Financing building energy renovation through public, private, and crowdfunding schemes: evidence from Greece, Cyprus, and Croatia

Public financing instruments for building energy renovation

Public intervention has long been central to promoting energy renovation in the building sector. Due to market failures, such as information asymmetries, split incentives, liquidity constraints, and behavioural biases, public financing instruments are often justified as corrective policy tools (Cattaneo, 2019). Grants and capital subsidies remain the most widely implemented mechanisms across Member States, particularly in residential renovation programmes (Bertoldi et al., 2020). These instruments directly reduce upfront investment costs and can significantly boost participation, especially among low- and middle-income households.

However, the effectiveness of grant-based schemes is debated. While these schemes can accelerate the uptake of renovations in the short term, concerns persist about free-rider effects, administrative complexity, and limited leverage of private capital (Bertoldi et al., 2020). Empirical evidence indicates that high subsidy intensities may crowd out private investment or reduce incentives for cost optimisation (Stieß and Dunkelberg, 2013). Furthermore, public schemes often operate within limited budget cycles, leading stop-and-go dynamics that undermine market stability and long-term supply chain development.

Tax incentives represent an alternative policy instrument, frequently used to stimulate renovation investments through deductions or credits. Their impact depends heavily on household income levels and tax liability, potentially limiting accessibility for vulnerable groups (Belleflamme et al., 2014). Revolving funds and publicly backed loan guarantees have also been implemented to improve capital recycling and reduce credit risk exposure for financial institutions (Boza-Kiss et al., 2017). Nevertheless, their effectiveness depends on institutional capacity, project aggregation mechanisms, and standardisation of technical assessment procedures (Bertoldi et al., 2020).

Despite the diversity of public financing instruments, studies increasingly highlight the need to move beyond isolated subsidy schemes towards more integrated financing frameworks capable of mobilising private capital at scale (Bertoldi et al., 2020; Heidenthaler et al., 2026).

Private and market-based financing mechanisms

Private finance is essential for bridging the renovation investment gap. Traditional bank loans remain the primary financing channel for energy renovation, particularly when grant schemes require beneficiary co-financing (Bertoldi et al., 2020). Recently, green loans and green mortgages have emerged, offering preferential interest rates to improved building energy performance (Di Tommaso et al., 2025). These instruments incorporate expected energy-saving credit risk assessments, which help reduce borrowing costs.

Energy Performance Contracting (EPC), implemented through Energy Service Companies (ESCOs), represents another market-based mechanism addressing upfront capital barriers (Boza-Kiss et al., 2017). Under EPC arrangements, the ESCO assumes performance risk and is remunerated through realised energy savings. Although EPC models have gained traction in public buildings and commercial sectors, their penetration in residential markets remains limited due to transaction costs, contract complexity, and small project sizes (Boza-Kiss et al., 2017).

Blended finance, which combines public funds with private capital, is increasingly considered as a de-risk strategy to enhance leverage ratios. Such structures may include subordinated public loans, first-loss guarantees, or co-investment facilities. However, the operationalisation of blended finance requires institutional coordination, robust monitoring frameworks, and stable regulatory environments. In many Member States, financial instruments continue to operate in parallel rather than as an integrated comprehensive renovation ecosystem (Bertoldi et al., 2020).

Financing ecosystems and instrument coordination

Recent publications highlight the need to analyse renovation finance as a system, rather than focusing on single instruments (Bertoldi et al., 2020; Di Tommaso et al., 2025). A financing ecosystem perspective considers the interactions between public policies, financial actors, regulatory frameworks, and end users, highlighting how fragmentation can reduce overall effectiveness even when instruments are well designed (Mochkabadi and Volkmann, 2018).

Key challenges include limited project standardisation, low data transparency, underdeveloped secondary markets, and the lack of aggregation mechanisms for small-scale investments. These factors increase transaction costs and perceived risk, limiting institutional investor participation (Bergmann et al., 2021).

In cohesion-oriented Member States, high owner-occupation rates, fragmented ownership structures, and shallow capital markets further constrain market-based financing, reinforcing reliance on subsidy-driven models (López-Mesa et al., 2024). Consequently, subsidy-heavy models often dominate, while private capital mobilisation remains comparatively weak.

