days of the heating season); Effective tariffs for thermal energy and other resources in the region where buildings are located. The experience of the Consultant (OOO CENEf) based on the energy auditing of residential buildings in various Russian regions proves that the following activities (shown in Table 3.1) have the shortest payback period: 51

52 1. Repairs (heat insulation) of outside entrance doors with installation of door closers (enabling to automatically close doors). The average payback period of this activity is years depending on types (construction series) of residential buildings. 2. Installation of heat reflecting screens behind heating devices in apartments and common areas (staircases). The average payback period of this activity is years depending on types (construction series) of residential buildings. In the course of capital repairs the energy-saving measures to improve heat-retention properties of enclosing structures must be combined with installation of utility meters in buildings and also with activities to reduce the loss of utility resources in heat-, water-, electricity- and gas-supply systems. An indicative list of measures allowing to reduce loss of utility resources in heat-, water-, electricity- and gas-supply systems which can be implemented during capital repairs of residential buildings is specified in Table 3.2. Table 3.2 buildings No. of activity Scope of works at heat-, water-, power- and gas supply systems in residential Description of activity Effect of implementation Applied technologies, equipment and materials 1 Repair (replacement) of utility systems inside a building in basements or attic floors, including: repair of heating pipes in a building with thermal insulation; repair of pipes of the hot water supply system in a building with the installation of a water pressure regulator at the inlet; repair of pipes of the cold water supply system in a building with the installation of a water pressure regulator at the inlet; repair of pipes of the sanitation (sewage) system inside a building; repair of pipes of the gas-supply system inside a building; 2 Complete makeover (total replacement) of in-building utility services, including: Refurbishment of pipes of inbuilding heating systems (pipes in the basement and/or in the attic, riser pipes, heating radiators) Refurbishment of pipes of inbuilding hot water supply systems (pipes in the basement and/or in the attic, standpipes) Refurbishment of pipes of inbuilding cold water supply systems (pipes in the basement and/or in the attic, standpipes) Refurbishment of pipes of inbuilding sanitation systems (pipes in the basement and/or in the attic, standpipes) Refurbishment of pipes of inbuilding gas-supply systems (pipes in the basement and/or in the attic, riser pipes) 3 Installation of hot water return lines in the hot water supply systems 1) Reduction of heat loss in heating pipes 2) Reduction of heat loss in pipes of the hot water supply system 3) Reduction of hot water discharge due to system cooldown (in case of no hot water draw-off at nighttime or daytime) 4) Reduction of physical depreciation and extension of operating life of heating systems, hot and cold water supply systems, sanitation systems and gas-supply systems 1) Reduction of heat loss in heating pipes 2) Reduction of heat loss in pipes of the hot water supply system 3) Reduction of hot water discharge due to system cooldown (in case of no hot water draw-off at nighttime or daytime) 4) Reduction of physical depreciation and extension of operating life of heating systems, hot and cold water supply systems, sanitation systems and gas-supply systems 3) Reduction of hot water discharge due to system cooldown (in case of no hot water draw-off at nighttime or Steel pipes for heating systems. Pipe-lines made of cross-linked polyethylene, polybutene, polypropylene for cold and hot water supply systems, sanitation systems and gas-supply systems. Shutoff and control valves (valves, gate valves, cold and hot water pressure regulators). State-of-the-art energyefficient insulation materials. Steel pipes for heating systems. Pipe-lines made of cross-linked polyethylene, polybutene, polypropylene for cold and hot water supply systems, sanitation systems and gas-supply systems. Shutoff and control valves (valves, gate valves). State-of-the-art energyefficient insulation materials. Plastic pipelines; circulating pump; water meter for return hot water metering 52

53 No. of activity Russian Urban Housing Energy Efficiency Programme Model Development Description of activity Effect of implementation Applied technologies, equipment and materials daytime) 1) Automatic heat medium Pump unit for delivery parameters control in the heating system water mixing with (keeping the temperature curve of automatic equipment the heating system at a preset level) (controller, temperature 2) Reduction of firing rate in the sensors, flow controller, heating system (eliminating excessive differential pressure building heating in the transitional controller) season) 4 Installation of an automated heating system control unit (replacement of mixing valves in a building) 5 Installation of an automated single-building heat distribution and metering station (replacement of mixing valves in a building) 6 Installation of balancing valves in riser pipes of the heating system 7 Installation of thermostatic control valves (temperature regulators) on heating radiators 8 Replacement of physically worn out inbuilding power supply systems (electrical wiring) and input distribution devices 9 Replacement of electric bulbs in public spaces (staircases, stair flights, external lighting of entrances) by energy-saving lighting fixtures 10 Installation of occupancy sensors in public spaces 11 Installation of single-building utility meters (heat energy meters, cold and hot water meters, electricity and natural gas meters) including: single-building heat energy consumption meters (heat meters) single-building hot water consumption meters (hot water meters) single-building cold water consumption meters (cold water meters) single-building multirate electronic electricity meters with enhanced accuracy (minimum 2.0) single-building natural gas consumption meters (gas meters) 1) Automatic heat medium parameters control in the heating systems and hot water supply systems (keeping the temperature curve of the heating system and hot water temperature at a preset level) 2) Reduction of firing rate in the heating system (eliminating excessive building heating in the transitional season) 3) Reduction of firing rate in the hot water supply system 1) Elimination of risers maladjustment in building heating systems 2) Reduction of heat energy consumption in a building 1) Improvement of comfort conditions in rooms 2) Reduction of heat energy consumption for heating purposes Reduction of physical wear and extension of operating life of power supply systems Reduction of electricity consumption for public space lighting Reduction of electricity consumption for public space lighting 2) Automatic public spaces illumination control 1) Reduction of payment for thermal energy consumed (for management companies and individuals) 2) Reduction of payment for hot water consumed (for management companies and individuals) 3) Reduction of payment for cold water consumed (for management companies and individuals) 4) Reduction of payment for electricity consumed (for management companies and individuals) 5) Reduction of payment for natural gas consumed (for management companies) Modular automated readyto-operate heat distribution and metering stations Manual or automatic balancing valves Control valves and thermostatic heads (thermostatic regulators) Compact fluorescent lamps; LED lighting fixtures State-of-the-art efficient control gears; occupancy sensors 53

54 Source: Consultant Russian Urban Housing Energy Efficiency Programme Model Development In addition to the activities described in Tables 3.1 and 3.2, measures without the energy-saving effect must be implemented during capital repairs of residential buildings which are aimed at improving living conditions of residents in apartment buildings. Such measures include: repair (upgrade) or a complete replacement of elevator equipment found unsuitable for further use. If necessary, elevator shafts are to be repaired as part of this measure; improvement of public spaces (repair of stairwells, painting walls and whitewashing ceilings of public spaces). If necessary, garbage chutes are to be repaired as part of this measure; repair of water disposal systems (storm water pipes) in the buildings. 3.2 DEFINITION OF PACKAGES OF MEASURES FOR CAPITAL REPAIRS OF RESIDENTIAL BUILDINGS Subject to tasks to be tackled during capital repairs of buildings and depending on availability of financial resources allocated for repair works standard packages of measures can be defined. In this study three standard packages of measures are applied by Consultant which can be implemented during capital repairs of residential buildings. To calculate the cost of each package of measures/activities, four most popular types of apartment buildings were selected. Their architectural and construction attributes are shown in Table 3.3: Table 3.3 Attributes of Model Apartment Buildings in Russia Attributes of Model Apartment Buildings Number of floors of a building Type 1 of buildings Type 2 of buildings up to four 4 floors inclusive Type 3 of buildings Type 4 of buildings (or higher) Total area of a building, м 2 Number of entrances (front-entrance doors): Area of the attic floor Basement area Window and balcony door space 133, External walls area Predominant external walling material brick brick, reinforced concrete slabs brick, reinforced concrete slabs brick, reinforced concrete slabs Unit costs (i.e. costs per one m 2 of the total floor space of a building) were estimated for each measure within three standard packages. In addition, costs of construction and erection (installation) works were taken into account for each activity. Costs associated with preparation of design and estimate documentation for capital repairs of buildings and contingencies were outlined as a separate component of each package. 54

