• Home
  • About
  • Subscribe
  • Conference
  • Events Calendar
  • Webcast151
  • MOTB
  • Log In
  • Register

Room 151

  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews

Q&A with the Green Investment Bank

0
  • by Colin Marrs
  • in Interviews
  • — 15 Apr, 2014

In February, the Green Investment Bank launched a new loan product to help local authorities make the switch to low energy street lighting. GIB is working with Glasgow City Council – the first council to take up the loan, supporting the City in its plans to convert its 70,000 streetlights to low energy. Room151 caught up with Gregor Paterson-Jones to find out more about the loan.

Room151: Why LED street lighting?

Gregor Paterson-Jones: What we wanted to do is introduce appropriate products to help energy efficiency projects. Street lighting was one of the easier things to do. There is market failure in this sector – the technology is mature but penetration into the market is less than 10 per cent.

R151: Why would councils approach you for a loan rather than the PWLB or other sources?

GPJ:  Before we launched our product, we examined the offer from the PWLB. We started from the point that if LED lighting is economic and makes sense then why isn’t it happening more quickly? If the default lending is through PWLB then what are the disadvantages and how do we make it more competitive? We found that with PWLB you have to borrow an amount up front and deploy it over time, meaning interest costs start from day one. We developed a product that means that you can draw down money as you need it, and only start repaying when the project begins. In addition, you can fix the rate of repayments to match the energy savings which result from the new lighting.

R151: What rates do you lend at?

GPJ:  I cannot give you an exact figure – the rate will vary from project to project, and we take the price in relation to the price of gilts. We have to lend on a commercial basis, but we can lend on a very long-term basis, which commercial banks are unwilling to do at the moment. That is where we can add value. It allows us to have a thin margin but offer sufficiently attractive rates. These rates are fixed.

R151: What do you require from the councils you lend to?

GPJ:  In order for us to lend to an authority it must have good credit and no financial problems. Their proposed scheme has to use LED lighting, and there must be a robust business case to prove value for money. We will lend £3 million as the minimum loan – we don’t want to do lots of small pilot schemes.

R151: What are the advantages of the product over PFI?

GPJ: Because this is tried and trusted technology, manufacturerss can guarantee the performance of the lighting for a long time. This means that council is taking less risk, which can help bring the price down. But the product could also be used as part of an existing PFI. You need an agreement with the contractor to vary the terms of the PFI.

R151: Can the loan be extended to other services?

GPJ:  Where there is a proven energy saving and where the local authority wants to borrow on a fixed rate it can be extended to other areas. The advantage with street lighting is that there are long manufacturing guarantees, and other areas might not. These would be more complicated deals. We can’t fund solar panels because there is not deemed to be any market failure in that market.

R151: Are any other loans in the pipeline?

We are discussions with 15 to 25 councils. There are about three in the running for the next one, which we hope to announce within three or four months. Working with councils can be slow going because there are so many layers of approval needed.

LATIF banner x610

Share

You may also like...

  • Q&A with Bernard Hayes Q&A with Bernard Hayes 21 Aug, 2014
  • Sponsored Q&A: Fundamentum’s Jim Boyd on investing in a social housing REIT 23 Jun, 2020
  • BSA Chief Builds Solid Case for Mutuals BSA Chief Builds Solid Case for Mutuals 8 Nov, 2011
  • Andrew Burns on strategic finance, the ‘care cap’ and commissioning for outcomes Andrew Burns on strategic finance, the ‘care cap’ and commissioning for outcomes 19 Feb, 2013

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 2 days ago

    The vaccine may help settle cash flows but inflation remains a risk: Sponsored article: Lauren Sewell examines the prospects for long-term borrowing as Brexit settles and vaccines are deployed against Covid-19. On the 9th October 2019 Whitehall sent… dlvr.it/RqZXCr pic.twitter.com/PzgOZOGQ0k

    Room151 2 days ago

    ESG in liquidity: Sponsored article: Gavin Haywood looks at the integration of ESG in Federated Hermes’ money market funds. Federated Hermes has over 300 public sector clients invested in our AAA rated money[...] dlvr.it/RqZX5f pic.twitter.com/E87sBXsay8

    Room151 3 days ago

    New realities of investing cash and liquidity: “What to do now?”: Sponsored article: Brian Buck looks at the “unique challenge” for cash management strategies. As investors assess the ongoing impact of the pandemic on their business, levels of cash and… dlvr.it/RqVbk9 pic.twitter.com/ZElVASmEUV

    Room151 3 days ago

    Extra finance promised by the government receives a broad welcome: Sponsored article: The financial pressures facing local authorities this year continue to pose challenges for council treasurers. While the launch of the UK’s Covid-19 vaccination… dlvr.it/RqTzTF pic.twitter.com/HCjH0pyHR5

