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Green finance summit aims to unlock £2Bn of clean local energy projects

 

Leading Green Finance experts and investors are set to meet with some of the UK’s largest companies and town hall bosses from across the country to discuss how together they can unlock at least £2bn of clean, local energy projects.

The future of Green Finance in the UK will be in focus at a conference on Thursday (January 31) where more than 100 attendees will share expertise on how these projects could cut carbon emissions in hundreds of our towns and cities.

The Leeds event - organised by UK100 in partnership with the Department for Business, Energy and Industrial Strategy as well as the Economic and Social Research Council and Leeds Climate Commission - will also hear from Energy and Clean Growth Minister Claire Perry. The Minister will outline how councils can benefit from green investment through the Government’s modern Industrial Strategy.

Polly Billington, Director of UK100, said its own survey of attendees has discovered that across the country a pipeline of clean energy projects are waiting to be built, but a lack of know-how on how to finance and develop these projects is stifling their growth.

Polly, who heads the 92-strong network of local government leaders committed to 100% clean energy by 2050, explained: “Too many local authorities are now stuck in the early stages of getting local low-carbon schemes off the ground. These projects are critical to ensuring our future energy systems are smart, clean and low cost.

“We believe private Green Finance is one of 2019’s most important economic and environmental topics. Local integrated energy projects are complex. They combine proven technologies into new systems that haven’t existed before and the private sector is not ready to make that happen on its own.

“Despite authorities facing a range of regulatory hurdles, local leaders have a growing appetite for such transformation to get proposed projects moving.”

Minister for Energy and Clean Growth Claire Perry said: "Unlocking the power of private investment is key to the success of the next generation of clean, green energy projects across the UK. We have already driven millions into local schemes, including working with Leeds City Council to improve the energy efficiency of local housing.

"This innovative project has already raised room temperatures in poorly insulated local authority housing by as much as 6 degrees celsius, while cutting consumer fuel bills by an average £325 a year.

"But this is just the start, and this conference's vital conversations could help to unlock up to £2 billion worth of clean, local energy projects to reduce emissions and create jobs - all part of our modern Industrial Strategy."

The conference will also hear from the likes of Barclays, the City of London, financiers and energy services businesses who will offer their own insight into how local authorities can benefit from an increased focus on Green Finance from UK investors. Barclays alone invested £16 billion in green bonds last year.

Ahead of the conference, UK100’s own ‘temperature check’ survey of attendees found:

  • 85% of the schemes referenced by local authorities attending the event are only at the conceptual or feasibility stages with 15% at commercialisation[3]
  • 45% of responses representing local authorities said low-carbon was the authority’s priority or strong priority[4]
  • When asked to rank their priorities when assessing low-carbon projects, those representing local authorities said their top 3 were:
    • Return on investment
    • Satisfying broader policy objectives such as reducing fuel poverty, improving air quality or providing better transport options
    • The potential for income generation
  • 89% of responses representing local authorities said “having no money for commercial engineering/commercial studies” represents a problem, a difficult problem or a very difficult problem[5]
  • 65% of responses representing local authorities said “too many Government departments to go to for different pots of money” was a difficult/very difficult problem[6]
  • 90% of responses representing local authorities said “development capital to help fund technical and commercial studies” would be helpful or most helpful[7]
  • 58% of responses representing local authorities said “a single gateway to apply for support” would be helpful or most helpful[8]
  • 63% of responses representing local authorities said “advisory support to guide through the process and provide critical feedback” was helpful or most helpful[9]

Among the investors who responded, the ‘temperature check’ survey of attendees found:

  • 75% of those representing investors said long-term cash flow was the most important element to make a low-carbon project attractive[10]
  • 50% of those representing investors said return on investment was the most important or second most important element to make a low-carbon project attractive[11]
  • Investor representatives responding to the survey said they had £620m to invest, seeking market returns, over the next five years[12]
  • 75% of investors responding to the survey said bureaucracy and slow decision making was a challenge or major challenge[13]
  • 75% of responses representing investors said a single gateway to apply for support would be helpful or most helpful in terms of central government support[14]
  • All responses representing investors said development capital to help fund technical and commercial studies would be helpful or most helpful in terms of central government support[15]

The conference will also examine examples of community schemes already powering the equivalent of 67,000 homes in England and Wales with local authority-led projects like Project SCENe in Nottingham[16], developing Europe’s largest community battery and solar panel system.

A number of innovative and pioneering solutions will also be discussed including ones from Public Power Solutions in Swindon[17], which owns and supplies power from local solar farms and produces green fuel from waste, and Manchester’s “Smart Quarter”[18] developed with Siemens, the City Council and the city’s universities to demonstrate how the entire district could be supplied with its own heat and electricity.

