Business leaders call for £5bn local energy stimulus

A coalition of local leaders and businesses have joined forces to call on the Government to pledge £5bn toward local energy projects in the upcoming stimulus package.

This would net a return of £100bn to support the British economy, including £40bn for energy efficiency. The package could create over 300,000 jobs, helping to level up all parts of the country and build back better. The plans could also cut energy bills and save the NHS money.

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.

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.

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), 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. 

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. 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.

Polly Billington (pictured), director of UK100 said: “The Prime Minister needs to make good on his manifesto promise to invest in energy efficiency in UK homes, which are some of the leakiest in Europe. £5bn could unlock £100bn. That would help consumers save on their fuel bills and the environment. A stimulus package that focuses on local energy will help rescue the UK economy and deliver on the Prime Minister’s ambitions of levelling up all parts of the country, and meeting the net-zero target.” 

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