55 Package No 1 (minimum) Russian Urban Housing Energy Efficiency Programme Model Development This package is designed to implement measures necessary to maintain a building in a condition suitable for further operation. It includes the following activities: 1. Measures designed to improve heat retention properties (heat insulation) of enclosing structures of buildings. Such measures include: repair of roofs (with insulation and waterproofing); repair of basements (with basement floor insulation); repair (sealing) of joints in combination with painting and plastering of external walls; installation of sealing gaskets between window frames and walls of a building (with the installation of a third window pane or application of a film); repair of front-entrance door with the installation of door closers (providing automatic door closing). If necessary, a second door may be installed at windporches in building entrances as part of this measure; 2. Measures to improve heating systems of buildings allowing to control the firing rate for heating and thereby to reduce heat loss due to imbalance of supply and demand (in a building). Such measures include: installation of an automated heating system control unit instead of mixing valves in a building; 3. Measures designed to reduce physical wear and to extend operating life of in-building utility services located in the attics or basements of buildings, including: repair of heating pipes in a building with thermal insulation; repair of pipes of the hot water supply system in a building with the installation of water pressure regulators at the inlet; repair of pipes of the cold water supply system in a building with the installation of water pressure regulators at the inlet; repair of pipes of the sanitation (sewage) system inside a building; repair of pipes of the gas-supply system inside a building; 4. Measures to replace physically worn out in-building electrical networks (wiring) and equipment of input distribution devices. If necessary, reactive power compensation devices when operating electric motors of pumping equipment and/or elevators may be installed as part of this measure; 5. Low-cost energy-saving measure to replace electric bulbs in public spaces by energyefficient lighting fixtures; 6. Measures designed to install single-building utility meters (heat energy meters, electricity meters, cold and hot water meters and natural gas meters) including: a single-building heat energy consumption meter; a single-building hot water consumption meter; a single-building cold water consumption meter; 55

56 single-building multirate electronic electricity meters with enhanced accuracy (minimum 2.0); a single-building natural gas consumption meter; 7. Measure designed to repair (upgrade) or replace elevator equipment. The total number of activities in Package No. 1 (minimum) is 15. Unit costs of measures as part of Package No. 1 for four types of residential buildings are described in Table

57 Table 3.4 space Unit cost of Package No. 1 of measures per one m2 of the total building floor Description of activity Repair of roofs (with insulation and waterproofing); Repair of basements (with basement floor insulation); Repair (sealing) of joints in combination with painting and plastering of external walls; Number of floors Measur ement unit up to four 4 floors in a building Five- to eightstoreyed buildings Nine- to twelvestoreyed buildings Thirteen- to sixteenstoreyed buildings Rubles/ m 2 Rubles/ m 2 Rubles/ m 2 Installation of sealing gaskets between window frames and walls of a building (with the installation of a third window pane or application of a film); Repair (sealing) of front-entrance doors with the installation of door closers (providing automatic door closing). Repair (replacement) of utility systems inside a building in basements or attic floors, including: Repair of heating pipes in a building with thermal insulation; pipes of the hot water supply system in a building with the installation of water pressure regulators at the inlet; pipes of the cold water supply system in a building with the installation of water pressure regulators at the inlet; pipes of the sanitation (sewage) system inside a building; pipes of the gas-supply system inside a building; Installation of single-building utility meters, including: a single-building heat energy consumption meter (heat meter); a single-building hot water consumption meter (hot water meter) a single-building cold water consumption meter (cold water meter) a single-building multirate electronic electricity meter with enhanced accuracy (minimum 2.0); single-building natural gas consumption meters (gas meters) Installation of an automated heating system control unit (replacement of mixing valves in a building) Replacement of electric bulbs in public spaces by energy-saving lighting fixtures Rubles/ m 2 Rubles/ m 2 Rubles/ m Rubles/ m Rubles/ m 2 Rubles/ m 2

58 Description of activity Replacement of physically worn out in-building electrical networks (wiring) and equipment of input distribution devices. Measur ement unit Russian Urban Housing Energy Efficiency Programme Model Development Number of floors up to four 4 Five- to eightstoreyed floors in a building buildings Nine- to twelvestoreyed buildings Thirteen- to sixteenstoreyed buildings Rubles/ m 2 Repair (upgrade) or replacement of Rubles/ 1, elevator equipment m 2 Costs of design and estimation Rubles/ documentation and contingencies m 2 ditto % Total unit cost of measures as part of Package No. 1 (minimum) Rubles/ m 2 3, , , ,516.2 Source: Consultant's estimates Analysis of Table 3.4 reveals that: 1. The total unit cost of measures as part of Package No. 1(minimum) amounts: for residential buildings of Type 1 (up to 4 floors inclusive) to 3,310.9 Rubles/m 2; for residential buildings of Type 2 (5 to 8 floors) to 2,632.3 Rubles/m 2; for residential buildings of Type 3 (9 to 12 floors) to 1,828 Rubles/m 2; for residential buildings of Type 4 (13 to 16 floors) to 1,516.2 Rubles/m 2; 2. The following are the most cost intensive measures for buildings of Type 1: Repair of roofs (garret floors) with insulation and waterproofing; The unit cost of this activity amounts to Rubles/m 2 (25% of the total unit cost of measures as part of Package No. 1); Repair of basements (with basement floor insulation). The unit cost of this activity amounts to Rubles/m 2 (14.3% of the total unit cost of measures as part of Package No. 1); Repair of in-building utility services in basements or attics. The unit cost of this activity amounts to Rubles/m 2 (14% of the total unit cost of measures as part of Package No. 1); 3. The following are the most cost intensive measures for buildings of Type 2: Repair (upgrade) or replacement of elevator equipment. The unit cost of this activity amounts to 1,009 Rubles/m 2 (38% of the total unit cost of measures as part of Package No. 1); Repair (sealing) of joints in combination with painting and plastering of external walls; The unit cost of this activity amounts to Rubles/m 2 (11.1% of the total unit cost of measures as part of Package No. 1); Repair of roofs (garret floors) with insulation and waterproofing. The unit cost of this activity amounts to Rubles/m 2 (10% of the total unit cost of measures as part of Package No. 1); 58

59 4. The following are the most cost intensive measures for buildings of Type 3: Repair (upgrade) or replacement of elevator equipment. The unit cost of this activity amounts to 519 Rubles/m 2 (28.3% of the total unit cost of measures as part of Package No. 1); Repair (sealing) of joints in combination with painting and plastering of external walls. The unit cost of this activity amounts to Rubles/m 2 (15.8% of the total unit cost of measures as part of Package No. 1); Installation of sealing gaskets between window frames and walls of a building (with the installation of a third window pane or application of a film). The unit cost of this activity amounts to Rubles/m 2 (10.7% of the total unit cost of measures as part of Package No. 1). 5. The following are the most cost intensive measures for buildings of Type 4: Repair (upgrade) or replacement of elevator equipment. The unit cost of this activity amounts to 365 Rubles/m 2 (24% of the total unit cost of measures as part of Package No. 1); Repair (sealing) of joints in combination with painting and plastering of external walls. The unit cost of this activity amounts to Rubles/m 2 (15.8% of the total unit cost of measures as part of Package No. 1); Activity named "Installation of sealing gaskets between window frames and walls of a building (with the installation of a third window pane or application of a film)". The unit cost of this activity amounts to Rubles/m 2 (14.1% of the total unit cost of measures as part of Package No. 1). 6. For buildings of Type 1 the activity named "replacement of electric bulbs in public spaces by for energy-efficient lighting fixtures" is distinguished by the minimum discounted cost. The unit cost of this activity amounts to 7.2 Rubles/m 2 (0.2% of the total unit cost of measures as part of Package No. 1); 7. For buildings of Type 2, 3 and 4 the activity named "repair of front-entrance doors with installation of door closers (providing automatic door closing" is distinguished by the minimum discounted cost. In which case: The unit cost of this activity amounts to 3.9 Rubles/m 2 for buildings of Type 2 (0.15% of the total unit cost of measures as part of Package No. 1); The unit cost of this activity amounts to 1.3 Rubles/m 3 for buildings of Type 3 (0.07% of the total unit cost of measures as part of Package No. 1); The unit cost of this activity amounts to 0.4 Rubles/m 4 for buildings of Type 4 (0.03% of the total unit cost of measures as part of Package No. 1); Package No. 2 (realistic) This package is aimed at implementing measures necessary to reduce wear and tear of buildings, to improve buildings performance as well as to improve living conditions for residents. Package No. 2 (realistic) includes the following activities: 1. Measures designed to improve heat retention properties (heat insulation) of enclosing structures of buildings. Such measures include: repair of roofs (with insulation and waterproofing); 59

