---
title: "Pay-as-you-save financial scheme"
description: "Pay-as-you-save financial scheme (EPBD IV): a loan only for energy improvements, with repayments designed around the energy savings achieved."
canonical: "https://gencompl.ai/glossary/pay-as-you-save-financial-scheme"
language: "en-US"
type: "Glossary term"
published: "2026-10-14T18:26:37.089Z"
modified: "2026-10-14T19:05:31.163Z"
---

# Pay-as-you-save financial scheme

A loan scheme dedicated exclusively to energy performance improvements where a correlation is established in the designing of the scheme between the repayments on the loan and the achieved energy savings, also taking into account other economic factors such as the indexation of the energy cost, interest rates, increased asset value and loan re-financing.

**What does "Pay-as-you-save financial scheme" mean under EPBD IV?**

Defined in: [EPBD IV](https://gencompl.ai/regulations/epbd) (32024L1275)

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> A loan scheme dedicated exclusively to energy performance improvements where a correlation is established in the designing of the scheme between the repayments on the loan and the achieved energy savings, also taking into account other economic factors such as the indexation of the energy cost, interest rates, increased asset value and loan re-financing

## Defined in / by

- [EPBD IV (32024L1275)](https://gencompl.ai/regulations/epbd), Article 2, point (40)

Last updated: 14 October 2026.

## 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.

> **What we could not establish**
>
> The Directive does not say how energy savings are measured for the repayment link, so schemes may use calculated or metered savings. This entry fixes the term. It does not decide whether the term catches your institution; counsel decides that.

## Questions and answers

### Does EPBD IV require banks to offer pay-as-you-save loans?

No. Article 17(7) requires Member States to promote such schemes among other financial tools. The Directive defines the product; it does not oblige a lender to offer it.

### Can a pay-as-you-save loan finance a kitchen renovation?

Not under the EPBD IV definition. The loan scheme must be dedicated exclusively to energy performance improvements.

## Sources

- [Directive (EU) 2024/1275 on the energy performance of buildings (recast)](https://eur-lex.europa.eu/eli/dir/2024/1275/oj/eng) (EUR-Lex · 8 May 2024)

## Related content

### Regulation

- [Energy Performance of Buildings Directive (EPBD IV)](https://gencompl.ai/regulations/epbd): EPBD IV is Directive (EU) 2024/1275, the recast Energy Performance of Buildings Directive. The Netherlands put its first tranche into force on 29 May 2026 (Stb. 2026, 103), with duties staged to 2033: recharging points in existing car parks from 1 January 2027, solar and lighting control from 1 January 2028. Energy label D by 2030 is still a proposal.