- Network of over 100 Mayors and local government leaders along with energy businesses Siemens UK and EDF call on Government to keep manifesto promise to invest in energy efficiency
- Report sponsored by Department of Business will be presented direct to the minister, Kwasi Kwarteng, on Monday
- £5bn of development funding would unlock £100bn worth of schemes; including £40bn for energy efficiency which would exceed Conservative manifesto pledge of £9.2bn for retrofitting leaky homes
- Call for a Net Zero Development Bank in order to finance schemes and avoid duplication (21 different grants through BEIS); alongside rebalanced system from large power stations to regional energy projects
- Research shows that 3.1 million posts affected by the shift to green jobs will need access to skills and training from government and industry
LONDON > A coalition of local leaders, including Conservative mayors and a major energy businesses, Siemens and EDF, have joined forces to lobby the Chancellor to pledge £5bn toward renewable energy[1]. By unlocking private sector investment, this would net a return of £100bn to support the British economy, including potentially £40bn for energy efficiency – exceeding the promised target of £9.2bn in the Conservative manifesto. The package could create over 300,000 jobs, helping to level up all parts of the country and build back better.
The research report has been sponsored by the Department for Business, Energy and Industrial Strategy and UK100 and Siemens and EDF will present their findings directly to the minister, Kwasi Kwarteng MP, at a meeting on Monday. Journalists and stakeholders are invited to join the meeting[2].
A separate study for UK100, launched as part of a resilient recovery taskforce shows that 3.1 million jobs (around 1 in 10 in the UK economy) will need access to skills and training from government and industry as part of a green recovery.[3]
The call for investment in energy efficiency follows the Chancellor’s summer economic statement and the urgent need for a national programme of home insulation, which was a £9.2bn Conservative manifesto pledge.[4] Only £2bn has so far been announced[5].
Polly Billington, Director of UK100 said:
“If ministers are to meet their manifesto promise on energy efficiency in our homes, which are some of the leakiest in Europe, they need to kickstart a renewable revolution. This would help hard-pressed consumers save on their fuel bills, support hundreds of thousands of jobs and protect the environment. £5bn now would unlock £100bn to rescue the UK economy and deliver on the Prime Minister’s ambitions of levelling up and meeting Net Zero. The Chancellor’s statement, while welcome, should have had far more front-loaded investment.”
Retrofitting energy efficiency measures and clean heat technology will be a critical part of Net Zero, as homes account for 18% of emissions[6], primarily from natural gas use for heating and cooking1. According to the UK Green Building Council, to achieve net zero carbon by 2050, we will need to improve almost all of the UK’s 29 million homes, meaning we need to retrofit nearly 2 homes every minute between now and 2050.
Carl Ennis, the UK CEO of Siemens said: “There is an urgent need to scale up local, sustainable, energy if the UK is to have any chance of meeting Net Zero by 2050. This requires a collective national effort with government, business and the public all playing our part. Local energy should be at the heart of the National Infrastructure Strategy creating a more consistent policy landscape that will give investors the confidence to invest earlier.”
UK100, a network of over 100 mayors and local leaders from across the country have partnered with smart infrastructure leader Siemens UK on a new study which argues that a more “balanced energy system” is required with the right mix of local decentralised energy systems alongside large scale generation. Members of the public and energy consumers will become generators themselves.[7]
Local energy projects include retrofitting homes, onshore solar and wind power, biomass, electric vehicle charging and smart grids all of which are critical to meeting the UK’s ‘Net Zero’ target by 2050.
The group is calling for the establishment of a Net Zero Development Bank which would bring together all government financing for the transition to Net Zero and kickstart local energy schemes which are at too early a stage to be attractive to private finance. The Bank would provide a single gateway to government support, replace lost funding from the EU within a more stable regulatory regime.[8]
The report is the outcome of an 18 month programme of 5 workshops held across England (Bristol, Cambridge, Leeds, Leicester and Manchester) and expert interviews sponsored by the Department for Business, Energy and Industrial Strategy (BEIS) and Siemens UK bringing together 327 experts from local authorities, business, academia, NGOs and local economic partnerships (LEPs) to discuss green financing. The report will be published in full at a meeting with business minister Kwasi Kwarteng MP on Monday (13 July).
Tim Bowles, the Conservative Mayor of the West of England, said: “Decarbonising our energy network is the sort of grand challenge that is central to tackling the climate emergency and making sure we meet our national, regional and local net zero targets. In the post- Covid-19 recovery and renewal of our economy, there is a real opportunity to make substantial progress towards marking this goal a reality.
“In the West of England, I’m already making sure we seize this opportunity. From making sure our skills programmes are providing the sort of skills the sector will need for these jobs of the future, to having a programme which supports local energy schemes to create a low carbon future for the region.”
Cllr Steve Count, the Leader of Cambridgeshire County Council, and Chair of the newly launched Countryside Climate Network, said: “This clear evidence shows us the challenges of environmental change, however Cambridgeshire, as a key exporter nationally and internationally of advanced cleantech, would add its voice to calls for additional resource and focus on the need to upskill those in industries most at risk. We are not alone in having well established green sector employment opportunities which are crying out for these skills, and are simply looking for the green light to develop and expand.”