Crowdfunding and alternative financing models

Crowdfunding has emerged over the past decade as an alternative mechanism for mobilising capital through digital platforms (Belleflamme et al., 2014). Donation-based crowdfunding model (Figure 1) involves contributions without financial return, typically driven by social or charitable motives (Mollick, 2014). Reward-based models (Figure 2) provide non-financial benefits, often resembling pre-order mechanisms. Lending-based crowdfunding (Figure 3) involves repayable loans, sometimes combining financial and social motivations. Equity-based crowdfunding grants investors ownership stakes, with higher risk and return expectations (Mochkabadi and Volkmann, 2018; Mollick, 2014). Contributor motivations (Figure 4) vary accordingly, ranging from social impact to financial returns (Kgoroeadira et al., 2018).

Figure 1

Figure 2

Figure 3

Figure 4

In the energy sector, crowdfunding has been mainly applied to renewable and community energy projects, offering benefits such as risk-sharing, reduced reliance on bank financing, and increased local acceptance (Bonzanini et al., 2016). Lending and equity models have shown particular potential for mobilising small-scale investments.

Community-based crowdfunding has also emerged, emphasising local participation, shared ownership, and collective benefits. While not a distinct model, it builds on lending or equity approaches and is particularly relevant for local sustainability projects (Bauwens and Devine-Wright, 2018).

In addition to these established models, crowdfunding practice has increasingly incorporated community-based financing approaches, particularly in sectors involving local infrastructure or sustainability projects. Community-based crowdfunding has emerged as an additional configuration that builds on lending- or equity-based structures by emphasising the collective participation of individuals within a specific locality. While not a fully independent model, it is characterised by shared ownership, local engagement, and the desire to support projects generating community-wide benefits. This configuration is particularly relevant for building renovation, where multi-owner properties and community infrastructure create conditions suited to collective financing approaches (Bauwens and Devine-Wright, 2018; Commission and Directorate-General for energy, European Commission, DG ENER, 2023).

However, applying crowdfunding to building energy renovation presents distinct challenges. Renovation projects are often small-scale, heterogeneous, and associated with performance uncertainty. Moreover, energy savings-based returns may be less transparent to retail investors compared to feed-in tariff-supported renewable energy projects. Regulatory frameworks governing crowdfunding, investor protection, and securities law further influence feasibility and scalability.

Despite these limitations, crowdfunding may offer complementary value within hybrid financing structures. It could potentially support beneficiary co-financing requirements, facilitate community-based renovation initiatives, or enhance social acceptance of projects. Nevertheless, systematic analysis of its compatibility with public support schemes and conventional banking products remains limited in the literature (Mollick, 2014).

Research approach

This study employs a systematic mapping methodology to document financing instruments supporting building energy renovation across Greece, Cyprus, and Croatia. The mapping serves a twofold purpose: first, to produce a structured, comparable inventory of active renovation financing schemes; and second, to diagnose the structural characteristics of each national financing ecosystem in ways directly relevant to assessing crowdfunding integration potential. This dual objective distinguishes the approach from a simple descriptive inventory and positions the mapping as an analytical instrument for identifying where alternative financing mechanisms could add value.

Scheme-level characteristics are recorded using harmonised variables across all three countries to enable systematic comparison and to identify patterns such as concentration of support in specific sectors, dependence on public subsidies, and limited coordination across financing tools.

Combinability between instruments is explicitly documented, as it determines whether crowdfunding contributions could legally and operationally complement existing public or private schemes within a layered financing structure.

Scheme characteristics are thus analysed not only descriptively but also diagnostically: indicators such as high co-financing requirements, beneficiary-level funding caps, or limited instrument combinability signal areas where crowdfunding could plausibly operate as a complementary financing layer.

Identification and selection of instruments

Financing instruments were identified through a structured review of official national sources, including legislation, government portals, programme guidelines, managing authority documentation, and financial institution data. Eligible schemes explicitly support energy efficiency, renewable energy in buildings, heating and cooling upgrades, or broader renovation measures with measurable energy performance impacts. Both dedicated programmes and broader frameworks were included where relevant building-related components exist, provided they were active, recently implemented, or adopted in the latest programming period.