60 repair of basements (with basement floor insulation); Russian Urban Housing Energy Efficiency Programme Model Development repair (sealing) of joints in combination with painting and plastering of external walls; Installation of state-of-the-art energy-efficient triple glazed windows in plastic window frames; repair of front-entrance doors with the installation of door closers (providing automatic door closing). If necessary, a second door may be installed at windporches in building entrances as part of this measure; In this case, the activity named "Installation of sealing gaskets between window frames and walls of a building (with the installation of a third window pane or application of a film) as part of the above Package No. 1 is substituted by a more efficient measure named "Installation of state-of-the-art energy-efficient triple glazed windows in plastic window frames." 2. Measures to improve heating and hot water supply systems in buildings allowing to control the firing rate for heating and hot water supply. In this case, heat loss due to imbalance of supply and demand (in a building) is reduced. Such measures include: Installation of an automated single-building heat distribution and metering station (instead of mixing valves in a building). In this case, the activity named "Installation of an automated heating system control unit instead of mixing valves in a building" as part of the above Package No. 1 is substituted. 3. Installation of hot water circulation line in the hot water supply system. 4. Installation of heat-reflecting screens behind heating radiators in a building. 5. Measures designed to reduce physical wear and to extend operating life of in-building utility services located in the attics or basements of buildings (same measures as in Package No. 1). 6. Measures to replace physically worn out in-building electrical networks (wiring) and equipment of input distribution devices. If necessary, reactive power compensation devices when operating electric motors of pumping equipment and/or elevators may be installed as part of this measure. 7. Low-cost energy-saving measure to replace electric bulbs in public spaces by energyefficient lighting fixtures. 8. Measures designed to install single-building utility meters (heat energy meters, electricity meters, cold and hot water meters and natural gas meters). Same measures as in the above Package No Measure designed to repair (upgrade) or replace elevator equipment (elevators). 10. Repair of drainage pipes (storm water pipes). 11. Measures to improve public spaces, including: repair of stairwells; painting of walls and whitewashing of ceilings in public places; repair of garbage chutes in buildings. 60

61 The total number of types of works to be implemented as part of Package No. 2 (realistic) is 20. The unit cost of works included in Package No. 2 for residential buildings with different total floor space and different number of storeys is specified in Table 3.5. Unit cost of Package No. 2 of measures per one m2 of the total building floor- Table 3.5 space Description of activity Repair of roofs (with insulation and waterproofing); Repair of basements (with basement floor insulation); Repair (sealing) of joints in combination with painting and plastering of external walls; Measur ement unit Number of floors up to four 4 floors in a building Five- to eightstoreyed buildings Nine- to twelvestoreyed buildings m Rubles/ Thirteen- to sixteenstoreyed buildings Rubles/ m Rubles/ m 2 Installation of state-of-the-art energyefficient triple-glazed windows in plastic window frames (energyefficient triple-pane windows in PVCframes) Repair (sealing) of front-entrance doors with the installation of door closers (providing automatic door closing). Rubles/ m 2 Rubles/ m 2 Repair (replacement) of utility systems inside a building in basements or attic floors, including: Repair of heating pipes in a building with thermal insulation; pipes of the hot water supply system in a building with the installation of water pressure regulators at the inlet; repair of pipes of the cold water supply system in a building with the installation of water pressure regulators at the inlet; pipes of the sanitation (sewage) system inside a building; pipes of the gas-supply system inside a building; Installation of single-building utility meters, including: a single-building heat energy consumption meter (heat meter); a single-building hot water consumption meter (hot water meter) a single-building cold water consumption meter (cold water meter) single-building multirate electronic electricity meters with enhanced accuracy (minimum 2.0); single-building natural gas consumption meters (gas meters) Rubles/ m Rubles/ m

62 Description of activity Installation of an automated singlebuilding heat distribution and metering station (replacement of mixing valves in a building). Installation of hot water return lines in the hot water supply systems Installation of heat-reflecting screens behind heating radiators Replacement of electric bulbs in public spaces by energy-saving lighting fixtures Replacement of physically worn out in-building electrical networks (wiring) and equipment of input distribution devices. Measur ement unit Russian Urban Housing Energy Efficiency Programme Model Development Number of floors up to four 4 Five- to eightstoreyed floors in a building buildings Nine- to twelvestoreyed buildings Thirteen- to sixteenstoreyed buildings Rubles/ m 2 Rubles/ m 2 Rubles/ m 2 Rubles/ m 2 Rubles/ m 2 Repair (upgrade) or replacement of Rubles/ 1, elevator equipment m 2 Repair of water disposal systems Rubles/ (storm water pipes) in the buildings. m 2 Improvement of public spaces (repair of Rubles/ stairwells, painting walls and whitewashing ceilings of public spaces, repair of garbage chutes). m 2 Costs of design and estimation Rubles/ documentation and contingencies m 2 ditto % Total unit cost of measures as part of Package No. 2 (realistic) Rubles/ m 2 5, , , ,849.1 Source: Consultant's estimates Analysis of Table 3.5 reveals that: 1. The total unit cost of measures as part of Package No. 2 (realistic) amounts: for residential buildings of Type 1 (up to 4 floors inclusive) to 5,193 Rubles/m 2; As compared to the above Package No. 1 the total unit cost of measures has grown by 1,882.1 Rubles/m 2 (56%); for residential buildings of Type 2 (5 to 8 floors) to 3,808.6 Rubles/m 2; As compared to the above Package No. 1 the total unit cost of measures has grown by 1,176.3 Rubles/m 2 (45%); for residential buildings of Type 3 (9 to 12 floors) to 3,201.2 Rubles/m 2. As compared to the above Package No. 1 the total unit cost of measures has grown by Rubles/m 2 (43%); for residential buildings of Type 4 (13 to 16 floors) to 2,849.1 Rubles/m 2; As compared to the above Package No. 1 the total unit cost of measures has grown by 1,332.9 Rubles/m 2 (47%); 2. The following are the most cost intensive measures for buildings of Type 1: Installation of state-of-the-art energy-efficient triple-glazed windows in plastic window frames (energy-efficient triple-pane windows in PVC-frames). The unit 62

63 cost of this activity amounts to 1,118.4 Rubles/m 2 or 22% of the total unit cost of measures as part of Package No. 2; Installation of an automated single-building heat distribution and metering station instead of mixing valves in a building. The unit cost of this activity amounts to Rubles/m 2 or 15.7% of the total unit cost of measures as part of Package No. 2; Repair of roofs (garret floors) with insulation and waterproofing. The unit cost of this activity amounts to Rubles/m 2 or 15.6% of the total unit cost of measures as part of Package No. 2; 3. The following are the most cost intensive measures for buildings of Type 2: Repair (upgrade) or replacement of elevator equipment. The unit cost of this activity amounts to 1,009 Rubles/m 2 or 26.5% of the total unit cost of measures as part of Package No. 2; Installation of state-of-the-art energy-efficient triple-glazed windows in plastic window frames (energy-efficient triple-pane windows in PVC-frames). The unit cost of this activity amounts to Rubles/m 2 or 20.1% of the total unit cost of measures as part of Package No. 2; Installation of an automated single-building heat distribution and metering station instead of mixing valves in a building. The unit cost of this activity amounts to Rubles/m 2 or 8% of the total unit cost of measures as part of Package No. 2; 4. The following are the most cost intensive measures for buildings of Type 3: Installation of state-of-the-art energy-efficient triple-glazed windows in plastic window frames (energy-efficient triple-pane windows in PVC-frames). The unit cost of this activity amounts to 1,149 Rubles/m 2 or 35.8% of the total unit cost of measures as part of Package No. 2; Repair (upgrade) or replacement of elevator equipment. The unit cost of this activity amounts to 519 Rubles/m 2 or 16.2% of the total unit cost of measures as part of Package No. 2; Repair (sealing) of joints in combination with painting and plastering of external walls. The unit cost of this activity amounts to Rubles/m 2 or 9% of the total unit cost of measures as part of Package No. 2; 5. The following are the most cost intensive measures for buildings of Type 4: Installation of state-of-the-art energy-efficient triple-glazed windows in plastic window frames (energy-efficient triple-pane windows in PVC-frames). The unit cost of this activity amounts to 1,143.9 Rubles/m 2 or 40.1% of the total unit cost of measures as part of Package No. 2; Repair (upgrade) or replacement of elevator equipment. The unit cost of this activity amounts to 365 Rubles/m 2 or 12.8% of the total unit cost of measures as part of Package No. 2; Repair (sealing) of joints in combination with painting and plastering of external walls. The unit cost of this activity amounts to Rubles/m 2 or 8% of the total unit cost of measures as part of Package No. 2; 63

64 6. For buildings of Type 1 the activity named "replacement of electric bulbs in public spaces by energy-efficient lighting fixtures" is distinguished by the minimum discounted cost. The unit cost of this activity amounts to 7.2 Rubles/m 2 or 0.13% of the total unit cost of measures as part of Package No. 2; 7. For buildings of Type 2, 3 and 4 the activity named "repair of front-entrance doors with installation of door closers (providing automatic door closing)" is distinguished by the minimum unit cost. In which case: The unit cost of this activity amounts to 3.9 Rubles/m 2 for buildings of Type 2 (0.1% of the total unit cost of measures as part of Package No. 2); The unit cost of this activity amounts to 1.3 Rubles/m 3 for buildings of Type 3 (0.04% of the total unit cost of measures as part of Package No. 2); The unit cost of this activity amounts to 0.4 Rubles/m 4 for buildings of Type 4 (0.01% of the total unit cost of measures as part of Package No. 2); Package No. 3 (energy - efficient) This package is aimed at implementing measures necessary to reduce wear and tear of buildings, to improve buildings performance as well as to significantly reduce energy resources and water consumption. Part of measures forming Package No. 3 (energy-efficient) is aimed at improvment of living conditions of residents). Package No. 3 ( (energy-efficient)) includes the following activities: 1. Measures designed to improve heat retention properties (heat insulation) of enclosing structures of buildings. Such measures include: repair of roofs (with insulation and waterproofing); repair of basements (with basement floor insulation); heat insulation of external walls; Installation of state-of-the-art energy-efficient triple-glazed windows in plastic window frames; repair of front-entrance doors with the installation of door closers (providing automatic door closing). If necessary, a second door may be installed at windporches in building entrances as part of this measure; The activity named "Repair (sealing) of joints in combination with painting and plastering of external walls" which was included in the above mentioned Packages No. 1 and No. 2 is substituted by a more efficient measure named "Heat insulation of external walls." 2. Measures aimed at a complete reconstruction (replacement) of in-building utility services. Such measures include: complete reconstruction of the heating system (replacement of pipes with thermal insulation in basements or attics; replacement of riser pipes and supply lines to heating radiators; replacement of radiators in the apartments and public spaces); complete reconstruction of in-building hot water pipes (replacement of pipes in basements; replacement of riser pipes of the hot water supply system; installation of pressure regulators at the inlet); 64

