Shepherd and Wedderburn act for Green Investment Bank in development of new Green Loan
UK law firm Shepherd and Wedderburn has advised the UK Green Investment Bank (GIB) on the development of its new product, the Green Loan and advised the bank in relation to its first deployment of the Green Loan in the pathfinder LED street lighting project with Glasgow City Council.
The Green Loan is being used to finance the first wave of the Council’s plan — the replacement of 10,000 street lanterns along its main arterial roads, leading into the city, at an expected cost of £6.3m. The new low-energy streetlights will pay for themselves through energy savings while generating further carbon savings for the city.
Glasgow City Council is the first UK local authority to utilise the UK Green Investment Bank’s specially designed loan to finance the switch to the low-energy lighting solution. The initiative, if adopted by other local authorities, is one that could help them save millions of pounds every year through a drastic reduction in energy and maintenance costs. The Green Loan will make it easier for local authorities across the UK to make the switch.
The Shepherd and Wedderburn team, led by partner Clare Foster, worked with GIB to document the Green Loan product and advised the bank in connection with the provision of the Green Loan to Glasgow City Council. Gregor Paterson-Jones, Managing Director of Energy Efficiency at GIB, commented:
“The Glasgow transaction is a major milestone in the development of the LED street lighting market and the use of the GIB Green Loan to fund these projects in a way that provides a real spend to save. Shepherd and Wedderburn have been instrumental in the project reaching financial close and developing the Green Loan and the standardised legal documentation.”
Clare Foster, Partner in the Finance and Restructuring Team at Shepherd and Wedderburn commented:
" We were delighted to work with the GIB team and are so pleased to see the first deployment of the Green Loan with Glasgow City Council. By using the "spend to save" model, the Green Loan not only provides a flexible financing option for local authorities across the UK but also provides a powerful tool to facilitate energy efficiency measures."
GIB has now produced a route-map which is available to help other local authorities and public bodies think about and progress a business case for transitioning to low-energy street lighting. GIB has also developed a financial model to accompany the business case and shape the loan so that interest and repayments are only made from forecast savings, and standardised loan documentation, developed with Glasgow, which should save other local authorities time and money in agreeing a finance package to convert their street lighting estates.
About Green Investment Bank
The UK Green Investment Bank was launched in November 2012. With £3.8 billion of funding from the UK Government, it is the first bank of its kind in the world. It is a "for profit" bank, whose mission is to accelerate the UK's transition to a greener economy, and to create an enduring institution, operating independently of Government.
GIB’s Green Loan offers UK local authorities a low, fixed-rate loan over a period of up to 25 years. It has been specifically designed to finance public sector energy efficiency projects, ensuring that repayments are shaped to fit within savings and alleviate already tight budgets by bringing immediate financial benefits to councils. The product can also include a development loan to help local authorities with the costs of progressing their plans.
The new lights are expected to use at least 50 per cent less energy than the old versions and will cut the council’s carbon emissions by in excess of 18,000 tonnes over the next 18 years. The energy saved by the LEDs is equivalent to the total electricity saved by 1,250 households.
The next phase of Glasgow’s LED lighting project will replace a further 60,000 street lamps and their columns, which is complimentary to the City Centre Future Cities Demonstrator Project. This incorporates intelligent lighting and focuses on the City Centre.