Filed under: Development Environment Governance

C. Sultanoglu with Aleksandar Bogdanovic, Mayor of Cetinje

Getting a guided tour of Beautiful Cetinje from the Mayor, Aleksandar Bogdanovic

Last month I visited Montenegro’s old capital, beautiful Cetinje, nestled in the mountains, on the way to the coast. It has enormous tourism potential.

I was lucky to get a guided tour from Cetinje’s mayor, who explained its rich history and showed me some of its lovely architecture. Many of the buildings are former embassies.

Cetinje does, however, face a few challenges:

  • Unemployment: with an unemployment rate of 18 percent, many of the town’s inhabitants are struggling

  • Energy efficiency: while pretty, many of the old buildings in Cetinje are drafty, leaky, and lose far too much to heat

  • Fulfilling its tourism potential: with all the tourists that visit Montenegro’s coast (and neighbouring Croatia’s coast, just a couple of hours away), you’d think more would visit Cetinje. But the Mayor recognizes that some work needs to be done to make the town a real tourist destination.

In the face of these challenges, UNDP in Montenegro is working with local partners to revitalize the city’s economy through reconstructing the city’s cultural heritage, but with energy efficiency in mind.

In other words: what if we were to train some of the people who are unemployed to do energy efficiency retrofitting as part of a massive rehabilitation of the old, beautiful buildings in the town?

And what if that same idea is applied to houses that are “illegal” – that is, were built without planning permission (as many thousands of homes in Montenegro are)?

Could energy efficiency result in financial savings on the energy bills that families can use to pay for legalization?

If done correctly, the office figured, this could lead to

  1. More employment

  2. More energy efficiency

  3. More tourism

Here’s how it works:

Our calculations showed that an investment of 100,000 euros in retrofitting buildings under cultural heritage protection would result in 20,000 euros annual savings on energy bills, and a reduction of 30 tons of carbon dioxide emissions.

Retrofitted Music Academy, Cetinje, Montenegro

Music Academy in Cetinje, retrofitted for energy efficiency

We tested out our theory with the Cetinje Music Academy, a beautiful, but somewhat run-down building, which previously housed the UK Embassy.

In addition to energy savings, the project created 10 jobs for unemployed people (who also received training and new skills).

Of course, this is just a start. But we demonstrated that this is possible, and we now want to scale up.

We’re looking to replicate what we did for the Music Academy to 40 other buildings of cultural significance, including the municipal building (have a look around).

This should have a great multiplier effect on employment and energy savings (See: Connecting energy efficiency and history). Next up is the city’s hospital.

Illegal housing and energy efficiency

The project team also asked: what if that same idea were applied to houses built without planning permission (with many families simply unable to pay to legalize their homes)?

How does it work?

  • A family retrofits their home to be energy efficient, and gets a smaller energy bill

  • Savings are used to pay for the cost of legalizing their home, and getting a loan for energy efficiency

  • A very important point: the scheme is designed in a way that the family does not pay any extra money the month after the retrofit, so the solution is cost-neutral

And again, everyone wins: families get a legal title to their home, local authorities start collecting real estate taxes (and reinvesting them in the community), architects, energy auditors and construction companies have a whole new market segment for work, and the country overall saves on its energy consumption.

I believe that our best development solutions take this multidimensional approach (as I have discussed before – See: Good for development: Energy efficient buildings).

What are some projects that you know about that combined various development challenges in a creative way?

Get updates from the Beautiful Cetinje project:

  • Emma

    Great scheme and no doubt more detail is in the works, especially to answer the question how a poor family can afford to retrofit their home to be energy efficient in the 1st place. Is a loan scheme in the planning? Most illegal builds here are so poorly constructed that an energy efficient retrofit is essentially a new house!

    • Jelena Janjusevic

      Dear Emma, thank you very much for your questions. This approach is set as a solution for a lack of financial resources for payment of legalization. Our researches and prototype we developed showed that EE retrofit can save in average 63% of energy consumption in household. This fact, as well as possibility that our Law on legalization allows – to pay legalization fee in 240 monthly installments (20 years payment period), put owners of illegal construction in position that after EE legalization, in term of costs the owner will be in almost same position as before the legalization. We calculated (in the below table), that the costs for owner are even lower after legalization (monthly electricity bill cost + retrofitting cost + legalization cost) compared to energy bill they paid at the moment, plus with our approach they will have legalized house (this increase price of the house) as well as lower energy consumption in the house.

      So, before EE legalization owner has 110 euros monthly cost for energy consumption. After EE legalization the household costs are: 47.8 € for energy consumption, 20€ for legalization and 32 € for retrofit – total 99.8€ – less then before, but now legalized house and lower energy consumption.

      Related the loan scheme – yes, we are in negotiation with Government, EBRD; KfW and national Investment Development fund for establishment a credit line for owners of illegal house as well as for ESCO companies to conduct EE retrofit.

  • Guest

    Did you send this newsletter to the European Commission services? DG Enlarg, DG Regio and EUD in Podgorica? And to EU parliament as well. They could assist with EU funds.

    • Jelena Janjusevic

      Thank you for suggestions. Yes we are working on this, and we believe that this could be topic for IPA 2.