65 complete reconstruction of in-building cold water pipes (replacement of pipes in basements; replacement of riser pipes of the cold water supply system; installation of pressure regulators at the inlet); complete reconstruction of pipes of the in-building sanitation system (replacement of pipes in basements; replacement of riser pipes of the sanitation (sewage) system); complete reconstruction of pipes of the in-building gas supply system (replacement of pipes in basements; replacement of riser pipes of the gas supply system); 3. Measures to improve heating and hot water supply systems in buildings allowing to control the firing rate for heating and hot water supply. In this case, heat loss due to imbalance of supply and demand (in a building) is reduced. Such measures include: Installation of an automated single-building heat distribution and metering station (instead of mixing valves in a building). 4. Measures to improve heating systems in the buildings allowing to control firing rate for heating both separately by risers of the heating system and directly in residential rooms (apartments) of a building. Such measures include: Installation of balancing valves in riser pipes of the heating system. This measure allows to control the firing rate separately by risers of the heating system (eliminates maladjustment of risers of the heating system in a building); Installation of thermostatic control valves (temperature regulators) on heating radiators in the apartments of a building. This measure allows to adjust the firing rate directly on heating radiators in the apartments of a building. 5. Installation of hot water circulation line in the hot water supply system. 6. Installation of heat-reflecting screens behind heating radiators in a building. 7. Measures to replace physically worn out in-building electrical networks (wiring) and equipment of input distribution devices. If necessary, reactive power compensation devices when operating electric motors of pumping equipment and/or elevators may be installed as part of this measure. 8. Low-cost energy-saving measure to replace electric bulbs in public spaces by energyefficient lighting fixtures. 9. An energy-saving measure consisting of installation of occupancy sensors in public spaces. This measure allows to automatically control light intensity in public spaces. 10. Measures designed to install single-building utility meters (heat energy meters, electricity meters, cold and hot water meters and natural gas meters). Same measures as in the above Packages No. 1 and No Measure designed to repair (upgrade) or replace elevator equipment (elevators). 12. Repair of drainage pipes (storm water pipes). 13. Measures to provide public amenities. Same measures as in the above Package No

66 The total number of types of works to be implemented as part of Package No. 3 (energyefficient)) is 23. The unit cost of works included in Package No. 3 for residential buildings with different total floor space and different number of storeys is specified in Table 3.6. Unit cost of Package No. 3 of measures per one m 2 of the total building floor- Table 3.6 space Description of activity Repair of roofs (with insulation and waterproofing); Repair of basements (with basement floor insulation); Heat insulation of external walls: Installation of state-of-the-art energyefficient triple-glazed windows in plastic window frames (energyefficient triple-pane windows in PVCframes) Repair (sealing) of front-entrance doors with the installation of door closers (providing automatic door closing). Number of floors Measur ement unit up to four 4 floors in a building; Five- to eightstoreyed buildings; Nine- to twelvestoreyed buildings; Thirteen- to sixteenstoreyed buildings; Rubles/ m 2 Rubles/ m 2 Rubles/ , , m 2 Rubles/ m 2 Rubles/ m 2 Complete makeover (replacement) of in-building utility services, including: pipes of the heating system inside a building; in-building pipes of the hot water supply system in-building pipes of the cold water supply system pipes of the sanitation (sewage) system inside a building; pipes of the gas-supply system inside a building; Installation of single-building utility meters, including: a single-building heat energy consumption meter (heat meter); a single-building hot water consumption meter (hot water meter) a single-building cold water consumption meter (cold water meter) single-building multirate electronic electricity meters with enhanced accuracy (minimum 2.0); single-building natural gas consumption meters (gas meters) Installation of an automated singlebuilding heat distribution and metering station (replacement of mixing valves in a building). Installation of hot water return lines in the hot water supply systems Rubles/ m Rubles/ m Rubles/ m 2 Rubles/ m 2 66

67 Description of activity Installation of heat-reflecting screens behind heating radiators Installation of balancing valves in riser pipes of the heating system Installation of thermostatic control valves (temperature regulators) on heating radiators Replacement of electric bulbs in public spaces by energy-saving lighting fixtures Installation of occupancy sensors in public spaces Replacement of physically worn out in-building electrical networks (wiring) and equipment of input distribution devices. Measur ement unit Russian Urban Housing Energy Efficiency Programme Model Development Number of floors up to four 4 Five- to eightstoreyed floors in a building; buildings; Nine- to twelvestoreyed buildings; Thirteen- to sixteenstoreyed buildings; Rubles/ m 2 Rubles/ m 2 Rubles/ m 2 Rubles/ m 2 Rubles/ m Rubles/ m 2 Repair (upgrade) or replacement of Rubles/ 1, elevator equipment m 2 Repair of water disposal systems Rubles/ (storm water pipes) in the buildings. m 2 Improvement of public spaces (repair Rubles/ of stairwells, painting walls and whitewashing ceilings of public spaces, repair of garbage chutes). m 2 Costs of design and estimation Rubles/ documentation and contingencies m 2 ditto % Total unit cost of measures as part of Package No. 3 (energy-efficient) Source: Consultant's estimates Analysis of Table 3.6 reveals that: Rubles/ 6, , , ,056.7 m 2 1. The total unit cost of measures as part of Package No. 3 (energy-efficient) amounts: for residential buildings of Type 1 (up to 4 floors inclusive) to 6,706.7 Rubles/m 2; As compared to the above Package No. 2 the total unit cost of measures has grown by Rubles/m 2 (29%); for residential buildings of Type 2 (5 to 8 floors) to 5,018.8 Rubles/m 2; As compared to the above Package No. 2 the total unit cost of measures has grown by 1,176.3 Rubles/m 2 (32%); for residential buildings of Type 3 (9 to 12 floors) to 4,523.1 Rubles/m 2. As compared to the above Package No. 2 the total unit cost of measures has grown by 1,321.9 Rubles/m 2 (29%); for residential buildings of Type 4 (13 to 16 floors) to Rubles/m 2; As compared to the above Package No. 2 the total unit cost of measures has grown by 1,207.6 Rubles/m 2 (42%); 67

68 2. The following are the most cost intensive measures for buildings of Type 1: Installation of state-of-the-art energy-efficient triple-glazed windows in plastic window frames (energy-efficient triple-pane windows in PVC-frames). The unit cost of this activity amounts to 1,118.4 Rubles/m 2 or 16.6% of the total unit cost of measures as part of Package No. 3; Activity named "Heat insulation of external walls"; The unit cost of this activity amounts to Rubles/m 2 or 14.4% of the total unit cost of measures as part of Package No. 3; Activity named "Complete reconstruction (replacement) of in-building utility services." The unit cost of this activity amounts to Rubles/m 2 or 12.6% of the total unit cost of measures as part of Package No. 3; 3. The following are the most cost intensive measures for buildings of Type 2: Activity named "Heat insulation of external walls"; The unit cost of this activity amounts to 1,131.5 Rubles/m 2 or 22.5% of the total unit cost of measures as part of Package No. 3; Repair (upgrade) or replacement of elevator equipment. The unit cost of this activity amounts to 1,009 Rubles/m 2 or 20% of the total unit cost of measures as part of Package No. 3; Activity named "Installation of state-of-the-art energy-efficient triple-glazed windows in plastic window frames (energy-efficient triple-pane windows in PVC-frames)". The unit cost of this activity amounts to Rubles/m 2 or 15.2% of the total unit cost of measures as part of Package No. 3; 4. The following are the most cost intensive measures for buildings of Type 3: Activity named "Heat insulation of external walls"; The unit cost of this activity amounts to 1,193.7 Rubles/m 2 or 26.3% of the total unit cost of measures as part of Package No. 3; Activity named "Installation of state-of-the-art energy-efficient tripleglazed windows in plastic window frames (energy-efficient triple-pane windows in PVC-frames)". The unit cost of this activity amounts to 1,149.2 Rubles/m 2 or 25.4% of the total unit cost of measures as part of Package No. 3; Repair (upgrade) or replacement of elevator equipment. The unit cost of this activity amounts to 519 Rubles/m 2 or 11.4% of the total unit cost of measures as part of Package No. 3; 5. The following are the most cost intensive measures for buildings of Type 4: Activity named "Installation of state-of-the-art energy-efficient tripleglazed windows in plastic window frames (energy-efficient triple-pane windows in PVC-frames)". The unit cost of this activity amounts to 1,143.9 Rubles/m 2 or 28.2% of the total unit cost of measures as part of Package No. 3; Activity named "Heat insulation of external walls"; The unit cost of this activity amounts to Rubles/m 2 or 22.1% of the total unit cost of measures as part of Package No. 3; 68