Sally Longford, Deputy Leader of Nottingham City Council and Portfolio Holder for Energy and Environment, said: “A green recovery programme built around the transformation of our energy systems is not only a good thing to do, but the right thing too. The evidence shows that this type of investment pays dividends compared to traditional approaches, and helps us urgently move forward our climate emergency response. We have seen in Nottingham already how local energy projects can bring a range of real benefits to people and businesses, not just the environment. Councils are ready to lead and help deliver stimulus programmes to help us renew our local economies in a transformative way to overcome the effects of COVID-19 in the most positive way.”
Leader of Warrington Borough Council, Cllr Russ Bowden, said: “As a council, we’re committed to becoming energy self-sufficient by 2030. We approved our green energy strategy in 2019 which commits to addressing fuel poverty, creating jobs, stimulating economic growth and securing energy supply whilst achieving carbon neutrality. But together we need to think bigger: if we’re to meet the challenge of achieving Net Zero nationally by 2050, we need to scale up local energy schemes and put more power to our regions. We want our work locally to support and inspire others, and I firmly believe that by investing in local energy recovery and using the expertise of our councils, we can realise Net Zero.”
It analyses the progress of the 5 regional energy hubs, set up by the government in 2018, which currently have a pipeline of 183 projects valued at £850 million. However, 90% of these projects were still at an early stage of development and most of the projects are also relatively small scale, at below £5 million.
Analysis conducted by Siemens and UK100 shows that the potential pipeline could be increased by more than 100 times from £0.85bn to £100bn.[9] It includes £40bn for energy saving and efficiency in homes and businesses; £10bn for renewables such as solar, wind and biomass; £30bn for low carbon heating such as district heating networks; £10bn for smart energy systems; and £10bn for low emissions transport such as electric and hydrogen vehicles.
A Net Zero Development Bank would avoid duplication and establish common rules for financing schemes ensuring value for money for the taxpayer, and efficiency of scale for businesses. Currently there are 21 different grants available for local energy projects just via the Department for Business, Energy and Industrial Strategy (BEIS)[10], with more via other departments and agencies such as the Ministry of Housing, Communities and Local Government (MH CLG) and Ofgem. Some of the SMEs interviewed have described the ‘valley of death’ challenge they face as they seek to scale up successful concepts.
At the same time, businesses such as Siemens are working with a wide range of local authorities on one-off clean energy schemes which each require bespoke contracts and financing, wasting precious resources. For instance, Siemens have supported West Sussex County Council to develop their first solar farm on landfill site which is not ready for development, powering 2,400 homes – but such an approach could have a far higher and more efficient impact on cleaning up our energy if done through a consortium of local authorities with landfill development.
Paul Spence, Strategy and Corporate Affairs Director at EDF said: “Local authorities have a vital role to play in delivering a low carbon energy system that is firmly rooted in communities in all regions. With the right support, they can build the infrastructure that underpins a vibrant and climate-friendly economy. The right mix of local solutions and a UK-wide energy network with low carbon renewables and nuclear will be key to delivering low carbon power that’s affordable for citizens and reliable all year round. EDF is keen to help make this happen and this report contributes some interesting ideas on how this can be done.”
New Jobs
316,387 jobs could be created in the local energy sector over the coming decade with investment in decarbonisation including 223,387 in energy efficiency (such as insulating homes and businesses), up to 81,000 in heat networks and 12,000 in smart meters, according to research compiled by IPPR[11]. Financing and procurement policies should ensure that while economies of scale are met, there are still real opportunities for small and medium-sized enterprises (SMEs) in the transition to net zero and that large conglomerates are not favoured at the expense of their smaller competitors.
Why a Local Energy Recovery?
The switch to low carbon generation, which relies heavily on smaller but widely spread solar and wind power installations, requires us to develop a balanced energy system which combines a mix of large scale power generation, such as off-shore wind, with local decentralised energy systems.
These involve energy consumers becoming generators themselves. To be cost effective these local energy systems will use smart technology and storage solutions to balance demand and supply. They will also need to keep generation close to demand to minimise energy transmission loss. But they need to be linked to ensure security of supply when local demand and supply become unbalanced.
Some areas of the country have their own particular energy sources which can be used to support their local energy systems, such as warm water in old mine shafts, or more sun or wind to power low carbon generation. In other parts of the country, such as Lincolnshire, the waste disposal strategy of its agricultural economy involves biomass energy such as the 38MW Sleaford Renewable Energy Plant.
Many local authorities sit on large asset portfolios of public buildings and land, which could be invested in energy projects. At the same time, with their increasing reliance on business rates for funding, councils are keen to foster local economic growth while recognising they may need additional advice from the private sector. Councils are under pressure from concerned citizens – 90% of whom live in an area where the council has declared a Climate Emergency.
