Presentatie justine prain

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Energy Saving Trust: Options and opportunities for local authorities Justine Prain – Associate Consultant 7 th December 2011, Utrecht

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Transcript of Presentatie justine prain

Page 1: Presentatie justine prain

Energy Saving Trust:Options and opportunities for local authorities

Justine Prain – Associate Consultant

7th December 2011, Utrecht

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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

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Local authorities enabling of finance

Aligned Incentives De-risking

• Jobs• Fuel Poverty• CO2 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

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Changes to the housing retrofit Sector

2011 2012 2013

Economic Activity

Warm front

CERT

CESP

Green Deal & ECOFeed in tariff

Renewable Heat Incentive

Warm zones

Renewables Grants Tariffs

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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

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Gre

en D

eal

EC

OPrinciples of the Green Deal

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Previously proposed returns for RHI6% solar thermal12% other

Whole house 5-7%

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 efficiencyLoft ~45%Cavity wall ~30%Solid wall, internal; 4-9%Solid wall, external; 0-3%

Returns for solar PV FIT4.5% index linked

Note; assume 3% growth in energy pricesSource; Camco, EST; Marksman Consulting Analys

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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

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Local authority

Utility

Installer

Bank/ FinancePension schemePrivate 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 workTenants receive free electricity from installed technology

Outsourced ‘rent a roof’ model

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Bank finance

Guarantee fundInstaller

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 providedto the banks

Finance for guarantee fund from LA and other sources

Contract about the management and operation of guarantee fund

Retrofit Guarantee Fund

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Local authority

Property owner

Green Deal provider

Referral team

LA promotesbenefits of retrofit work

Property owner seeks advice/ shows interestReferral made to

provider

Provider completes assessment and works

Local authority may receive finders fee from Provider

LA facilitator/ Marketeer

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LA trade co.

UtilityProperty owners

OpCo agrees works where necessary with occupier

PWLB provides financeto LA through prudential borrowing

LA finances OpCo through loans

Utility pays FiT OR Green Deal payment to OpCo

Local authorityPublic Works Loan Board

LA forms a wholly owned trading company that undertakes the operational role of the project

LA finance and delivery model

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Banks

Finance vehicleDelivery 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 financeto 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

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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

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LA Green Finance options

LA Options Review

Business case process

LA data gathering

Adjust model

Stakeholder engagement

Write up findings

Cab

inet

de

cisi

on

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

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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)

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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):

1. 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

2. Approves the plans for an initial Pathfinder Programme for 15,000 properties with an initial scheme value of £250m.

- 250m 3. 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.

4. 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

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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):

1. Commitment to fund initial project costs of £100,000

2. Agreed consultation with neighbouring authorities regarding contributions/ partnerships commission

3. Procurement of legal, financial and technical advice

4. 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

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• 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)

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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

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Energy Saving Trust Key Contacts:

Andy Deacon - Director of Local Delivery

[email protected]

+44 (0)207 654 2601

Vicky East – Green Finance Manager

[email protected]

+44 (0)207 654 2477