Building Retrofits Gain Importance for Urban Resilience Across the Baltics
Cities across the Baltic states are increasingly looking at building renovation as more than an energy-efficiency measure, with aging housing, energy security concerns, and climate risks creating a broader case for retrofitting existing structures.
Much of the residential infrastructure in Estonia, Latvia, and Lithuania was constructed during the Soviet period, particularly between the 1950s and 1990s. Large numbers of residents in cities including Vilnius and Riga continue to live in prefabricated apartment blocks built during this period, many of which now require substantial upgrades to heating, ventilation, electrical, plumbing, and structural systems.
Improving these buildings could simultaneously address several pressures facing Baltic cities. Better insulation, windows, ventilation, heating systems, and building controls can lower energy demand, while measures such as shading and improved ventilation can make buildings more resilient during heatwaves and other extreme weather.
For Baltic countries, reducing building energy demand also has implications for energy security.
The European Commission estimates that buildings account for around 40% of energy consumption across the EU, while roughly half of EU gas consumption is linked to buildings. Around 75% of the EU building stock has poor energy performance, while the annual energy renovation rate remains approximately 1%.
Aging Housing Creates an Energy Challenge
The problem is particularly visible in older multi-apartment buildings.
Many Soviet-era apartment blocks use centralized single-pipe heating systems that offer residents limited control over individual apartment temperatures. Poorly insulated walls, roofs, and windows can further increase heating requirements during Baltic winters.
According to the European Commission's 2026 country assessment, Latvia's housing stock remains outdated, with a particularly high proportion of multi-apartment buildings constructed before 1990. Years of underinvestment have contributed to poor energy performance, while renovation activity remains uneven between Riga and other parts of the country.
Lithuania faces similar challenges. Buildings account for around 40% of the country's final energy consumption, while residential energy use increased by 3.8% between 2019 and 2024 despite efficiency improvements. The Commission has warned that the pace of renovation remains too slow to meet the country's energy-efficiency objectives.
The International Energy Agency has also called for faster renovation of Lithuania's multi-apartment buildings, including neighborhood-scale approaches that combine building upgrades with improvements to district heating systems. Lithuania's long-term strategy targets a 60% reduction in primary energy use in buildings by 2050.
From Energy Efficiency to Urban Resilience
Retrofitting can provide benefits beyond lower energy consumption.
Gustas Germanavičius, founder and CEO of real estate investment platform InRento, told Forbes that building renovation in the Baltic states is increasingly becoming an urban resilience tool, potentially strengthening energy security while reducing household operating costs.
In cities where suitable development land is becoming more constrained, upgrading existing properties can also extend the usable life of the housing stock and reduce reliance on new construction.
A comprehensive retrofit can include additional insulation, replacement windows and doors, upgraded heating and ventilation, electrical modernization, renewable energy systems, and digital energy controls. The European Commission estimates that deep renovation of a very inefficient building can reduce its energy consumption by as much as 80%.
However, improving individual buildings alone may not provide full protection against climate risks.
Gintarė Kapočiūtė, partner and architect at BLUMA, told Forbes that resilient renovation also requires coordination with the wider neighborhood. Public spaces, drainage systems, vegetation, mobility infrastructure, utilities, and landscaping can influence how effectively an area responds to heatwaves, intense rainfall, and other climate stresses.
That means renovation programs increasingly intersect with broader urban planning. Measures such as reducing impermeable surfaces, improving stormwater management, increasing tree cover and shading, and modernizing underground infrastructure can complement building-level energy improvements.
EU Rules Increase Pressure to Renovate
The policy environment is also changing.
Under the revised EU Energy Performance of Buildings Directive, member states must establish national building renovation plans designed to move residential and non-residential buildings toward a highly energy-efficient and decarbonized building stock by 2050.
For residential buildings, countries must establish trajectories that reduce average primary energy consumption by 16% by 2030 and between 20% and 22% by 2035 compared with 2020 levels. At least 55% of those savings must come from renovating the worst-performing residential buildings.
Estonia submitted its draft National Building Renovation Plan in June 2026, Latvia followed in September, and Lithuania submitted its draft in January. Final national plans are due by the end of 2026.
Financial support is also expanding. Lithuania's Social Climate Plan, endorsed by the European Commission in June, is expected to mobilize €884 million through 2032, including support covering between 50% and 85% of eligible renovation costs for some households. Latvia's Social Climate Plan is expected to mobilize €617 million, with a strong focus on cleaner and more energy-efficient housing for vulnerable households.
Estonia, meanwhile, has been developing approaches including prefabricated and neighborhood-scale renovation. Its long-term renovation strategy envisages renovating approximately 54 million square meters of buildings by 2050.
Implementation Remains the Main Obstacle
Financing, fragmented ownership, regulatory approvals, and construction capacity remain significant barriers.
Multi-apartment buildings can require agreement among many individual property owners before major work proceeds. Smaller owners may also struggle with upfront costs even where renovation produces long-term energy savings.
Poorly designed projects create additional risks. Inadequate ventilation following insulation work can contribute to moisture and mold, while inappropriate structural modifications, outdated electrical systems, and insufficient attention to fire safety can create new problems rather than resolve existing ones.
For policymakers and property owners, the challenge is therefore shifting from demonstrating that renovation can reduce energy use to creating financing and implementation systems capable of delivering upgrades at scale.
Across the Baltics, that could increasingly mean treating individual buildings, district heating networks, public spaces, climate adaptation, and neighborhood infrastructure as connected parts of the same renovation strategy.
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