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Presentatie justine prain Presentatie justine prain Presentation Transcript

  • Energy Saving Trust: Options and opportunities for local authorities Justine Prain – Associate Consultant 7 th December 2011, Utrecht
  • Why act now?
    • Investing in a time of cuts
    • Reducing council costs and improving efficiency
    • Economic benefits derived from local scheme set up and delivery
    • Protecting consumers against rising energy prices
    • Security of supply
    • Carbon benefits
    • Opportunity to lever in funds from the private sector
    • Localism
    • Building more sustainable and resilient communities
    • Generation and maintenance of local jobs
    • Improving housing to tackle fuel poverty, promote health and well-being
    • Big Society – supporting local solutions
  • Local authorities enabling of finance Aligned Incentives De-risking
    • Jobs
    • Fuel Poverty
    • CO 2 reduction targets
    • Landfill reduction
    • Own estate contracts
    • Social housing
    • Marketing support
    • Planning
    • Waste contracts
    Convening power
    • Project initiation
    • Procurement
    • Local initiatives (LEPs etc)
    • Community leadership
    • Project pipeline
    • Scale
    Local Authority
    • Revenue accounts
    • Grants – UK and EU
    • Prudential borrowing
    • Credit enhancements
    Finance provision
  • Changes to the housing retrofit Sector Renewables Grants Tariffs 2011 2012 2013 Economic Activity Warm front CERT CESP Green Deal & ECO Feed in tariff Renewable Heat Incentive Warm zones
  • What is Green Deal?
    • A regulatory framework enabling companies to offer householders and SMEs :
    • accredited advice and energy assessment of homes
    • home energy efficiency improvements at no up-front cost
    • reassurance that work is of a high standard
    • the ability to pay via energy bills over the long term (for example, 25 years), making use of the money saved on fuel
    • only to pay whilst they remain in that property
    • backed up by a new Energy Company Obligation
    • a number of consumer protections including requirements on warranty, guarantee, disclosure and redress
  • Principles of the Green Deal Green Deal ECO
  • What are we trying to finance?
    • Return on investment over 25 year period with householder as the investor investing their own money
    • Returns for energy efficiency
      • Loft ~45%
      • Cavity wall ~30%
      • Solid wall, internal; 4-9%
      • Solid wall, external; 0-3%
    • Returns for solar PV FIT
      • 4.5% index linked
    • Previously proposed returns for RHI
    • 6% solar thermal
    • 12% other
    • Whole house
      • 5-7%
    Note; assume 3% growth in energy prices Source; Camco, EST; Marksman Consulting Analys
  • LA Finance options Leave to central government and the market In house Work with private sector Provide marketing support Outsource finance and delivery In-house model Partnership with private sector (finance/ delivery) Marketing/ Facilitation role Retrofit Guarantee Fund Public Private finance model Public Sector model Concept Going live Minimalist Carbon proactive
  • Local authority Utility Installer Bank/ Finance Pension scheme Private equity etc. Local authority housing LA appoints and leases air space above their own properties in return for rent Utility pays FiT to installer OR bank Installer finances work Tenants receive free electricity from installed technology Outsourced ‘rent a roof’ model
  • Bank finance Guarantee fund Installer Installer receives Finance from bank at lower rate Central Govt/ Grant/ Other funding Local authority/ Property owner Local authority Contracts created for retrofit works Guarantee contract provided to the banks Finance for guarantee fund from LA and other sources Contract about the management and operation of guarantee fund Retrofit Guarantee Fund
  • LA facilitator/ Marketeer Local authority Property owner Green Deal provider Referral team LA promotes benefits of retrofit work Property owner seeks advice/ shows interest Referral made to provider Provider completes assessment and works Local authority may receive finders fee from Provider
  • LA trade co. Utility Property owners OpCo agrees works where necessary with occupier PWLB provides finance to LA through prudential borrowing LA finances OpCo through loans Utility pays FiT OR Green Deal payment to OpCo Local authority Public Works Loan Board LA forms a wholly owned trading company that undertakes the operational role of the project LA finance and delivery model
  • Banks Finance vehicle Delivery partner PWLB Property owner Local authority Utility LA lends to FV SPV contracts with OpCO for works Delivery partner carries out retrofit works Bank(s) lend to FV PWLB provides finance to LA through prudential borrowing Utility pays FiT OR Green Deal payment OR Eco obligation to SPV Occupier pays for works through utility bill LA public/private model
  • Strengths and Issues Rent-a-roof Retrofit guarantee fund LA facilitator LA finance and deliver LA public/private model Option
    • No LA finance required
    • Low amount of LA finance
    • No LA finance required
    • In control of desired outcomes
    • In control of desired outcomes
    • Ability to scale
    • Solar PV only
    • Need retail banks on board
    • Long term fixed rates difficult to obtain
    • Reliant on private sector GDP for all outcomes
    • Financial and operational exposure
    • Costs to revenue account
    • Difficult to scale
    • Financial exposure
    • Need LA partnerships to get scale
    • Reliant on delivery partner
    Strengths Issues
  • LA Green Finance options LA Options Review Business case process LA data gathering Adjust model Stakeholder engagement Write up findings Cabinet decision Aim: To support LAs understand the different finance models available to them to support the delivery of large scale eco-retrofit Includes: Features and benefits/ Risk and Issues/ LA examples
  • EST Green Finance Procurement Framework
    • March 2011 - EST issue OJEU contract for finance consultancy support :
          • to Local Authorities and Housing Associations to assess their finance needs and objectives, as well as structuring finance and operational solutions for them.