Previous calls from local authority leaders for a “crack team” to cut down on red tape and bureaucracy have been met by the establishment by Government of five Local Energy Hubs[19] across England in the last year. These local hubs will manage a £9 million fund to support local groups to solve local energy problems.

At Thursday’s event, representatives from local authorities, businesses, investment funds, developers, regulators, national government and climate change organisations will also hear from Ross Taylor from Barclays’ Green Banking Council and Carl Ennis from Siemens. Both companies have sponsored the conference alongside SSE and Next Energy Capital.

The event itself came out of a recommendation by the Green Finance Task Force to increase capacity in local authorities along with awareness of opportunities to access private finance.

Local authorities across the UK are already looking at integrated projects to include solar power generation, battery storage, district heating and top specification homes with smart systems, high energy efficiency standards and charging points for electric cars.

Carl Ennis, Managing Director, Siemens Energy Management, explained: “With 70% of greenhouse gases coming from cities and 70% of our population forecasted to live in urban areas by 2050, we believe energy efficiency and CO2 neutrality for cities is not only possible but a necessity.”

In Leeds, the authority has launched a pioneering and collaborative Climate Commission to encourage investment in low-carbon, climate-resilient developments to save millions of pounds and counter climate change.

LCC Chair Andy Gouldson explained: “Our research shows there’s a massive opportunity for low-carbon and climate-resilient development in cities and communities across the UK. As an example, the Leeds City Region could save over £1 billion a year in energy bills if it invested in all available profitable energy efficiency and low-carbon options.

“This would create nearly 15,000 years of employment and emissions would fall by nearly a quarter, over and above what is currently expected. The sooner we move to turn these forecasts into reality the better. The economics now mean we can meet the challenge of climate change here in the UK.”

Cllr Judith Blake, leader of Leeds City Council and co-chair of UK100, added: “Local authorities are playing a more prominent role in local energy and this is a fantastic opportunity to deliver innovation in low-carbon energy infrastructure. As our energy system changes from being centralised to one where local technologies are more important, this will stimulate local economies and tackle fuel poverty.

“Accessing finance to deliver integrated local clean energy at scale remains a challenge for many. That is why a partnership of local and national government and public and private investors is so important.”

Anecdotal responses to the UK100 survey with suggestions for a way forward on Green Finance included loan guarantees and government being lenders of last resort.

Ross Taylor, Industry Director, Manufacturing, Transport and Logistics, at Barclays, added: “Barclays is committed to developing a strong Green Finance offer for all our customers. We need to understand what has to be done so that we can invest in the kind of transformational energy system that is required in the UK, building on our strong track record in local government finance. This is an important opportunity to bridge the gap that we know exists between finance and projects.”

 

[1] Survey Monkey research of confirmed conference attendees, carried out in late December/early January with 63 responses from local authorities, developers, investors and others including academics, students and the general public

[2] Survey saw 16 representatives of local authorities attending the conference reply with 3 noting their pipeline was worth £500m+, 1 saying £100-500m, 3 with £50-100m, 4 with £10-50m and 5 with up to £10m

[3] 17 out of 20 responses = 85% (8 at Conceptual + 9 at Feasibility) with 3 at Commercialisation

[4] 9 out of 20 responses

[5] 17 out of 19 responses (7 said problem, 5 difficult problem, 5 very difficult problem)

[6] 11 out of 17 responses (6 difficult problem, 5 very difficult problem)

[7] 18 out of 20 responses (7 helpful, 11 most helpful)

[8] 11 out of 19 responses (5 helpful, 6 most helpful)

[9] 12 out of 19 responses (9 helpful, 3 very helpful)

[10] 3 out of 4 responses

[11] 2 out of 4 responses (1 most important, 1 second most important)

[12] 4 out of 4 responses (1 up to £500m, 1 up to £100m and 2 up to £10m)

[13] 3 out of 4 responses (1 a challenge, 2 a major challenge)

[14] 3 out of 4 responses (1 helpful, 2 most helpful)

[15] 4 out of 4 responses (2 helpful, 2 most helpful)

[16] https://www.projectscene.uk/

[17] https://www.publicpowersolutions.co.uk/resources/news/pps-energises-barnfield-solar-farm-powering-swindon-recycling-centre/ 

[18] https://www.siemens.com/uk/en/home/company/topic-areas/sustainable-energy/triangulum.html

[19] UK100 report Financing the Transition published in late 2017