69 Repair (upgrade) or replacement of elevator equipment. The unit cost of this activity amounts to 365 Rubles/m 2 or 8.9% of the total unit cost of measures as part of Package No. 3; 6. For buildings of Type 1 the activity named "Replacement of electric bulbs in public spaces by energy-efficient lighting fixtures" is distinguished by the minimum unit cost. The unit cost of this activity amounts to 7.2 Rubles/m 2 or 0.11% of the total unit cost of measures as part of Package No. 3; 8. For buildings of Type 2, 3 and 4 the activity named "Repair of front-entrance doors with installation of door closers (providing automatic door closing)" is distinguished by the minimum unit cost. In which case: The unit cost of this activity amounts to 3.9 Rubles/m 2 for buildings of Type 2 (0.07% of the total unit cost of measures as part of Package No. 3); The unit cost of this activity amounts to 1.3 Rubles/m 3 for buildings of Type 3 (0.02% of the total unit cost of measures as part of Package No. 2); The unit cost of this activity amounts to 0.4 Rubles/m4 for buildings of Type 4 (0.01% of the total unit cost of measures as part of Package No. 3). 3.3 RESOURCE SAVING AS A RESULT OF IMPLEMENTATION OF PACKAGES OF MEASURES FOR CAPITAL REPAIRS OF RESIDENTIAL BUILDINGS The procedure for estimating the amount of savings as a result of implementation of energy-saving and energy efficiency enhancement measures Annual savings due to reduced loss of energy resources was defined as a change in the amount of loss of energy resources (heat, electricity, water, gas) before and after implementation of measures by the following formula: П ээ = П 0 - П 1, (1), wherein П ээ is the amount of savings due to reduced loss of energy resources in thousands of tons of coal equivalent; П 0 is the loss of energy resources before the implementation of a measure in thousands of tons of coal equivalent; П 1 is the loss of energy resources after the implementation of a measure in thousands of tons of coal equivalent; The savings estimation due to reduced loss is defined by the following formula: З эп = П ээ * Т ээ (2), wherein З эп - economic benefit from loss reduction in thousands of Rubles; П ээ is the amount of savings due to reduced loss of energy resources in thousands of tons of coal equivalent; Т ээ is the tariff for purchase of energy to compensate loss of energy in Rubles per ton of coal equivalent. (A scheduled tariff is applied for the period (year) of calculation) Estimation of the amount of utilities savings as a result of implementation of energy efficiency enhancement measures The Consultant has developed 3 standard packages of expedient measures that should be implemented during capital repairs of residential buildings while benefits from each of the 69

70 packages are described below. These estimates are based on the average figures achieved in the real practice of resource savings in apartment buildings. As the experience of capital repairs in the city of Moscow has shown, more significant amounts of savings as a result of packaged capital repairs of buildings can be achieved in practice, if apartment owners are substantially motivated. Heat energy savings can exceed 40%. However, more moderate estimates are quoted below. To estimate savings as a result of each package of measures, the most commonly encountered four types of apartment buildings in Russia were selected. The Consultant estimated savings per unit, i.e. savings per one m 2 of the total floor space of a building for each measure within three standard packages. Comparison of savings from packages of measures implemented during capital repairs of residential buildings (relative amount of savings on some utility resources per one m2 of the total building floor space) is specified in table 3.7. A detailed estimation of savings from measures in each of the three standard packages is described in Annex 2 Table 3.7 shows that package #3 provides for the highest saving of utility resources. Besides, a specific size of savings is predetermined by the type of a building. Higher savings are typical for low-rise buildings (up to four floors). The more floors a building has the fewer specific saving of utility resources will be attained. The payback period of these packages will vary according to characteristics of a building (to the presence of a saving potential) and to tariffs for energy resources and water which differ considerably across regions. Besides, unit costs of implementing the same package of measures may vary times depending on how many floors a building has. (See Section 3.2) This also significantly influences the payback period of capital repairs which are aiming at improved energy efficiency in apartment buildings. All these factors make the payback ranges excessively wide 70

71 Table 3.7 Comparison of savings from packages of measures implemented during capital repairs of residential buildings (relative amount of savings on some utility resources per one m2 of the total building floor space) Number of floors in a building Name of package Package No. 1 Package No. 2 Package No. 3 up to four floors inclusive; 5 to 8 floors; 9 to 12 floors; 13 to 16 floors; without reference to the number of storeys Heat Heat Heat energggy Electricity energy tricity energy tricity tricity tricity Heat Elec- Heat Elec- Gas Water Gas Water Gas Water ener- Elec- Gas Water ener- Elec- Gas Water % % % % % % % % % % % % % % % % % % % %

72 CONCLUSIONS 1. On the basis of effective regulatory and legal documents and relying on available Russian and international practice the Consultant has put forward three packages of measures which may be implemented within capital repairs of apartment buildings, and which vary according to tasks and amounts of financial resources for capital repairs. These are baseline, realistic and energy efficient packages: Package #1 (baseline) aims at supporting a building in a serviceable state. There are 15 measures included into the package. Package #2 (realistic) is oriented towards the reduction of physical wear and tear and obsolescence, the enhancement of operational characteristics of a building, as well as the improvement of living conditions of residents. The total number of measures in this package is 20. Package # 3 (energy efficient) will help to reduce physical wear and tear, and obsolescence, enhance operational characteristics of a building, and also considerably reduce consumption of energy resources and water, and improve living conditions of residents. 2. Four most wide-spread, in Russia, types of apartment buildings have been chosen to calculate the cost of each of the packages. These packages differed by the number of floors, total area and other architectural characteristics and structural performance of a building. 3. The unit cost of these packages of measures - which are recommended for implementation within capital repairs varies according to the type of an apartment building, and is as follows: For package # 1 from 3,310.9 RUR/m 2 to 1,516.2 RUR/m 2 ; For package # 2 from 5,193 RUR/m 2 to 2,849.1 RUR/m 2 ; For package # 3 - from 6,706.7 RUR/m 2 to 4,056.7 RUR/m 2. On the basis of the calculations it is clear that the highest unit cost of repair of each package is typical for low-rise buildings (those with up to 4 floors, and with total area of up to 750 m 2 ), while the lowest unit cost of repair for high-rise buildings (those with and more floors). 4. The calculations show that an average specific saving of utility resources (per one sq. m.) increases while passing from package #1 to package #3, and varies within the packages according to the type of a building. The higher value of specific saving of utility resources has been calculated for buildings with fewer floors. For buildings of the 1 st type (with up to 4 floors) and for packages #1, #2, #3, respectively, the saving will be as follows: Heat 12.4%, 21.0%, 26.6% Electricity 7.7%, 7.7%, 10.5%; Gas 14%, 14%, 18%; Water 13%, 16%, 22%.

73 For buildings of the 2 nd type (with 5-8 floors) and for packages #1, #2, #3, respectively, the saving will be as follows: Heat 10.3%, 20.8%, 25.7%; Electricity 8.8%, 8.8%, 11.3%; Gas 12%, 12%, 15%; Water 10.5%, 13.0%, 17.5%. For buildings of the 3 rd type (with 9-12 floors) and for packages #1, #2, #3, respectively, the saving will be as follows: Heat 10.5%, 20.6%, 24.4%; Electricity 8.0%, 8.0%, 10.3%; Gas 10%, 10%, 12%; Water 8%, 10%, 13%. For buildings of the 4 th type (with floors) and for packages #1, #2, #3, respectively, the saving will be as follows: Heat 7.4%, 20.4%, 23.8%; Electricity 2.4%, 2.4%, 4.0%; Gas 8%, 8%, 9%; Water 5.5%, 7.0%, 6.5%. 73

