The European Court of Auditors (ECA) has identified weaknesses in the design and monitoring of residential energy renovation measures in Cyprus, Belgium, Italy, and Lithuania that were financed through the Recovery and Resilience Facility (RRF).
According to a special report published in Luxembourg on 7 July, the findings concerning Cyprus cast doubt on the reported energy-saving benefits, as they point to low levels of energy savings achieved through measures that, in practice, do not reduce a building's actual energy consumption.
Specifically, the ECA notes that Cyprus was the only one of the four sampled Member States to select deep renovation projects under a dedicated measure, representing 20% of the funds allocated to renovations. However, auditors found, based on their own calculations using data from actual buildings, that the energy savings reported by Cyprus would not meet the minimum 30% threshold required.
The report also highlights that 88% of the energy savings reported by Cyprus come from the installation of photovoltaic (PV) panels, mainly funded through the measure "Promotion of Individual Energy Efficiency Measures." While PV panels reduce climate impacts by lowering carbon dioxide emissions and are counted as energy savings under the Energy Performance of Buildings Directive, the report stresses that they do not actually reduce a building's real energy consumption.
According to the ECA, beneficiaries in Cyprus may participate in the national Net Metering Scheme, with a payback period for installation costs of between 3.5 and 5 years. However, on-site audits found that some beneficiaries used the energy credits generated to maintain or even increase their energy consumption.
Major distortions between estimated and actual final energy consumption
Furthermore, a study of Cyprus's methodology for calculating building energy performance revealed major distortions between estimated and actual final energy consumption, with estimates ranging from two to three times higher than actual consumption. Another study found discrepancies of up to 377%.
Regarding cost-effectiveness, the ECA states that, at the current pace, Cyprus will require approximately €24 million to achieve the target for its deep renovation measure—81% of the allocated budget. According to the auditors, this suggests that the original cost estimate was overstated.
By contrast, for the simpler renovation measure, costs were revised upwards during the revision of the national recovery plan, with 96% of the €74 million budget expected to be absorbed. The ECA classified Cyprus's deep renovation measure as "at risk of delay" after the target was reduced from 1,100 to 800 renovations in November 2025. According to the report, this revision did not fully reflect actual progress, as the Cypriot authorities had informed the auditors that 263 projects had already been completed and 1,465 contracts had been signed by that same month.
For the other three Member States examined, auditors found in Belgium that eligibility criteria did not require buildings to have a poor energy performance rating, resulting primarily in funding for medium- or low-impact renovation measures.
No reference to deep renovations
In Italy, the "Superbonus" programme, which covered up to 110% of beneficiaries' renovation costs, was identified as the most expensive and least cost-effective measure in the sample, costing nearly €10 per kilowatt-hour of energy saved, while in Lithuania, the revision of the national recovery plan reduced the renovation target by 40%, creating a risk that only 77% of the revised target would ultimately be achieved.
At the EU level, the ECA found that the Recovery and Resilience Facility contains no explicit reference to deep renovations. Among the EU's 27 Member States, only Romania linked a measure to an explicit deep renovation target. Overall, 83% of the expenditure supported medium-depth renovations, while the remaining 17% was not subject to any minimum energy-saving requirement.
The ECA made three recommendations to the European Commission: to improve the targeting of renovation measures in preparation for the next Multiannual Financial Framework (MFF), to ensure more transparent reporting of energy savings and evaluate renovation measures by the end of 2026 and 2028, respectively, and to improve performance monitoring by December 2027.
The mechanism supports investments worth around €80 billion
On its part, the EU Commission welcomed the report's conclusion that the RRF has provided broad support for improving the energy efficiency of residential buildings. It noted that the mechanism supports more than 400 energy-efficiency reforms and investments worth around €80 billion, of which approximately €44 billion is specifically dedicated to residential building renovations.
Regarding the lack of emphasis on deep renovations, the Commission argued that the RRF Regulation did not require Member States to include such measures in their national plans. It also noted that, as acknowledged by the report itself, Member States generally chose schemes designed to reach a broader range of households and buildings, enabling renovations to be carried out more quickly and on a larger scale.
The Commission partially accepted the recommendation to strengthen the design and monitoring of residential renovation measures under the next MFF, referring to the new Performance Regulation it has proposed to establish a harmonised framework for monitoring expenditure. It noted that future arrangements will depend on the outcome of the interinstitutional negotiations on the next MFF.
Influences on estimates
With regard to the reliability of reported energy savings and Energy Performance Certificates (EPCs), the Commission stated that these are based on the methodology set out in the Energy Performance of Buildings Directive and constitute a reliable tool for assessing improvements. It stressed that measuring actual energy savings is neither legally required nor technically feasible with complete accuracy, as estimates are influenced by factors such as occupancy levels, user behaviour, and weather conditions. In this context, it also partially accepted the recommendation to improve performance monitoring.
Regarding common monitoring indicators, the Commission recalled that these are intended to track overall progress towards the objectives of the RRF rather than evaluate individual measures. Responsibility for reporting the underlying data lies with the Member States, while the Commission committed to providing further information on the methodology used for the common energy savings indicator.
Finally, the EU executive acknowledged delays affecting more complex renovation measures, attributing them to the exceptionally challenging implementation environment of the RRF during the COVID-19 pandemic, Russian invasion of Ukraine, the energy crisis, high inflation, and supply chain disruptions. It stated that it remains committed to achieving the RRF's objectives within the legally established timetable.
(Source: CNA)