The three countries share structural characteristics that justify their comparative analysis. Owner-occupation rates exceed 70% in all three, renovation rates remain below the EU average, and private capital markets for green finance are comparatively underdeveloped relative to northern and western EU Member States. At the same time, they represent distinct financing configurations – subsidy-dominated (Greece), credit-dependent (Cyprus), and high-intensity co-financing (Croatia) – making cross-country comparison analytically productive.

Data recording structure

Each financing scheme was recorded as a separate entry in a structured database using harmonised variables to ensure cross-country comparability. These include territorial level, geographical coverage, scheme name, and implementation period, as well as sectoral scope (e.g. building envelope, heating and cooling, renewable energy, district systems) and building typology. Beneficiary categories were systematically captured, including private individuals, vulnerable households, businesses, SMEs, public authorities, and other actors. This enables assessment of distributional targeting and identification of underserved segments.

Financial characteristics were recorded in detail, including scheme type (e.g. grant, subsidy, obligation scheme, investment law framework), total scheme budget, maximum funded amount per beneficiary, and incentive rate expressed as a percentage of eligible costs. Where applicable, the database also documents whether schemes are combinable with other incentives. This variable is particularly relevant for assessing whether alternative financing mechanisms could legally and operationally complement existing instruments. Qualitative descriptions of scheme objectives and eligible measures were included to assess the depth and scope of supported interventions and the potential investment size per project.

Limitations

The study is based on documented scheme design and publicly available information. As such, it reflects formal policy architecture rather than realised investment performance or uptake levels. Private bilateral financing arrangements not embedded in formal programmes may not be fully captured. Furthermore, the crowdfunding assessment remains conceptual, given the limited empirical deployment of such models in building renovation within the examined countries. Nevertheless, the structured and harmonised mapping provides a transparent basis for comparative analysis and for evaluating integration pathways for alternative financing mechanisms.

Crowdfunding integration assessment

Building on the mapped characteristics of national financing ecosystems, crowdfunding models are analysed in relation to identified structural features. The assessment evaluates whether donation-based, reward-based, lending-based, or equity-based crowdfunding models could potentially complement existing instruments by addressing uncovered investment shares, supporting SME capital needs, or enabling community-based renovation initiatives.

The analysis focuses on structural compatibility rather than empirical case studies. It examines alignment between typical project sizes and crowdfunding ticket volumes, compatibility with incentive structures, risk allocation implications, and the regulatory feasibility of combining retail-based capital with public support schemes. The mapping therefore functions as the empirical foundation for assessing whether crowdfunding can operate as a complementary layer within national renovation financing architectures.

Financing instruments in Greece

For Greece, the mapping identified a range of financing instruments supporting building energy efficiency and renovation, including public subsidies, private bank products, and hybrid schemes. These operate within a multi-level framework shaped by national policies, EU programmes, and financial sector initiatives. Table 1 presents the instruments currently available that directly or indirectly support building energy efficiency improvements and renovation activities.

The Greek financing landscape is dominated by large residential grant programmes, with six public schemes totalling over €2.9 billion. A key structural feature is the beneficiary-level funding cap: schemes such as Exoikonomo 2025 (€35,000 per dwelling) and Renovate and Rent (€8,100) cover only a share of total renovation costs, generating a recurrent residual co-financing gap. This gap is analytically significant: it is precisely the investment share left uncovered by public subsidies that defines the structural space within which alternative financing mechanisms could operate.

Private instruments, while diverse (seven products from five banks), remain modest in scale and reach. Green loans typically range from €1,500 to €50,000 and are subject to standard creditworthiness conditions, limiting access for households with limited collateral. The two hybrid schemes (My Home II and Upgrade My Home) partially bridge this gap but are restricted to young households and specific renovation measures. The overall picture is one of public-sector dominance with limited private capital leverage, a pattern that reinforces the analytical case for exploring complementary mechanisms.

Financing instruments supporting building energy renovation in Cyprus

The mapping exercise for Cyprus identified a set of financing instruments to support building energy efficiency improvements and renovation activities, combining public support schemes with private financial instruments offered by national banking institutions. Compared with the Greek financing ecosystem, the number of instruments identified is more limited, reflecting the smaller scale of the national renovation support framework. Table 2 presents the financing instruments identified for Cyprus through the structured mapping exercise.

