New report highlights problem of ‘sporadic’ funding for local energy transition

Sporadic funding is stifling net zero ambitions at the local level and should be replaced with a systematic approach to planning, funding, and powers, according to a new report by Energy Systems Catapult.

The report, ‘Enabling Smart Local Energy Systems: Finance and Investment’, builds on extensive research with local government and UK investors to set out recommendations for government, local authorities, energy and financial sectors, and the emerging UK Infrastructure Bank.

 

It proposes moving away from one-off energy, transport and heat projects towards a systematic approach that delivers joined-up local energy communities to attract investment, drive clean economic growth and fund net zero.

Philip New, Chief Executive of Energy Systems Catapult, said it was vital that a standardised and transparent approach to net zero was developed to deliver low carbon projects that were both tailored to local needs and aggregated across the UK to provide a credible investment pipeline – with the co-benefits of job creation, skills development, and air quality improvements.

He said: “Local authorities have a pivotal role to play in the net zero transition, leveraging public funding to attract the private finance needed to deliver the clean technologies and infrastructure required by local communities.

“Yet there is a risk that the potential value and co-benefits that integrated local systems can offer will be missed if investors focus only on siloed technologies and separate asset classes.”

Putting the challenge into stark relief, the report cites that low carbon investment must scale up to £50 billion each year from 2030 – 2050 to deliver net zero. Despite world-beating climate change targets and over three-quarters of local authorities declaring a climate crisis, there is still no up-and-running mechanism to mobilise the scale of investment needed.

A fundamental starting point, the report states, is support and resources to help local authorities establish smart local energy systems (SLES).

Eric Brown, Chief Technology Officer at Energy Systems Catapult, is leading the organisation’s work on SLES.

He said: “Smart local energy systems integrate heating, transport and power systems to help local authorities unlock new markets, revenue streams and business model opportunities. This ultimately leads to reduced emissions, improved energy services and more affordable bills, but also many co-benefits, including new jobs, skills and better air quality.

“However what works in Liverpool might not be suitable for Glasgow. Which is why smart systems ensure projects are tailored to fit the characteristics of a local area, while allowing innovative approaches to be replicated elsewhere.

“This requires a standardised approach to planning, collaboration and funding, so that local net zero projects can be aggregated to provide a transparent and accessible pipeline of credible local energy projects to investors.

“The nature of smart local energy systems is both bespoke and big picture. It requires coordination across a wide range of actors. It means funding that facilitates long-term thinking and proactive planning, not sporadic one-off projects in response to short-lead and competitive funding calls. Public and private finance must work together to deliver an integrated portfolio resulting in a cost-effective energy transition.”

The author of the report – the ESC’s Energy Revolution Integration Service (ERIS) – is set to launch a toolkit that will consolidate sector resources and support local learning, upskilling and good practice.

Key recommendations include:

  1. Working with local authorities and the sector to cultivate awareness of smart local energy systems, their value and the opportunities they present for people, place and planet
  2. Legislation of net zero at local level, giving local authorities the power and capability to develop local energy communities
  3. A planning framework to provide guidance and confidence to local authorities to develop these integrated energy solutions
  4. Collaboration with investors, policy makers, and national and local government to develop innovative finance mechanisms to combine public funds and private investment
  5. Creating demonstrable, visible pipelines of credible local energy projects to investors
  6. Developing flexible standard procurement frameworks suitable for smart local energy systems

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