Gregor Paterson-Jones, Managing Director of Energy Efficiency at the UK Green Investment Bank gives an overview of how investing in energy efficiency can help reduce costs as well as carbon emissions…
It’s hard to believe that the Green Investment Bank has only been in existence for 2 years. In that time, we have backed almost 40 new projects which will mobilise up to £5bn into the UK’s green economy.
More importantly, all of these projects will be profitable. Once built, they will generate an annual net profit of between £10m to £15m for taxpayers.
Delivering a UK wide impact, we have financed vital new infrastructure, activated private capital and we are innovating so others can follow.
These themes might well be our key messages, however, the last one of innovating so others can follow is perhaps more applicable when it comes to reducing costs for public services.
We are leading the way in financing ground breaking technologies, helping to create new markets and building inventive financial products on fully commercial terms.
Let me give you 3 examples from the last 2 years, at Westernmost Rough in Yorkshire, we are backing pioneering new offshore wind technology and in London, with TEG Biogas, we are turning the capitals’ waste into renewable electricity.
Lastly, in Glasgow, we used our Green Loan to help the city make the switch to low energy street lighting with the cost of repayments covered by their energy savings.
We are working hard to replicate this across the UK as lighting our streets can account for as much as 30% of a local authority’s energy consumption.
Adding new technology to older infrastructure is one of the best ways of reducing energy consumption and saving money in the public sector. We can help with building retrofits, onsite generation, industrial processes and infrastructure.
Retrofitting technologies, such as LED lighting, heat exchangers and smart metering, could save UK businesses £3bn to £5bn a year, according to the Carbon Trust, the energy saving advisory body.
This could easily be replicated in the public sector. One of our priority sectors for investment is public sector energy efficiency, especially in the NHS and local authorities where we have a track record of activity.
We have developed an innovative offering with the Green Loan and the Health Sector Energy Efficiency Programme. It allows us to use the full spectrum of financing across debt and equity with the ability to fund long-term projects.
Our experience with Glasgow City Council Green Loan shows local authorities can retrofit their streetlights with LEDs, and using the savings to repay the capital and interest used to finance them, and in certain cases structured with cash left over from day one.
In September, we concluded a deal with De Lage Landen (DLL) to announce a new £50m funding alliance focused on NHS energy efficiency projects.
The first project funded by the alliance is a £7.5m investment into Queen’s Medical Centre in Nottingham, part of Nottingham University Hospitals NHS Trust, where £7.5m is being invested to finance the installation of a suite of energy production and reduction measures.
The project has been developed under the Carbon and Energy Fund (CEF) framework and it will be delivered by the energy services company, Interserve.
As with previous NHS energy efficiency projects, the Trusts and Health Boards that will benefit from the new funding won’t need to find the capital upfront. The money saved by reducing their energy bills more than covers the cost of the repayments.
GIB estimates that energy efficiency measures could, across the UK, cut the NHS’s current £750m energy bill by up to 20%, saving £150m each year.
Investing in energy efficiency isn’t just about cost savings and environmental benefits. Investment in energy efficiency could provide the NHS with more reliable and resilient systems that would significantly reduce costs and operating risks.
Energy efficiency technologies can also be used to improve industrial processes such as pumps, refrigeration and heating, motors and how we use water.
They can be used to generate heat and electricity on-site, often using renewable fuel sources. And small changes like a switch to low-energy lighting can add up quickly. We recently helped NCP to change all the light bulbs in their 149 car parks to low energy, saving themselves 65% on their energy bill.
We don’t have to look far for examples of good practice like these. And it doesn’t have to be large multi-national companies.
We recently helped Bernard Matthews install 179 renewable energy boilers in their turkey farms, helping them towards their target of sustainably generating 100% of their own energy. In the whisky industry we are working with a number of distilleries, helping them lower their costs and reduce their risks. Our first project at Tomatin distillery, just south of Inverness, cut the cost and carbon emissions of producing the single malt that’s exported to 40 countries.
As we celebrate our 2-year anniversary, we closed a further round of deals in the energy efficiency market. The first was in the financial sector, a new area for us. Global banking group Citi put in place innovative energy efficiency measures to cut their energy use by 10% at its London data centre with energy efficient cooling units and efficiency improvements to the building’s air conditioning system.
I hope these examples have given you the impression that energy efficiency is an option for everyone.
Whether you are running an organisation that’s big or small I’m confident that we can help you save money, modernise your systems and improve your environmental performance. We stand ready to back these types of projects and can do it in a way that means you do not have any up-front costs with payments made from the savings in energy costs.
Gregor Paterson- Jones
Managing Director of Energy Efficiency
UK Green Investment Bank