Nottingham
Nottingham wants to become the first carbon neutral city in England, by 2028. It has a wide range of demonstrator projects in partnership with universities and businesses. Nottingham City Council has invested in over 50 commercial solar PV schemes, owns and operates a waste incinerator that was built in the 1970s and owns 26,000 social housing units. It is involved in a number of innovative energy efficiency retrofit and energy storage programmes across this housing stock. In the Trent Basin regeneration area its joint venture development partner, Blueprint, is working with SmartKlub to develop a subsidy free commercial model for community energy.
Warrington
Warrington Borough Council aims to become energy self-sufficient by 2030. It has taken an active approach to the local energy market with its first investment fitting 2,000 council owned homes with solar panels supplying electricity to tenants. Following this it has invested in two sizable commercial solar PV projects, 25MW and 35MW in capacity, in York and Hull, at a cost of about £60 million using a mixture of private and public finance.
The electricity generated willpower all council buildings, securing savings in energy costs, whilst the remainder of will be sold to the grid or other public sector organisations. The council has offered to fund solar panels on private homes or businesses, and retain income from them. A percentage of any profits from its green energy investments will go toward community energy and reducing fuel poverty.
Social Benefits
There will be many social and health benefits from moving to a zero carbon economy, including lower heating bills and fewer hospital admissions. One pilot project in Portsmouth which deployed Passivhaus-standard energy efficiency upgrades to 111 flats reduced energy bills by an average of £700 per year1, equivalent to over half the annual cost of a standard energy bill.2 Reducing the chronic health effects from fuel poverty driven by high energy bills and inefficient homes has the potential to save the NHS between £1.4 billion and £2 billion per year in England alone.3
Recommendations: Barriers to Investment
The main recommendations made to policymakers and business in the UK100 report to unlock investment include:
- Participants in the local energy market are confused and frustrated by inconsistent policy and regulation
- £100 billion of capital investment requires initial development funding of the order of £5 billion.
- The private sector can provide much of the development capital needed, but only if there is sufficient market clarity
- Local authorities lack the development capacity to support local energy investment
- Government support, provided in a coherent and consistent manner, could help to provide the necessary market certainty and stability
- UK 100 believes that government support for local energy Net Zero investment would be delivered most effectively through a new Net Zero Development Bank,working in partnership with UK local authorities, to mobilise private investment by:
○ becoming a centre of excellence for developing, procuring and delivering Net Zero project investment;
○ scaling up investment opportunities to make them more attractive to institutional investors; and
○ engaging with regulators and the central government to ensure the necessary support for market development.
What is the scale of the local energy opportunity?
Siemens estimates that more than £100 billion of investment in local clean energy schemes could be generated through local authorities, private capital and government investment working together on a wide range of projects across the country.
Siemens bases this on the energy strategies that it has carried out for two regions in England, the TriLEP area which covers much of South East England outside London, and the Humber region.
The table below sets out UK100’s estimates of how this £100 billion investment potential might be distributed across each of the local energy sectors which we have identified. The true scale of the investment required is likely to be much greater than this, particularly if our ambition is to achieve Net Zero well before 2050.
At a city level, Bristol estimates that it needs to invest £5-7 billion in local energy over the next 10 years to achieve net zero by 2030. Edinburgh has assessed cost-effective carbon reduction investments in housing, public and commercial buildings, transport, industry and waste sectors up to 2030 at almost £4 billion.
The consensus among our interviewees and UK100 members is that the scale of the investment required cannot and should not be met by the public purse. Instead the investment opportunity for private finance needs to be created by shaping markets.
About UK100
UK100 is a network of highly ambitious local government leaders, who have pledged to secure the future for their communities by shifting to 100% clean energy by 2050. This is not just good for the planet but for the people and communities they serve, be they in villages, towns or cities. Local leaders are working together to create flourishing communities, seizing the opportunities of technology to create jobs and establishing a nationwide project of renewal, focussed on local needs and ambitions.
UK100 is the only network for UK local authorities, urban, suburban and rural, focused on climate and clean energy policy. We connect local leaders to each other, to business and to national government, enabling them to showcase their achievements, learn from each other and speak collectively to accelerate the transition to clean energy.
We work closely with elected representatives, policy experts and grassroots campaigners to make the clean energy transition a reality. This involves developing solutions to challenges faced by each and all of our local leaders, whatever their geography, history or makeup, so as to influence national government and building public support for clean energy solutions. www.uk100.org
About Siemens
Siemens Smart Infrastructure (SI) is shaping the market for intelligent, adaptive infrastructure for today and the future. It addresses the pressing challenges of urbanization and climate change by connecting energy systems, buildings and industries. SI provides customers with a comprehensive end-to-end portfolio from a single source – with products, systems, solutions and services from the point of power generation all the way to consumption. With an increasingly digitalized ecosystem, it helps customers thrive and communities progress while contributing toward protecting the planet. SI creates environments that care. Siemens Smart Infrastructure has its global headquarters in Zug, Switzerland, and has around 71,000 employees worldwide. For more information, visit siemens.co.uk/smartinfrastructure
