Drives and Controls Magazine
‘Spend to save’ scheme will back efficiency projects
Published:  27 February, 2014

The UK Green Investment Bank (GIB) has joined forces with Societe Generale Equipment Finance (SGEF) to provide £50m of finance for energy efficiency projects, with each institution committing £25m to the scheme. The funding will help public and private sector organisations to cut their energy costs and emissions without having to fund the finance upfront.

“Many organisations understand that energy efficiency measures make good commercial sense but, with few financiers in this space, they simply cannot afford the initial investment,” explains GIB chief executive, Shaun Kingsbury. “Our partnership with one of the industry leaders allows these organisations to realise cost savings from day one without having to fund the capital upfront.”

The first project to benefit from the GIB-SGEF partnership is at Rampton Hospital, managed by the Nottinghamshire Healthcare Trust. A £5m investment will finance the installation of a combined heat-and-power plant, dual-fuel boilers, biomass boilers and an effluent treatment plant.

The GIB-SGEF alliance will finance the full amount of the project. Cofely, an energy and technical services provider, will design and install the equipment, including making an initial £5m investment. On completion of the installation, GIB-SGEF will reimburse Cofely.

The Trust will pay the cost back over a 15-year period. The “spend to save” model means that the cost savings from the energy efficiency measures will exceed the cost of the repayments. A similar model will be used for other projects financed by the alliance.

It is estimated that the project will save Rampton Hospital £1.7m. It will also generate around 5GWh of renewable heat per annum and avoid 88,000 tonnes of CO2 emissions over the lifetime of the project. The effluent treatment plant will improve wastewater quality and energy efficiency.

The GIB-SGEF scheme will finance energy efficiency projects without the end-user needing to fund the finance upfront

“The new energy centre will provide Rampton Hospital with a more efficient, reliable and responsive energy infrastructure that will deliver guaranteed savings with a fast return on investment,” says Cofely’s energy services director, Paul Rawson. “The long-term re-financing of our initial investment using GIB-SGEF funding, is an innovative alternative model to direct financing by Cofely, which we are now able to provide for our customers.

“We look forward to working with GIB-SGEF to help both the Trust and other public and private sector organisations to reduce their energy costs and emissions through similarly-financed projects,” he adds.

The UK Green Investment Bank was launched in November 2012 with £3.8bn of funding from the UK Government. It is a “for profit” bank, whose mission is to accelerate the UK's transition to a greener economy, operating independently of Government.