Pay-as-you-save financial scheme

Repayments linked to savings

A pay-as-you-save scheme is a loan with two features. It is dedicated exclusively to energy performance improvements, so it cannot finance other works. And its repayments are designed in relation to the energy savings achieved, taking into account other economic factors that the definition lists: indexation of energy costs, interest rates, increased asset value and loan refinancing.

The definition says a correlation is established in the design of the scheme. It does not require repayments to equal savings, or to stop if savings fall short. How close the link is, and who carries the risk if the savings do not materialise, is left to the scheme.

In the operative articles the term appears in Article 17. Article 17(7) lists pay-as-you-save financial schemes among the funding and financial tools Member States must promote, alongside energy efficiency loans and mortgages, energy performance contracting, on-bill schemes and guarantee funds. Article 17(19) adds a social angle: when financial incentives support the renovation of rented buildings, Member States must introduce safeguards for vulnerable households and may incentivise schemes that tackle the upfront costs of renovation, such as on-bill schemes, pay-as-you-save schemes or energy performance contracting.

For a lender, the definition is a product description rather than a rule. It becomes relevant when a Member State supports such schemes with public money or guarantees, and the scheme must then fit the definition to qualify.