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Fringe   carillion energy services
 

Fringe carillion energy services

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    Fringe   carillion energy services Fringe carillion energy services Presentation Transcript

    • Financing Eco-refurbishment – a local authority solution June 2011 Christoph Harwood Marksman Consulting LLP
    • Local authority Green Deal options Leave to central government and the market Carbon proactive Minimalist In house Work with private sector Provide marketing support Outsource to third party marketer End to end in-house model Partnership with private sector finance and delivery model Jobs and creation of low carbon sector *North London Sub-Regional Housing Stock Analysis and Business plan Public Sector Development Company or Project* First Loss Guarantee Fund* Public Sector Ownership of Assets through SPV* Public Sector Ownership of Assets on balance sheet* Concept Going live
    • Birmingham City Council – Cabinet Decision 4 th April 2011
      • Confirms its commitment to establish a transformational and pioneering public private partnership programme to improve the energy efficiency of 200,000 properties in Birmingham by 2026 by taking advantage of the Government’s Green Deal proposals.
      • Approves the plans for an initial Birmingham Energy Savers Phase 3 Pathfinder Programme for 15,000 properties with an initial scheme value of £100m.
      • Approves the commencement of a procurement process to select a delivery partner for this initial Birmingham Energy Savers Phase 3 Pathfinder Programme with an initial scheme value of £100m which includes the option to extend the scheme value up to £400m by 2020.
      • Approves the deployment of financial, legal, procurement and technical resources, including specialist external support and expertise to conduct the procurement with due diligence.
      • Notes that a further procurement exercise would be required to complete the full Birmingham Energy Savers Phase 3 Programme of 200,000 properties which will be subject of a future Cabinet report and Full Business Case.
    • Changes to the energy efficiency sector Economic Activity Warm front CERT CESP Green Deal & ECO Warm zones 2011 2012 2013
    • Financing offer to house owner £5-10,000 Ownership
      • Generation and export FIT
      • Potential for RHI
      Free electricity (£100-200) pa
      • 25 year Green Deal service charge
        • Help with hard to treat
        • Help with fuel poor
      £8,000 Lower cost energy bills Renewables with roof rental Energy efficiency with Green Deal
    • Local Authority Operating Model Finance Payments Other SPV Green Deal Payments Installation companies Install and manage Contract Marketing PV Meter/deemed Benefits Banks Non-recourse finance Green Deal + FIT payments Energy Companies Hard to treat subsidy Delivery Partner Contract LAs Buffer capital PWLB
    • Initial Local Authority Eco-refurbishment SPV £25m £100m ECO 30% 70% Local Authorities Banks 7% 5-6% Illustrative £75m Cost per house - £6-7k Number of houses = 15,000 6.5% £25m £50m Energy Companies Long term fixed low cost finance Write-off Low cost buffer/ junior debt Non-recourse private sector Hard to treat 7.5-8.5%
    • Working with other local authorities £25m £100m ECO Local Authorities Banks 7% 5-6% Illustrative £75m 7.2% £25m £50m Energy Companies Long term fixed low cost finance Write-off Low cost buffer/ Junior debt Non-recourse private sector Hard to treat & fuel poor LA1 LA2
      • Shared funding of junior debt
      • Rebalance for housing take up by LA area at regular periods or end of roll out
      • Bad debt allocated by LA area?
      • Shared but independent governance
      Cost per house - £6-7k Number of houses = 15,000 7.5-8.5%
    • Green Deal LA consortium Consortium Delivery Partner LA (2) LA (3) LA (1) Initial local authority set up consortium and commit to critical mass for delivery partner £
      • Finance or underwrite start up costs
      • Provide finance for critical mass required to deliver low costs and attract delivery partners
      • Other local authorities act as “customer aggregator”
        • Commitment to deliver volume
        • Penalty if not acheived
      LA (4) £ LA (5) £ LA (6) Follow on local authorities join with their own pool of funds for their own housing on incremental cost basis £
    • Local Authority Green Deal Warehouse Green Deal Warehouse ABS ? ? £3-500m
      • Benefits
      • Size of first tranche of capital may less than £75m
      • Project finance from banks may not be required
      • Size of equity layer can be as low as 5%
      • Issues
      • Need commitments collectively to reach £300m(tbc)
        • Penalties if not achieved
        • Passed back to LAs
      • Need consistency across programmes
      Uniformity requirement Bank finance GIB BCC NCC
    • Summary
      • Local authorities have core role to play
        • Trusted by householders
        • Access to low cost finance
        • Fits with requirements on jobs, low carbon and fuel poverty
      • Green Deal legislation is strong enabler
        • Private sector finance does not seem to be available without public sector support – ie local authorities
        • Private sector delivery sector is supportive
      • Local authorities are taking the lead
        • Birmingham and Newcastle have enabled the programme
        • Other UK local authorities are expected to follow
        • Consistency across LA programmes will reduce debt requirements, costs and refinancing risks
    • Financing Eco-refurbishment Christoph Harwood Marksman Consulting LLP Christoph. harwood @ marksmanconsulting .co. uk Jasmine. singh @ marksmanconsulting .co. uk