The decision stems from the findings of the project Mobilising Local Energy Investment (MLEI) Cambridgeshire. Supported by Intelligent Energy Europe, this project has been running since late 2012, to respond directly to the rising cost of energy and to become more energy self-sufficient. Investment in low carbon infrastructure is needed on a scale that brings real local economic benefits and carbon reductions, and helps tackle energy security issues.
According to the MLEI Project Director, Sheryl French, “We know there is huge potential to bring forward energy projects; research completed in 2011[1] estimates that we could deliver 28% of Cambridgeshire’s energy needs from renewables by 2031, compared to 7% at present. This would require investment of more than £2 billion. In addition the market for energy efficiency improvements to Cambridgeshire’s building stock is in excess of £800 million. MLEI Cambridgeshire is about finding ways to unlock these investment opportunities, and so bring multiple benefits to our communities and businesses.”
A consortium of local authorities is delivering the project lead by Cambridgeshire County Council. South Cambridgeshire District Council, Huntingdonshire District Council and Cambridge City Council are also involved.
The project is essentially aimed at testing the business case for a local Low Carbon Investment Fund by using public money and public sector projects to leverage private investment and develop a bankable pipeline of projects. An additional benefit for the local authorities involved is the option to create revenue streams from low carbon energy investments, which can be reinvested into further projects, and/or used to support public service delivery.
Cllr Mathew Shuter, Cambridgeshire County Council’s portfolio holder for Enterprise and Skills, said “The MLEI project will test how the public sector can intervene to enable investment in projects on a greater scale and at a faster pace and for greater local benefit. To do this we will use Council owned land and buildings, and public sector financial capabilities, to create the conditions that will stimulate further private sector investment. In other words, we will create more confidence for investors in Cambridgeshire low carbon energy projects. There is also the added benefit of generating new revenue streams from investment in our own assets, which can be used to finance more projects or to support Council service delivery”.
A local needs assessment took place prior to the MLEI project stage. The team spent nine months building up the evidence base for local energy needs - to sustain and grow businesses, manage rising fuel costs and secure local energy supplies for local jobs. This lead to further research and analysis and the proposal for a Low Carbon Investment Fund and Low Carbon Development Unit – a financial and delivery arrangement that would help deliver low carbon energy projects on a greater scale and at a faster pace than ever before in Cambridgeshire.
Now that there’s the prospect of some real money on the table to fund these ambitions, the project team is re-engaging with local stakeholders, to get their input on the proposals and help develop a pipeline of projects. Look here for details of the event on 21 November.
Potential projects identified so far include energy performance contracting for schools and other public sector buildings, community buildings retrofit, and even a solar farm.
Jane Frank, project manager at MLEI Cambridgeshire noted that setting up an investment fund requires local authorities to acquire new skills and knowledge to prepare quality projects that have robust business cases and that stand up to investor scrutiny. As with sustainable energy projects in many rural areas, it will be necessary to bundle projects together to achieve investment scale.
*** Keep updated on this project’s progress – follow this great blog
How an investment Fund would work:
It is envisaged that the Low Carbon Investment Fund will invest alongside structural funds and development banks (European Investment Bank, Green Investment Bank) and leverage private sector funding (debt or equity). Funding will be provided for a mixture of short, medium and long term projects of up to 25 years. Once the fund has placed its initial investments, the authorities can retain the fund to generate income, grow the fund further or exit the fund by selling the portfolio of investments, i.e. re-finance, via community share offer, bond issue or sale to a fund to reinvest in more projects.
An infographic to show these relationships is available here.
_____________________________________________________
About MLEI
- Project is coordinated by Cambridgeshire County Council, working alongside Cambridge City Council, South Cambridgeshire District Council and Huntingdonshire District Council
- Project partners are in receipt of a grant from the EU Intelligent Energy Europe programme for technical assistance. This grant is for staff and subcontracting costs over 3 years to 2015. It will be used to;
- Set up a long-term finance model (investment fund) which aligns public and private sector investment to support low carbon infrastructure
- Establish an investment programme of energy infrastructure projects on a scale that will attract private sector investmentSet up appropriate mechanisms e.g. energy services company or framework agreements to deliver low carbon infrastructure using the fund
- The investment fund will mobilise a programme of energy projects initially to the value of at least £14.5M. However the project envisages attracting significantly more investment over the longer-term.
________________________________________________________________________________