Shepherd and Wedderburn advises GIB on major local authority streetlight financing
UK Green Investment plc (GIB) has agreed to part-fund the biggest non-Private Finance Initiative (PFI) streetlighting project in the UK to date.
It is providing Kent County Council with a £10.2m Green Loan to help finance the local authority’s £40m streetlight conversion programme.
The project involves the replacement of 120,000 traditional streetlights with energy-saving LED alternatives and the installation of a central management system (CMS), increasing the efficiency of the local authority’s lighting stock while making it easier to manage.
The council estimates that the programme will reduce annual electricity consumption by 60% and cut maintenance costs, resulting in anticipated savings in excess of £5m per year. The new lights are also expected to avoid around 223,000 tonnes of greenhouse gas emissions during their lifetime.
Salix Finance has also provided funding for the project, the contract for which has been awarded to Bouygues Energies & Services. All conversions are expected to be completed by mid-2019.
GIB’s Green Loan has been specifically designed to finance public sector energy efficiency projects. Similar streetlighting arrangements are already in place with three other UK local authorities: Glasgow City Council; Southend-on-Sea Borough Council; and Stirling Council.
The Banking and Finance team at law firm, Shepherd and Wedderburn, advised on this latest deployment of the Green Loan, the largest to date, working closely with GIB on standardising the investment process to save the authority time and money in agreeing a financing package for this energy efficiency project.
Previously the team advised GIB in connection with the Green Loan pathfinder project with Glasgow City Council in February 2015 and six months later, it acted for GIB on the first Green Loan to an English local authority, with GIB lending to Southend-on-Sea Borough Council. That project was quickly followed by the signing of the Green Loan by Stirling Council.
Clare Foster, Head of Clean Energy at the firm and who led the Shepherd and Wedderburn team, commented:
“This is the fourth signing of the Green Loan, and it is clear that the ‘spend to save’ model, a key component of the loan is rapidly gaining recognition among local authorities throughout the UK as a powerful tool in helping them transition to a low carbon economy. It is enormously satisfying to once again see the successful deployment of the Green Loan.”
Iain Watson, Director, Energy Efficiency, GIB, said:
“Shepherd and Wedderburn has again provided expert legal advice on the Green Loan. Its team of specialists worked with us to standardise the finance documentation and streamline the investment process, making the Green Loan an attractive method for local authorities to finance energy efficiency projects, providing significant energy and financial savings.”
Edward Northam, Head of Investment Banking, GIB, said:
“Local authorities can run up significant energy bills, but making the switch to low-energy streetlighting helps reduce demand and costs while cutting greenhouse gas emissions. By embarking on this ambitious project, Kent County Council has joined a growing number of public sector organisations that are focusing on energy efficiency as they manage their economic and environmental responsibilities.”
Matthew Balfour, Cabinet Member for Environment and Transport, Kent County Council, said:
“By embracing LED lighting in one of the largest projects of its kind in the UK we can make significant savings to our electricity bill and cut our carbon footprint. We are extremely grateful to GIB for the loan which will allow us to continue this ambitious project.”