Can the Green Investment Bank trigger a UK boom in LED street lighting?

UK public infrastructure is set for a major LED lighting boom following the roll out today of a new loan product by the Green Investment Bank (GIB) to finance a nationwide switch to low energy streetlighting.

The new scheme is being pioneered by Glasgow City Council and will see 70,000 streetlights start to be converted to low energy as part of the city’s preparation for the Commonwealth Games. This will pave the way for all local authorities across the UK to follow suit. 

“There are seven million street lamps in the UK and less than 10% are energy efficient LEDs so there is a huge opportunity,” explained Green Investment Bank chief executive Shaun Kingsbury. “The UK spends around £300M a year on lighting and 30% of it goes into the sky. If you switch to LEDs you can save up 80% of the electricity cost.”

An extended version of this interview with Shaun Kingsbury will feature in the forthcoming KPMG Focus on Infrastructure, Building and Construction digital magazine which will be published next month.

Also in this magazine will be interviews with Olympic Delivery Authority chairman Sir John Armitt, HS2 commercial director Beth West and Birmingham City Council leader Sir Albert Bore to discuss the progress of infrastructure delivery in the UK. 

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The new product from GIB offers UK local authorities a low, fixed rate loan over a period of up to 20 years. The green loan has been specifically designed to finance public sector energy efficiency projects, ensuring that repayments are made from savings resulting from use of LEDs.  Kingsbury said loans will also be available to the Highways Agency for motorway lighting, Network Rail and any hospital, university or public facility with street lighting assets. 

“What we are doing is creating a very structured green loan product for local authorities that will allow them to pay for the capital expenditure to replace the lighting out of the savings,” he said, pointing out that energy efficiency was key to meeting the UK’s carbon reduction targets and so was something the public sector should be doing more of. 

“This technology has been improving dramatically over the last five years and it has now got to a point where it is proven and the cost savings are there,” he said. “Now is the time and there is now no excuse. We will structure a loan that will allow [the local authority] to carry out capital upgrades to the lamps out of the energy savings they see. But you won’t see bills go up in the short term while you pay for capital.”

The GIB said that local authorities that made the switch to low energy streetlights would have a short payback period on their investment, possibly as early as five years. After that, they would be see their electricity bills fall by up to 80% - a significant saving since streetlighting can account for up to 40% of a local authority’s energy consumption.

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