The Cypriot financing ecosystem is characterised by a relatively small public support architecture (approximately €90–100 million across three programmes) and a correspondingly greater reliance on commercial bank lending. With nine private green loan products spanning €15,000–€30,000, the dominant financing model is debt-based rather than subsidy-driven. This structural feature shifts the nature of the financing barrier: unlike Greece, where the gap arises from subsidy caps, in Cyprus the principal constraint is credit access, particularly for households and SMEs unable to meet standard lending criteria. This distinction is analytically important for assessing which crowdfunding models are most structurally compatible with the Cypriot context.

Financing instruments supporting building energy renovation in Croatia

The mapping exercise identified 10 public and 5 private financing instruments supporting building energy-efficiency improvements and renovation activities in Croatia. Compared with the other two countries, Croatia exhibits the strongest reliance on publicly funded renovation programmes, particularly through national environmental fund and European structural financing mechanisms. Table 3 presents the financing instruments currently supporting building energy efficiency improvements and renovation activities in Croatia, including both public funding programmes and private financial instruments. It is worth noting that public subsidy programmes provide direct public financial support (grants, subsidies, tax incentives), while private financial instruments include market-based instruments such as loans, bonds, and ESG-linked financing mechanisms.

Croatia’s financing architecture is distinct from both Greece and Cyprus in that it combines the highest public co-financing intensities (60–80% of eligible costs for residential and public buildings) with a broad sectoral scope spanning family houses, multi-apartment buildings, public infrastructure, and industrial facilities. The FZOEU plays a central coordinating role, administering the majority of public calls and channelling both national and EU structural funds.

Despite these high subsidy intensities, beneficiaries must still mobilise the remaining 20–40% of project costs privately. This residual share constitutes the primary financing gap in the Croatian context. The inclusion of public assets such as schools and municipal buildings (which carry strong community relevance but limited commercial return) further shapes the crowdfunding compatibility assessment. The Energy Efficiency Obligation Scheme adds a regulatory dimension absent from the other two countries, stimulating additional investment outside grant-based structures.

Comparative analysis of structural financing gaps and crowdfunding integration potential

The structured mapping of financing instruments across Greece, Cyprus and Croatia reveals important differences in the scale, composition and institutional architecture of national renovation financing ecosystems. At the same time, the comparison identifies a common structural feature: despite the presence of public subsidy programmes and private financial instruments, none of the examined national systems currently includes crowdfunding as a dedicated financing mechanism for building renovation.

Across the three countries, renovation activity is supported primarily through public subsidy schemes and bank-based lending instruments. However, these instruments only partially cover the investment requirements associated with building renovation. In most programmes, financial support is either capped at the beneficiary level or expressed as a co-financing percentage, which means that project owners must mobilise additional capital to implement the full set of renovation measures.

In Greece, the renovation financing ecosystem is dominated by large public programmes such as Exoikonomo 2025 (€924.27 million), HLEKTRA (€640 million), Exoikonomo – Renovate for Young People (≈€300 million), and Renovate and Rent (≈€120 million), representing a combined public investment envelope exceeding €1.9 billion. However, these programmes impose beneficiary-level ceilings, for example, €35,000 per dwelling under Exoikonomo 2025 and approximately €8,100 under Renovate and Rent. When projects involve multiple interventions, total investment requirements may exceed these limits, creating a recurrent residual co-financing gap.

The Cypriot system is characterised by a smaller public financing architecture, with programmes such as the Energy Fund of Funds (€50–60 million), the Renovate–Rent scheme (€25 million), and the Scheme for the Energy Upgrade and Competitiveness of Large Businesses (€17 million), amounting to roughly €90–100 million. Consequently, the ecosystem relies more heavily on bank-based green lending instruments, typically financing projects in the €15,000–€30,000 range. In this context, the principal constraint relates to access to credit rather than subsidy ceilings.

Croatia presents a financing structure characterised by relatively high subsidy intensities rather than large programme budgets. Residential renovation schemes typically cover 60–80% of eligible costs, with grants reaching approximately €62,120 per project, alongside additional support for renewable energy installations and public building renovations. Although public support is substantial, beneficiaries must still finance the remaining 20–40% share of project costs.

Overall, the comparison indicates that different financing gaps emerge across the three national ecosystems: subsidy ceilings in Greece, credit access constraints in Cyprus, and the residual investment share following high co-financing rates in Croatia.

