Funding the neighbourhood-based approach

Using a mix of funding instruments is particularly effective for promoting neighbourhood-based energy-efficient urban redevelopment. The KfW programme 432 for energy-efficient urban redevelopment – integrated neighbourhood strategies and their implementation management provides an interface for the useful combination of different instruments.

What is funded?

Grants programme 432 funds the development of an integrated neighbourhood strategy for energy efficiency. Material and personnel expenditures incurred for engaging qualified third parties for the project (for instance energy technology specialists and planners) are all eligible for funding. The implementation management can be funded for up to three years. From 1 December 2015, it has also been possible to extend the support period for a further two years, so that the total support period can be as much as five years. Funding covers staff costs for specialised personnel and material expenditures of up to 10% of the personnel costs.

The two objects of support – the integrated neighbourhood strategy and the implementation management – are 65% subsidised from federal funds via the KfW. The remaining 35% must be provided by the municipalities. Some of this remainder can also be covered by third parties (e.g.public utilities, housing companies, private owners, energy providers) and up to 20% of the costs eligible for funding can be financed from EU or Länder funds. Funding from Federation and/or Länder sources must not exceed 85%. In individual cases, the contribution of financially weak municipalities with budgetary consolidation plans can be reduced to 5% of the eligible costs.

Muncipalities can pass on the funding to third parties, e.g. private-sector or non-profit players such as public utilities, housing companies or redevelopment agencies.

KfW grants programme 432 for energy-efficient urban redevelopment is uniquely placed to support the effective combination of different funding instruments. Various other KfW funding is also available for implementing the investment measures set out in the strategies, for instance through the programmes for neighbourhood supply infrastructure or the energy-efficient refurbishment of residential buildings and commercial properties. Furthermore, programme 432 can be used in conjunction with urban development promotion programme and other EU, Federation and Länder programmes.