Ready for retrofits: The funding exists

Retrofits support our existing housing supply, contribute to a healthier indoor environment, and can boost building value. And as demand for more efficient and resilient buildings grows across the country, there are two pieces needed to realize these benefits: financing support for building owners, and regulation to drive retrofits like Building Emissions Performance Standards (BEPS).  

Often, the absence of one of these pieces – financing or policy – is the reason for delaying the other. Successful retrofit policy relies on adequate funding and financing support for building owners, but the market is unlikely to offer it if there isn’t enough demand, which is driven by regulation, and the cycle continues. The good news? A lack of financing is no longer a valid reason to delay regulation.  

There are a variety of public and private financing and incentive programs already open to building owners – many of which are actively seeking more projects than the market is currently producing. And, for some building upgrades, the initial costs aren’t that steep. 

Financing and incentive programs available to building owners to support retrofits include: 

• Efficiency Capital: Their Energy-As-A-Service program supports projects with a $500,000 minimum, requires no upfront capital, and helps to manage capital, risk, and capacity 
• SOFIAC: Supports projects with a $3 million minimum, providing 100% coverage with no impact on debt ratios with reimbursement based on actual energy savings 
• Scotiabank: Recent Canada Infrastructure Bank partnership provides low-cost loans available to Scotiabank clients aiming for a minimum 30% emissions reduction 
• Utility incentives: The gas demand side management programs and incentives from Enbridge are available for retrofit projects targeting energy savings and emissions reductions, while IESO’s Save on Energy Programs provide a variety of financial incentives and training 
• Clean Technology Investment Tax Credit: EY provided an overview of the available but underused federal tax credits, including the Clean Technology credit that offers up to a 30% rebate of capital costs for low-carbon equipment like heat pumps and solar and storage  

The capital is ready, but we need policy certainty and market activation to really scale retrofits and reap the benefits as a society. For example, Toronto is in process of developing a potential BEPS bylaw that is intended to target buildings with the highest emissions levels, setting gradually tougher targets over time. Our analysis shows that 85% of proposed BEPS-eligible buildings already meet the draft initial emissions target. And of the remaining 15% of buildings that would need to undertake work to meet the initial target, 10% only need small upgrades and repairs. Only 5% of BEPS-eligible buildings – about 350 buildings overall – would need major, capital-intensive retrofits. 

For those remaining major retrofits, support is available through City programs and TAF. Through our Retrofit Accelerator, funded by NRCan’s Deep Retrofit Accelerator Initiative, we can fund up to 75% of non-capital expenses, covering things like decarbonization studies, social contracting labour, and retrofit design work. The City of Toronto makes low interest loans available for retrofits to all building types, through its Energy Retrofit Loan and High Rise Retrofit Improvement Support programs.   

Retrofits that include fuel-switching, deep energy efficiency improvements, or renewable energy generation can be capital intensive but deliver lasting rewards. Between national financing programs, provincial incentives, and locally targeted Retrofit Accelerators across the country, there’s a wide supply of retrofit support for building owners to draw from. What’s most needed now to scale retrofits is regulatory clarity and corporate commitments. There’s unlikely to be a bottleneck for capital – when regulation is clear and demand grows, even more capital will flow.   

Details on available financing options were drawn from a recent BOMA Toronto event focused on how to finance decarbonization projects, where experts discussed these as solutions to real life funding challenges that local building owners have faced.