The potential role of financially strained local UK authorities in realizing a successful transition to renewable energy sources.
In a recent report, the Energy Systems Catapult, in partnership with Phoenix Group, has outlined key challenges and solutions for scaling up regional investment in net zero infrastructure by UK local authorities. According to Bruno Gardner, head of Climate Change and Nature at UK insurance giant Phoenix, the work done with Energy Systems Catapult builds directly on the priority areas identified in their 'Charting the UK's Net Zero Future' report last year.
The Challenges
The report highlights several challenges that local authorities face in their quest to invest in net zero infrastructure. A fragmented investment landscape, capacity and capability constraints, risk perception and cost concerns, coordination across regions and sectors, and regulatory and procedural barriers are identified as significant hurdles.
Local authorities often struggle to access sufficient and coordinated funding due to the multiple sources and complexity of investment mechanisms. Many lack the technical expertise and resources to develop investable net zero infrastructure projects at scale. Higher perceived risks around new technologies and uncertain returns deter large-scale investment, and aligning priorities and investments between different local authorities and private sectors is complex. Lengthy planning, procurement, and regulatory processes discourage rapid deployment of infrastructure.
The Solutions
To address these challenges, the report proposes several solutions. Creating strategic regional partnerships to facilitate collaboration between local authorities, investors, and stakeholders is one such solution. This collaboration could help pool resources and expertise, making it easier for local authorities to develop and implement net zero infrastructure projects.
Capacity building and technical support, providing expert guidance and tools to help local authorities develop robust business cases and project pipelines, is another proposed solution. Innovative financing models, such as leveraging blended finance, public-private partnerships, and guarantees to reduce risk and attract private capital, are also highlighted as necessary to secure long-term capital for net zero infrastructure.
Simplifying planning and approval procedures to accelerate project deployment and developing clear regional investment strategies that align infrastructure needs around net zero targets with targeted investment approaches tailored to local contexts are other solutions proposed in the report.
Success Stories
The report draws attention to successful case studies from Greater Manchester, London, and Newport, showcasing how local authorities can accelerate investment in net zero infrastructure. For instance, Greater Manchester has an £80m renewable energy project pipeline, with £26m already secured in solar investment. The Greater London Authority has identified a £34bn energy project pipeline, with £53m ready for immediate implementation.
The Role of Local Authorities
Local authorities play a vital role in the development of clean energy infrastructure, primarily due to their role in granting planning permission for new infrastructure projects. However, many struggle to attract private sector backing, with 75% relying on grants and only 15% exploring private finance options.
The report calls for better coordination between public and private sector stakeholders to scale up investment. Phoenix Group, which has been investing in established asset classes such as social housing for years, is one private sector entity that is working closely with local authorities to bridge the gap between climate ambition and financial reality.
In conclusion, the Energy Systems Catapult and Phoenix Group report underscores the need for a coordinated, well-supported, and risk-managed approach to enable UK local authorities to accelerate investment in net zero infrastructure effectively and at scale. By addressing the challenges and implementing the solutions proposed in the report, local authorities can unlock significant energy savings, job creation, and improved public health while contributing to the UK's transition to net zero.
- To bolster environmental-science efforts and combat climate-change, the formation of strategic partnerships between local authorities, investors, and stakeholders is essential, as suggested in the Energy Systems Catapult and Phoenix Group report.
- Innovative financing models, such as blended finance, public-private partnerships, and guarantees, are highlighted as critical in securing long-term capital for energy infrastructure that aligns with environmental-science and net zero targets, as proposed in the report.
- Industry collaboration could help confront the challenges local authorities face in developing net zero infrastructure projects, such as limited technical expertise and capacity constraints, by providing guidance and support for creating investable projects, as recommended in the report.