74 SECTION 4. LONG-TERM FORECAST SCENARIOS FOR CAPITAL REPAIRS UNTIL 2030 This section reviews three scenarios of capital repair dynamics which differ from one another by planned annual volumes of capital repairs and the proportion of comprehensive repairs embracing energy saving measures: Momentum Strategy, Enhancement Strategy, As in Europe. For each scenario with accepted assumptions the demand for capital repairs of apartment buildings, the volume of undertaken capital repairs and the costs funded from various sources of financing have been calculated for a period until DESCRIPTION OF KEY ASSUMPTIONS IN SCENARIOS It is not possible to exactly identify the demand for capital repairs in the long run. Several important factors influence the evaluation of demand for capital repairs of residential buildings, including but not limited to: change in the age structure of the housing stock over time, including commissioning of new residential buildings and demolition of dilapidated and unsafe buildings and along with this the changes in the structure of the housing stock with regard to walling material, number of storeys, average number of apartments and changes in the percentage of apartment buildings; intensity of capital repairs of buildings of different ages; distribution of the scope of capital repairs between apartment buildings and private buildings; regulatory time interval between capital repairs the degree of its complexity; regulatory requirements for the minimum list of capital repairs and target indicators of efficiency, including the parameters of reliability, quality and energy-efficiency; decision-making plans with regard to scopes and characteristics of capital repairs; models of financing, availability of funding sources and financial constraints that determine the feasibility of capital repair programs and costs of debt financing for such purposes; possible income flows by main sources of funding within each model and changes in costs of construction and erection works; possibility of covering part of costs by means of savings on housing stock maintenance achieved as a result of capital repairs. Various combinations of the said factors may be encountered in the future. Therefore, for the purpose of analysis a "scenario approach" was chosen allowing to do a forecast for changes in the demand for capital repairs of residential buildings for a period until 2035 under different assumptions and to assess probable trends on the basis of an analysis of the degree of feasibility of such assumptions. In this study three scenarios for capital repairs were considered: "Sluggish Strategy", i.e. a scenario extrapolating existing trends in recent years in the field of capital repairs and serving as a "base line". In this scenario it is assumed

75 that 2% of the total floor space of apartment buildings would undergo capital repairs each year, primarily those apartment buildings which have been in operation for 40 years, of which at least 50% should undergo comprehensive capital repairs according to plans which do not stipulate requirements with regard to reduction of energy consumption; "Improvement Strategy", i.e. a scenario according to which it is assumed that starting from % of the total floor space of residential buildings will undergo capital repairs each year, primarily apartment buildings which have been in operation for 40 years, of which at least 75% should undergo comprehensive capital repairs according to plans stipulating requirements with regard to reduction of energy consumption by at least 15%; "Like in Europe", i.e. a scenario in which it is assumed that starting from % of the total floor space of residential buildings will undergo capital repairs each year, of which at least 90% should undergo comprehensive capital repairs according to plans stipulating requirements with regard to reduction of energy consumption by at least 30%. In each scenario the following indicators are to be monitored: changes in the age structure of apartment buildings, their average age and the amount and percentage of the living space of apartment buildings which have been in operation for more than 25 years and more than 40 years; scopes of capital repairs and comprehensive capital repairs; housing stock in need of capital repairs by years of construction; scopes of capital repairs of facades, roofs, utility services, including installation of meters as well as other types of work; expenditures for capital repairs in total and by main types of works; sources of financing of repair works and financial burden for the population; amounts of energy savings in physical and monetary terms and possibilities to use savings to finance capital repairs; possible limitations with regard to amounts of capital repairs financing. All calculations were performed using an estimate model of capital repairs of housing stock developed by the Consultant (EMCRHS) which takes into account the impact of all the above factors on changes in the housing stock and also the evolution of its age structure and scopes of capital repairs. The parameters of this model were evaluated using data for In all scenarios the same assumptions were made as regards changes in the housing stock for the period until It is assumed that within ,900 million m 2 of residential space will be commissioned as newly constructed projects (Fig. 4.1). In the same period physical decommissioning of residential space, including dilapidated and unsafe housing, will amount to 450 million m 2. As a result, the living space in 2035 will amount to 4,578 million m 2. Given such housing stock increments, its age structure will change towards expansion in the number of buildings constructed after (Fig. 4.2). However, the percentage of residential buildings which have been in operation for more than 25 years and more than 40 years will persistently grow and with it the average age of the housing stock. The average age of apartment buildings taken by the living space will amount in 2035 to 49 years, while taken by the number 75

76 of buildings it will amount to 60 years. By 2035, the buildings commissioned before 2010 will already be in operation for 25 years or more, while buildings commissioned before 1995 will be in operation for 40 years or more. Consequently, a rapid average age increment trend for apartment buildings will clearly tale place. Figure 4.1 Factors determining the dynamics of the housing stock in the Russian Federation in Source: Consultant's estimate Figure 4.2 Change in the age structure of the housing stock in the Russian Federation in Source: Consultant's estimate 76

77 Other assumptions used in calculations made for three scenarios are described in respective subsections. 4.2 «SLUGGISH STRATEGY» BASELINE The percentage of capital repairs for the period reached % of the total floor space of residential buildings, while the percentage of capital repairs of the living space reached %. The percentage of capital repairs of apartment buildings reached % of their total floor space in It is assumed in the "Sluggish Strategy" scenario that the percentage of apartment buildings which have undergone capital repairs will amount to 2% of the floor space each year in the period from 2011 until It is assumed that the living space under capital repairs financed out of centralized funds (excluding capital repairs carried out by tenants themselves) will be distributed between apartment buildings and private buildings in the ratio of 95 to 5. Hereinafter data concerning apartment buildings are considered only. In this scenario, the operating life of a building before capital repairs or the interval between capital repairs is assumed to be 40 years. Despite the fact that new regulations presuppose a wide range of capital repair items for each residential building, it is assumed in the "Sluggish Strategy" scenario that selective capital repairs will be retained. The percentage of comprehensive repairs will increase to 50% in 2013 and remain at that level until In this scenario, the regulatory requirements for the minimum list of capital repair works to target efficiency indicators are not fully met. Comprehensive capital repairs are carried out in accordance with Package No. 1 of measures described in Section 3. In case of selective capital repairs it is assumed that the unit cost of works will amount to 1,013 Rubles/m 2 in 2011 with subsequent indexation using the civil works cost escalation index. Unit capital repair costs for various types of works (design and estimate documentation, construction and repair works, repair and replacement of building structures, repair and replacement of building utility services) are fixed at the level of 2009 and adjusted using a civil works price index which gradually declines from 9% in 2010 to 2.5% by 2025 and then remains at this level. Cost parameters for comprehensive repairs are determined on the basis of repair costs in the course of implementation of Package No. 1 of measures. The practice of overrating capital repair costs is widely used. In order to reflect it in the model, a "corruption index" is applied as a multiplier of capital repair costs. It is assumed to be 20%. It is assumed that in the "Sluggish Strategy" scenario the two main sources of funding for capital repairs are budgetary expenditures and payments from population made in the form of mandatory monthly deductions for capital repairs. In this scenario it is assumed that there are limited possibilities to cover part of the costs through savings on housing stock maintenance gained as a result of capital repairs as part of ESCO and that it is not proposed to raise loans for capital repairs. The main estimation results based on the "Sluggish Strategy" scenario are presented in Table 4.1. Table 4.1 Main estimation results based on the "Sluggish Strategy" scenario Measureme nt unit Living space in million m 2 2,761 2,237 2,349 2,475 2,615 2,772 2,949 apartment buildings Floor space of million m ,106 1,276 1,441 1,600 77

78 apartment buildings aged 40 years and older Floor space of apartment buildings aged 25 years and older Percentage of the floor space of apartment buildings aged over 40 years which did not undergo comprehensive repairs Russian Urban Housing Energy Efficiency Programme Model Development million m 2 1,079 1,370 1,596 1,770 1,912 2,002 2,181 % 25.9% 29.8% 31.1% 31.7% 31.6% 30.9% 29.5% Capital repairs, total million m ditto, cumulative since million m , , , Comprehensive capital million m repairs ditto, cumulative since million m Percentage of apartment buildings which have undergone capital repairs % 0.8% 1.8% 2.0% 2.0% 2.0% 2.0% 2.0% Percentage of comprehensive capital repairs of apartment buildings Cost of capital repair works on current basis Unit cost of capital repairs on current basis Expenditures of budgets at all levels and expenditures of the Fund for the Promotion of the Housing and Utility Sector Reform for capital repairs Expenditures of households on capital repairs Monthly payment of households for capital repairs Percentage of households' expenditures on capital repairs in the total expenditure ESCOs' expenditures on capital repairs Loans for implementation of capital repairs Utility services payment savings Source: Consultant's estimate % 0.1% 0.7% 1.0% 1.0% 1.0% 1.0% 1.0% Rubles, billion Rubles/m 2 3,340 4,192 5,057 5,677 6,158 6,778 Rubles, billion Rubles, billion Rubles/m 2 per month % 0.02% 0.14% 0.14% 0.15% 0.16% 0.18% Rubles, billion Rubles, billion Rubles, billion

