Georgia is gradually moving towards the introduction of green standards in the country’s construction and residential building development industry as consumer demand for eco-friendly living spaces rise and the country strives to meet EU energy efficiency obligations.
To support this move, both domestic and international financial institutions are increasingly making green loans and green financing a part of their offerings.
While environmentally-friendly construction practices are only just beginning to catch on, the country already has several examples of large-scale, successful developments that abide by green building principles, such as Lisi Development’s iconic Lisi Green Town in Tbilisi.
To encourage the consideration and value placed on energy efficiency in residential buildings, the Georgian parliament is currently examining a bill which will oblige apartment sellers and renters to conduct an energy efficiency audit and receive a certificate which will have to be provided to buyers or lessees. This obligation will likely be introduced at the end of 2022, but will only affect buildings constructed after the bill comes into force.
The European Union is supporting a number of green building initiatives and projects in the country as well.
With the help of newly secured Horizon 2020 EU funding, the SMARTER Finance for Families program is now expanding to Georgia, the prime objective of which is to introduce ‘innovative financing for energy efficiency investments’, and to create citizen-driven demand for green finance.
“[The program will] demonstrate the benefits of shifting spending attitudes towards a ‘total cost of monthly-ownership’ view of the cost of [a] home purchase or new construction or renovation project…while citizen-driven demand will help convince residential investors and developers to build to a high EE/Green standard, who will in turn be rewarded with positive market differentiation”, a description of the project on buildup.eu reads.
The project will be carried out by the Georgian Energy Efficiency Centre, and will address what has been a historic pattern for homebuilders and buyers in the country not to invest enough in the design, construction or selection process, instead choosing to avoid taking out larger bank loans and save on initial costs, which later costs consumers more due to higher utilities bills.
Lending institutions have reason to get on board as well: studies show that the risk of default on mortgages on ‘green homes’ is up to 30% lower, as annual energy savings can be equal to one or two annual mortgage payments. Energy efficiency expert at ProCredit Bank Levan Khmiadashvili says green loans should become a priority banking product.
“Eco-loans that help protect the environment also affect our image. We position ourselves as a green bank. Even the building of our head office was built in accordance with green building principles.”
The bank’s loan portfolio is 339 million euros, 16.1% of which (54 million euros) consists of green loans – 84% of the bank’s green portfolio is in energy efficiency loans, however the bank is working to diversify its green portfolio and include renewable energy technologies and other environmental investments. The bank plans to have 20% of its portfolio consist of green loans in the coming years.
In particular, the bank plans to finance solar micro-power plants: cooperating with importers of solar panels, the bank has already developed several options for small and medium-sized businesses and individual customers, most of which can be payed off within six-seven years.
To set an example, in March 2020 the bank plans to launch a solar power station on the roof of its head office.
Lisi Green Town
One of the first examples of green building to appear in Georgia was Lisi Green Town, a residential complex by Lisi Development, which is sprawled out over 355 hectares around Lisi Lake in Tbilisi. The project began back in 2011 and introduced an innovative principle to green building in Georgia, using only 20 percent of the territory for residential areas, and the remaining 80 percent for recreational zones and other infrastructure.
“Using green building concepts, we constructed low buildings, despite the fact that they cost more than standard buildings or than building a simple complex in the city center. However, we have chosen this approach, and today this is what sets us apart. A clean and green-friendly green environment is the lifestyle that we want to promote in Georgia,” says Nodar Adeishvili, Director General of Lisi Development.
At the moment, more than 100,000 square meters of housing and infrastructure have already been built; energy-efficient materials were used during construction which will allow home owners to save up to 30% on energy costs. The company employed modern construction technology, as well as the recommendations of foreign experts. Rain collectors installed in the town allow for the collection of rain water for irrigation purposes.
Electric car charging stations are installed on the territory of the complex to motivate residents to purchase electric vehicles. In addition, several residential units have already been equipped with solar panels.