    Room151 3 days ago

    A savvy approach to managing your cash: Sponsored article: Caroline Hedges examines the need for active cash management to achieve a higher than average return. Last year saw the already mountainous pile of negative-yielding debt around the[...] dlvr.it/RqTzMK pic.twitter.com/uP0RQYTJLt

    Room151 4 days ago

    Putting alternatives at the heart of multi-asset portfolios: Sponsored article: Nick Edwardson looks at the assets that provide the “most attractive opportunities”. We believe that asset allocation is the primary driver of investment returns and that the… dlvr.it/RqQ2Qt pic.twitter.com/WLBzvRRRUQ

    Room151 4 days ago

    Thriving in the pandemic: Avoiding the stragglers: Sponsored article: George Crowdy looks at the sectors providing opportunities for sustainable investment. Throughout much of 2020, we talked about why sustainable investing has thrived in the pandemic,… dlvr.it/RqQ2NQ pic.twitter.com/dxiPWKFsPl

    Room151 4 days ago

    The development of CCLA’s mental health benchmark: Sponsored article: Amy Browne examines the importance of investing in mental health in the workplace. We are living through a public health emergency in more ways than one. Physical health[...] dlvr.it/RqQ2Jx pic.twitter.com/o6yRSCX3oF

    Room151 5 days ago

    Brexit: What the EU trade deal means for the UK economy: Sponsored article: Hetal Mehta looks at the impact of Brexit on economic prospects. Four and a half years after voting to leave the EU, on Christmas Eve the UK finally[...] dlvr.it/RqLBDt pic.twitter.com/No62srfE8h

    Room151 5 days ago

    Cash dethroned: The quest for liquid yield: Sponsored article: Peter Hunt and George Carne ask how treasury departments can balance the need for yield and liquidity. The massive stimulus and waves of liquidity provided by central banks[...] dlvr.it/RqLBDj pic.twitter.com/05g6Zhu1kU

    Room151 5 days ago

    Richard Harbord: Delayed “capital determinations” make section 25 opinions a new crunch point: The severe pressure on local government budgets now means section 151 officers confront a tricky call on  whether they can make a judgement on the robustness… dlvr.it/RqLBDV pic.twitter.com/vTAbDKFzkI

    Room151 1 month ago

    PWLB Consultation: Analysis straight from Dickens: Helen Radall and Paul McDermott present a legal examination of the new PWLB borrowing rules as Charles Dickens might have imagined it. Free and easy PWLB (“Marley” to his friends)[...] dlvr.it/RnmwLq pic.twitter.com/yFxcPrQqEG

    Room151 1 month ago

    Room151’s top stories from a momentous year: 2020 was the year in which local government grappled with Covid-19, funding strains, controversy over borrowing rules and the threat of financial collapse. It has been an exhausting and historic[...] dlvr.it/RnlpZg pic.twitter.com/g3myNyox6J

    Room151 1 month ago

    Tracy Bingham: 2020, a year best forgotten but also one of learning: Many will rush to erase 2020 from their memories but, writes Tracy Bingham, there were also many lessons about finance teams, strategic planning and leadership. 2020: A year we’d… dlvr.it/RnlpY2 pic.twitter.com/m7G1krrtCu

    Room151 1 month ago

    Settlement must address ‘precarious’ local government finances: Dan Bates crosses his fingers for “no nasty surprises” in this week’s funding settlement but argues the “bigger prize” is post-Covid financial certainty. Thursday (17 December) should be the… dlvr.it/Rnj9dG pic.twitter.com/KLKjjuBqJE

    Room151 1 month ago

    PWLB consultation: Big change on the way but there are ‘grey areas’ and opportunities: The consultation on PWLB borrowing has concluded creating a new landscape for funding property acquisition. Our experts look at the implications. Tracie Langley The… dlvr.it/RndRvJ pic.twitter.com/KEqXEBmEfq

    Room151 1 month ago

    2021: Better income outcomes?: Sponsored article: Investors should be mindful of structural challenges posed to income generation as a result of rapid thematic change. Jon Bell looks at the prospects for the coming year.[...] dlvr.it/RndRsw pic.twitter.com/TxVk8aXkMq

  • Categories

    • 151 News
    • Agent 151
    • Blogs
    • Chris Buss
    • Cllr John Clancy
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Forum
    • Funding
    • Graham Liddell
    • Ian O'Donnell
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • LGPSi
    • Mark Finnegan
    • Recent Posts
    • Resources
    • Richard Harbord
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Treasury
    • Uncategorized
  • Archives

    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story PWLB borrowing drops, Pickles probes Tower Hamlets, Ellerton to K&S, Merseyside blues, HRA bids open
  • Next story Preparing the accounts

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we'll assume that you are happy to receive all cookies from this website.OK