79 The scopes of capital repairs and comprehensive capital repairs are gradually increased following the increase in living space of the apartment buildings (Figure 4.3). However, the percentage of apartment buildings requiring comprehensive capital repairs will not be possibly reduced. Until 2025 it will even increase and only after that it will start slowly declining. Throughout the period from 2011 until 2035 it will be within the range of 30 to 35%. It means that around one-third of the housing stock is constantly in need of comprehensive capital repairs. Improvement of the housing stock condition stock is not taking place. The "Sluggish Strategy" may only allow to rule out the possibility of a noticeable deterioration in its condition. Figure 4.3 Scope of capital repairs of apartment buildings according to the "Sluggish Strategy Scenario" Source: Consultant's estimate The scope of facade repairs increases along with the renovated space of apartment buildings (Fig. 4.4). The scope of roof repairs remains stable for some time and then decreases as the percentage of apartment buildings with a greater number of storeys in the number of buildings to be repaired is growing. Availability of metering devices increases as comprehensive repairs are implemented during which, according to the requirements of Federal Law No. 261 singlebuildings (bulk) meters and apartment meters are to be installed. A provision of Federal Law FZ No. 261 is taken into consideration according to which single-building meters are not installed in residential buildings with a heating demand of less than 0.2 Gcal/h. In this scenario the requirements of Federal Law FZ No. 261 regarding installation of metering devices in residential buildings by January are also not met. Equipping residential buildings with heat meters is extended until

80 Figure 4.4 Scope of capital repairs by specific work items according to the "Sluggish Strategy" а) scopes of facade repairs b) scopes of roof repairs c) availability of single-building meters d) availability of individual apartment meters Source: Consultant's estimate Expenditures for capital repairs in the scenario named "Sluggish Strategy" are constantly growing after some decline and reach 322 billion Rubles by (Figure 4.5). Figure 4.5 Expenditures for capital repairs according to the "Sluggish Strategy" scenario Source: Consultant's estimate

81 A slowdown in expenditure in is associated with the transition to Package No. 1 of capital repair measures which unit costs, at an average, is lower than actual unit costs of programs carried out in the regions of the Russian Federation. In this scenario it is assumed that monthly payments by individuals for capital repairs are imposed in the amount of one Ruble/m 2 with an annual increase by 5% in comparable prices and adjusted for inflation. As a result, by 2020 such payment on current basis would amount to 2.5 Rubles /m 2 and by 2035 to 7.6 Rubles/m 2. The percentage of expenditure on capital repairs in the expenditures of people living in apartment buildings amounts to approximately % (Table 4.1). Household expenditures on capital repairs do not lead to "crossing" the line of economic affordability. Figure 4.6 Structure of financing capital repair costs according to the "Sluggish Strategy" scenario Source: Consultant's estimate With a minimum use of the ESCO vehicle (simply due to the limited amounts of utility savings during the implementation of Package No. 1 of measures and due to a low proportion of comprehensive repairs) it is assumed that the remaining costs are covered from the budget (Figure 4.6). Average annual budget expenditures in will be significantly lower than in They do not exceed 100 billion Rubles per year and after 2025are gradually reduced to 28 billion Rubles. Cost savings on payments for utility services will amount by 2035 to 58 billion Rubles and the aggregate figure for will amount to 604 billion Rubles or 11% of the total capital repair costs. As a summary of estimation results on the basis of "Sluggish Strategy" scenario, it should be noted that given a moderate financial load on the population and the budget, while keeping the percentage of overhauled apartment buildings at a level of 2% of their floor space, it will only be possible to keep the housing stock in a minimum acceptable condition for living without any noticeable improvements with one third of the living space of apartment buildings being in need of comprehensive capital repairs. 4.3 «IMPROVEMENT STRATEGY» In the "Improvement Strategy" it is assumed that starting from % of the total floor space of residential buildings will undergo capital repairs each year, primarily apartment buildings which have been in operation for 40 years, of which at least 75% should undergo comprehensive 81

82 capital repairs according to plans stipulating requirements with regard to reduction of energy consumption. It is assumed that raising loans, in addition to budgetary expenditures and payments from the population, will become an important source of funding for capital repairs in the "Improvement Strategy" scenario. It is assumed in this scenario that monthly deductions for capital repairs are imposed on the population amounting to 2 Rubles/m 2 in 2012 with a gradual increase to 5 Rubles/m 2 by 2015 in comparable prices of 2011 and to 6.75 Rubles/m 2 by 2035 in comparable prices of 2011 Such payment on current basis adjusted for inflation in 2020 amounts to 8.5 Rubles/m 2 and by 2035 to 16.7 Rubles/m 2. The main estimation results based on the "Improvement Strategy" scenario are presented in Table 4.2. Table 4.2 Factors Living space in apartment buildings Floor space of apartment buildings aged 40 years and older Floor space of apartment buildings aged 25 years and older Percentage of the floor space of apartment buildings aged over 40 years which did not undergo comprehensive repairs Capital repairs, total ditto, cumulative since 2000 Comprehensive capital repairs ditto, cumulative since 2000 Percentage of apartment buildings which have undergone capital repairs Percentage of apartment buildings which have undergone comprehensive capital repairs Cost of capital repair works on current basis Unit cost of capital repairs on current basis Expenditures of budgets at all levels and expenditures of the Fund for the Promotion of the Housing and Utility Sector Reform for capital repairs Main estimation results based on the "Sluggish Strategy" scenario Measure ment unit million 2,761 2,237 2,349 2,475 2,615 2,772 2,949 m 2 million ,106 1,276 1,441 1,600 m 2 million 1,079 1,370 1,596 1,770 1,912 2,002 2,181 m 2 % million m million , , ,191.0 m 2 million m 2 million , ,446.2 m 2 % % Rubles, billion Rubles/m 2 Rubles, billion , ,340 4,310 5,210 5,860 6,373 7,

83 Factors Expenditures of households on capital repairs Monthly payment of households for capital repairs Percentage of households' expenditures on capital repairs in the total expenditure ESCOs' expenditures on capital repairs Loans for implementation of capital repairs Capital improvement loans servicing principal debt repayment interest payments Utility services payment savings Source: Consultant's estimate Measure ment unit Rubles, billion Rubles/m 2 per month Russian Urban Housing Energy Efficiency Programme Model Development % Rubles, billion Rubles, billion Rubles, billion Rubles, billion Rubles, billion Rubles, billion The scopes of capital repairs will increase up to 74 million m 2 by 2020 and to 89 million m 2 by Cumulatively for capital repairs will cover an area of 2,191 million m 2, this figure being 1,446 million m 2 for comprehensive capital repairs (Table 4.2). This will reduce the percentage of the floor space of apartment buildings aged 40 years and older being in need of comprehensive capital repairs to 12% in (Figure 4.7). Increasing the percentage of apartment buildings which have undergone capital repairs to 3% and the percentage of comprehensive repairs to 75% in contrast to the "Sluggish Strategy" scenario allows to substantially change the movement trend for the housing stock in need of capital repairs, however only with regard to apartment buildings with an operating life over 40 years (or last capital repairs implemented 40 years ago). As regards residential buildings with an operating life of more than 25 years, the percentage of the floor space of apartment buildings in need of capital repairs will also be reduced from 56% in 2010 to 28% in 2035 but it still remains significant. 83

84 Figure 4.7 Scope of capital repairs of apartment buildings according to the "Improvement Strategy" scenario Source: Consultant's estimate The scope of facade repairs and roof repairs is significantly higher than in the "Sluggish Strategy" scenario (Figure 4.8). However, in this scenario the requirements of Federal Law FZ No. 261 regarding installation of metering devices in residential buildings by January are also not met. Equipping residential buildings with heat meters will be accomplished in Figure 4.8 Scope of capital repairs by specific work items according to the "Improvement Strategy" scenario а) scopes of facade repairs b) scopes of roof repairs

85 c) availability of single-building meters d) availability of individual apartment meters Source: Consultant's estimate The above mentioned developments are achieved by means of substantial increase of expenditures on capital repairs according to "Improvement Strategy" scenario and will sustainably grow and amount to 627 billion Rubles in2020 and to 1,112 billion Rubles in 2035 on current basis (Figure 4.9). If the estimations are cleared of the "corruption factor", the costs would be reduced to 522 billion Rubles and 927 billion Rubles, respectively. Figure 4.9 Expenditures for capital repairs according to the "Improvement Strategy" scenario Source: Consultant's estimate The cumulative capital repair costs in in the "Improvement Strategy" scenario (17,091 billion Rubles) exceed those in the "Sluggish Strategy"scenario by more than three times (5,275 billion Rubles). The implementation of such an ambitious program of capital repairs requires modification of the capital repairs financing structure. The introduction of a considerable monthly mandatory fee payable by the population allows to cover only part of the expenses. Under the assumption that the amounts of of budget expenditures at all levels will decline and given limited possibilities for financing capital repairs using ESCO vehicles the importance of loans will grow. In this scenario it was assumed that loans are extended for 10 years at 8% per annum. Part of the payments from the population will be used for debt service. The rest will form financial resources to raise loans or to directly use these savings for capital 85