    • April 2011 – EST appoint OJEU contractors to:
          • deliver support on a project by project basis.
          • respond to requests with proposals and costs within 5 working days.
    • EST appointed contractors switched on depending on LAs preferences:
          • Marksman Consulting
          • CAMCO
          • Grant Thornton
          • KPMG
          • ARUP
        • EST currently working with following LAs using specific contractors:
          • Birmingham & Newcastle (using Marksman Consulting)
          • Nottingham (using CAMCO)
          • Greater London Authority (Marksman)
  • EST case studies (Birmingham )
    • Birmingham Energy Savers Phase 3 Pathfinders’ programme:
          • Business case to establish large scale retrofitting of 15k homes cost of ~ £100m
    • Cabinet decision (April 2011), OJEU (Sept 2011):
      • Commitment to establish a public private partnership programme to improve the energy efficiency of 200,000 properties in Birmingham by 2026 in line with Green Deal
      • Approves the plans for an initial Pathfinder Programme for 15,000 properties with an initial scheme value of £250m.
      • 250m
      • Commencement of a procurement process to select a delivery partner, includes the option to extend the scheme value up to £1.5b by 2020 with 20 WM orgs
    • includes the option to extend the scheme value up to £1.5b by 2020.
      • Approves the deployment of financial, legal, procurement and technical resources
    • EST and Marksman Consulting commissioned by Birmingham City Council to:
          • develop business case for green finance modelling
          • undertake housing stock modelling to underpin finance model
          • write, review and provide feedback on EIB and ELENA applications
  • EST case studies (Newcastle)
    • Newcastle Investment in Housing Retrofit:
      • 10,000-15,000 house programme (option to extend to 45,000)
    • Cabinet decision (July 2011):
      • Commitment to fund initial project costs of £100,000
      • Agreed consultation with neighbouring authorities regarding contributions/ partnerships commission
      • Procurement of legal, financial and technical advice
      • Further Cabinet report in Jan ‘12 to run a competitive process to select a Delivery Partner
      • Aug 2011 – secured €1.6m IEE funding for technical assistance to develop &launch programme
    • EST and Marksman Consulting commissioned by Newcastle City Council to:
          • developing business case for green finance modelling
          • undertake in depth housing stock modelling to underpin finance model and delivery
          • write, review and provide feedback on IEE applications
          • disseminate information to national and European partners within IEE application
    • Review of Local Authority finance models
      • Assess options for 15,000 house eco refurbishment programme
      • Select model for financing and implementation
    • Key differences with other LA retrofit schemes
      • Ambition to create a common energy tariff for businesses and households
      • Reviewing potential for an overarching framework for delivering all aspects of the Energy Strategy (including district heating)
    • EST commissioned by Nottingham City Council to:
          • develop business case for green finance modelling with CAMCO
          • undertake in depth housing stock modelling to underpin finance model and delivery
          • Provide links to local, regional, national and European programmes/ stakeholders
          • Share insight and Best practice
    EST case studies (Nottingham )
  • EST Finance Innovators Group (FIG)
    • National Finance Innovators Group
        • Launched September 2010
        • 18 member organisations (including UK Government – DECC, WAG, LGG)
        • Meetings held every 2 months in London
      • Aims
        • Forum for structured discussion on design and implementation issues for delivering finance models
        • Assess common issues to develop common solutions
        • Share the detail of LA finance models (i.e. legal templates to reduce costs)
        • Group to disseminate learning and showcase schemes as they develop
        • Contribute to the negotiations between local government and central government
  • Energy Saving Trust Key Contacts: Andy Deacon - Director of Local Delivery [email_address] uk +44 (0)207 654 2601 Vicky East – Green Finance Manager [email_address] uk +44 (0)207 654 2477