These structural differences are important when assessing the integration potential of the four crowdfunding models discussed in the literature and methodological framework. Figure 5 links the main financing gap observed in each national renovation financing ecosystem with the crowdfunding model that appears most compatible with the structure of existing financing instruments.

Figure 5

In the case of Greece, the most appropriate crowdfunding model appears to be lending-based crowdfunding, as the dominant financing gap arises from the uncovered share of renovation investments remaining after the application of subsidy ceilings within large public programmes. Major schemes such as Exoikonomo provide substantial financial support but impose beneficiary-level caps, which means that households often need to mobilise additional capital to implement the full set of planned interventions. In this context, peer-to-peer lending platforms could serve as a complementary financing channel, covering the remaining investment share for projects already approved under national subsidy programmes. In addition, community-based crowdfunding may also be particularly relevant in the Greek context, especially for renovation initiatives in multi-apartment residential buildings. In such cases, renovation investments often require the coordinated financial participation of multiple property owners, and community-based crowdfunding mechanisms could facilitate the aggregation of the necessary co-financing at the building level.

In Cyprus, the analysis indicates that lending-based crowdfunding also represents the most compatible model, although its potential role differs from that identified in Greece. Lending-based crowdfunding could operate as an alternative credit channel within a financing ecosystem that relies heavily on conventional bank lending. The mapping results show that typical green loan products finance renovation investments in the range of €10,000–€30,000, suggesting that crowdfunding platforms could support projects of similar scale, particularly for households and small and medium-sized enterprises that may face constraints in accessing traditional bank financing. Furthermore, Cyprus appears to offer comparatively favourable conditions for equity-based crowdfunding, particularly in projects involving renewable energy installations or energy efficiency upgrades in commercial buildings. In these cases, investment returns may be linked to electricity generation, energy cost savings, or other measurable financial benefits, which makes equity participation models more feasible than in predominantly owner-occupied residential contexts.

The Croatian case presents a different configuration. Here, the most distinctive opportunity arises for donation-based crowdfunding, primarily because a portion of the supported building stock includes assets with clear public or community relevance, such as schools, municipal buildings, and other public infrastructure. Renovation programmes in Croatia frequently provide high levels of public co-financing, typically covering 60–80% of eligible costs, yet beneficiaries must still mobilise the remaining investment share. In projects with strong local visibility and social value, donation-based crowdfunding could therefore serve as a mechanism to mobilise voluntary civic contributions that complement existing public funding. At the same time, community-based crowdfunding also appears highly relevant in the Croatian context, particularly for renovation projects involving multi-residential buildings where collective capital mobilisation among multiple owners is required. In addition, lending-based crowdfunding could provide complementary financing for the remaining private share in larger renovation projects where the uncovered investment amount exceeds the immediate liquidity of individual households.

The return on investment (ROI) here also plays an important role in shaping participation in crowdfunding markets, particularly in lending- and equity-based models where contributors expect financial compensation for the capital provided. Potential investors typically evaluate crowdfunding opportunities by assessing the balance between expected financial returns and associated risks, in a manner comparable to traditional investment decisions. In equity crowdfunding, returns are generally linked to the future growth and profitability of the funded venture, while in lending-based models they derive interest payments on the loaned capital. Empirical research shows that expectations regarding financial returns significantly influence investor behaviour and the success of crowdfunding campaigns, as investors tend to favour projects that demonstrate credible business models, transparent information disclosure, and clear value creation potential (Ahlers et al., 2015; Block et al., 2017; Mochkabadi and Volkmann, 2018; Mollick, 2014). In the context of building renovations and energy-efficiency investments, clearly identifiable financial benefits (such as energy cost savings or revenues from renewable energy generation) may further increase the attractiveness of crowdfunding mechanisms that offer financial returns to investors.

Taken together, the comparative analysis indicates that crowdfunding should not be viewed as a uniform financing instrument applicable in the same way across all national contexts. Instead, its relevance depends on the specific financing gap observed within each renovation financing ecosystem. When appropriately matched to these structural gaps, crowdfunding may function as a context-dependent complementary mechanism, expanding the range of available financing instruments while preserving the central role of public subsidy programmes and conventional financial institutions in supporting building renovation investments.