86 repairs by-passing the banking system. By 2035 this resource base will equal to the borrowing demand in terms of volume (Fig. 4.10). Figure 4.10 Mechanism of financing capital repair costs according to the "Improvement Strategy" scenario Source: Consultant's estimate The percentage of expenditure on capital repairs of apartment buildings in the total expenditures of the population amounts to approximately %. This is comparable with the percentage of expenditures on natural gas. The cost savings on payments for utility services due to increasing use efficiency as a result of implementation of comprehensive capital repairs by 2035will amount to 186 billion Rubles. (Figure 4.11). Cumulatively for these savings will amount to 1,880 billion Rubles or 11% of the cumulative capital repair costs (13% in the absence of corruption). If the economic benefit from savings on utility services is sustained for 25 years after 2035, 38% of the capital repair costs will be recovered by means of such savings during this period. Figure 4.11 Utility cost savings according to the "Improvement Strategy" scenario Source: Consultant's estimate 86

87 As a summary of estimation results on the basis of "Improvement Strategy" scenario, it should be noted that given a percentage of annually repaired apartment buildings being 3% and the percentage of comprehensive capital repairs being 75% and given a greater burden on the population to finance capital repairs and also given dynamic raising of borrowed funds to cover expenditures which by three times exceed the expenditures in the "Sluggish Strategy" scenario, it will be possible to provide for a persistent decrease of the percentage in the living space of apartment buildings aged over 40 years being in need of comprehensive capital repairs to 12% in «LIKE IN EUROPE» In the scenario under the code name "Like in Europe" it is assumed that from 20154% of the floor space of residential buildings will undergo capital repairs. Buildings which have been in operation over 25 years will fall within the capital repairs program under which 90% of the floor space will undergo comprehensive repairs in 2015 with implementation of Package No. 3 of measures for reduction of energy consumption. It is assumed that the required monthly payments on capital repairs from the population will remain the same as in the "Improvement Strategy" scenario. The main estimation results based on the "Like in Europe" scenario are presented in Table 4.3. The scopes of capital repairs will increase up to 99 million m 2 by 2020 and to 118 million m 2 by Cumulatively for capital repairs will cover an area of 2,952 million m 2, this figure being 2,078 million m 2 for comprehensive capital repairs (Table 4.3). This allows to decrease the percentage of the floor space of apartment buildings in need of comprehensive capital repairs which have been in operation for more than 40 years to zero in 2032 and to reduce such floor space in residential buildings in operation for more than 25 years to 14% by (Fig. 4.12). According to this scenario, real significant improvement of the housing stock condition is achieved. Increasing the percentage of apartment buildings which have undergone capital repairs to 4% and the percentage of comprehensive capital repairs to 90%, in contrast to the "Improvement Strategy" scenario, will allow to bring all buildings in operation for over 40 years and most of the buildings in operation for over 25 years in line with up-to-date standards. Table 4.3 Main estimation results based on "Like in Europe" scenario Factors Measureme nt unit Living space in million m 2 2,761 2,237 2,349 2,475 2,615 2,772 2,949 apartment buildings Floor space of million m ,106 1,276 1,441 1,600 apartment buildings aged 40 years and older Floor space of million m 2 1,079 1,370 1,596 1,770 1,912 2,002 2,181 apartment buildings aged 25 years and older Share in the floor space % 51.9% 60.5% 58.6% 47.9% 33.1% 16.9% 4.4% of apartment buildings aged over 40 years which did not undergo comprehensive repairs Capital repairs, total million m ditto, cumulative since million m , , , , Comprehensive capital million m

88 Factors repairs ditto, cumulative since 2000 Share of apartment buildings which have undergone capital repairs Share of comprehensive capital repairs of apartment buildings Cost of capital repair works on current basis Unit cost of capital repairs on current basis Expenditures of budgets at all levels and expenditures of the Fund for the Promotion of the Housing and Utility Sector Reform for capital repairs Expenditures of households on capital repairs Monthly payment of households for capital repairs Share of households' expenditures on capital repairs in the total expenditure ESCOs' expenditures on capital repairs Loans for implementation of capital repairs Capital improvement loans servicing principal debt repayment interest payments Savings on utility bills Measureme nt unit Russian Urban Housing Energy Efficiency Programme Model Development million m , , ,078.0 % 0.8% 1.8% 2.7% 4.0% 4.0% 4.0% 4.0% % 0.1% 0.7% 2.0% 3.6% 3.6% 3.6% 3.6% Rubles, billion , , ,715.7 Rubles/m 2 3,340 4,283 5,291 5,957 6,487 7,169 Rubles, billion Rubles, billion Rubles/m 2 per month % 0.02% 0.36% 0.49% 0.43% 0.41% 0.40% Rubles, billion Rubles, billion Rubles, billion Rubles, billion Rubles, billion Rubles, billion Source: Consultant's estimate

89 Figure 4.12 Scope of capital repairs of apartment buildings according to the "Like in Europe" scenario Source: Consultant's estimate Such progress in the maintenance of apartment buildings can be achieved by the increase in expenditures for capital repairs according to the"like in Europe" scenario up to 916 billion Rubles in 2020 and up to 1,716 billion Rubles in 2035 on current basis. (Fig. 4.13). Cumulative costs in according to the"like in Europe" scenario amount to 24,662 billion Rubles, which exceeds this figure from the "Improvement Strategy" scenario by 44% and which is 4.7 times higher as compared to the "Sluggish Strategy" scenario. Figure 4.13 Expenditures for capital repairs according to the "Like in Europe" scenario Source: Consultant's estimate

90 In this scenario it was assumed that all additional costs will be financed by raising loans, while maintaining payment conditions for the population according to the "Improvement Strategy" scenario. In this scenario the percentage of loans for capital repairs as wells as the percentage of payments from the population for capital repairs used for debt service is significantly higher (Fig. 4.14). Figure 4.14 Structure of financing capital repair costs according to the "Like in Europe" scenario Source: Consultant's estimate In order to reduce the percentage of loans to zero, mandatory payments from the population for capital repairs in 2020 should amount to 15 Rubles/m 2 at 2011 values. Then, the percentage of expenses for capital repairs incurred by the population in the aggregate expenditures of tenants in apartment buildings will grow to 1.2% and exceed the portion of payments for electric energy. Due to a more extensive catalogue of energy saving measures in Package No. 3 the savings on utility payments as a result of use efficiency enhancement after implementation of comprehensive capital repairs will be increased to 361 billion Rubles by 2035 which exceeds the level of savings in the "Improvement Strategy" scenario by two times and the same figure in the "Sluggish Strategy" scenario by 6 times (Fig. 4.15). Cumulatively for these savings will amount to 3,412 billion Rubles or 14% of the cumulative capital repair costs (16% in the absence of corruption in the course of capital repairs). If the economic benefit from savings on utility services is sustained for 25 years after 2035, 50% of the capital repair costs will be recovered by means of such savings during this period. In case of a serious motivation for practical implementation of technically achievable energy saving benefits from comprehensive capital repairs as part of Package No. 3 and in case of bringing heat energy savings up to 40% the savings on utility bills may be increased to 465 billion Rubles by 2035 and cumulatively for up to 4,400 billion Rubles or up to 18% of the aggregate capital repair costs for the same period. Then, if such level of savings if maintained for 25 years after 2035, 65% of the total capital repair costs will be recovered. 90

91 Figure 4.15 Utility cost savings according to the "Like in Europe" scenario Source: Consultant's estimate As a summary of estimation results in the "Improvement Strategy" scenario it ought to be noted that in case of increment in the percentage of annually repaired apartment buildings up to 4% and in the percentage of comprehensive capital repairs up to 90% and given a substantial burden on the population to finance capital repairs and also given dynamic raising of borrowed funds to cover expenditures which cumulatively by three times exceed the expenditures in the "Sluggish Strategy" scenario, it will be possible to provide for a decrease in the percentage of the living space of apartment buildings aged over 40 years being in need of comprehensive capital repairs to zero by COMPARISON OF SCENARIOS To compare various scenarios the results of scenario-related calculations have been summarized in Table 4.4 Table 4.4 Comparison of main estimation results by scenarios for 2035 Factors Scenarios Measurement unit "Sluggish "Improvement "Like in Strategy" Strategy" Europe" Share in the floor space of apartment % 29.5% 5.0% - buildings aged over 40 years which did not undergo comprehensive repairs Capital repairs, total Rubles, billion ditto, cumulative since 2000 Rubles, billion 1, , ,652.5 Comprehensive capital repairs Rubles, billion ditto, cumulative since 2000 Rubles, billion , ,078.0 Share of apartment buildings which % 2.0% 3.0% 4.0% have undergone capital repairs Share of comprehensive capital repairs % 1.0% 2.3% 3.6% of apartment buildings Cost of capital repair works on current Rubles, billion , ,715.7 basis Unit cost of capital repairs on current Rubles/m 2 6, , ,169.4 basis Expenditures of budgets at all levels Rubles, billion