The Local Authority Green Deal provider model - The Climate by fjzhangweiyun

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									                                                Work in Progress




The Local Authority Green Deal provider model




Banking on Energy Efficiency:
Financing models for The Green Deal and
other large-scale housing programmes
LEEP
Changes to the energy efficiency sector




Economic
Activity




           2011                   2012         2013


                         CESP

                          CERT                 Green Deal & ECO

                  Warm homes/Warm Front

                         Solar PV programmes
Creating enough Green Deal capacity
                                   7.0           10.0



     £0.7b of first loss layer




                         2.7



        0.3



     10% GIB         Private     Gap that    Green Deal
     first loss      sector      can be      requirements
     layer           finance     supported
                                 by LAs
Local authority activity on Green Deal Provider model
 Multiple                            Developing
 areas of   Option      Business     regional
 dialogue   review      case         support         Procurement



             AGMA      West Sussex   Newcastle (5)   Birmingham (23)




                       London
                       boroughs
                                                                                      Finance
Local Authority Base Operating Model                                                  Payments
                                                                                      Other




                  Finance (Prudential
                  borrowing or reserves)
       LA
                                                Finance
                                                vehicle                                 Green Deal
                                                                                        + FIT
                                                                                        payments

                                           Delivery Partner
                      Contract
                                           Marketing
                                                              CS & AW
                                                              ECO
   Installation                                                                        Energy
   companies                                                                           Companies
              Install and manage                              PV Meter/deemed



                                            Benefits                      Green Deal Payments




                                                       6
   Base Green Deal LA joint approach

                          Anchor                          IPA          FoPA
                                                                                  Housing
                                                                                  Association
                                                                                   Other public
                                                                                   sector
                                £
                                          Contract                £         £         £         £


Anchor local authority                 Delivery Partner
• Set up and run                                                Partner Authorities
  procurement process                                           • Self financing with own prudential
• Manage ongoing                                                   borrowing
  programme                                                     • Initial; from start
                                                                • Follow on;when ready


         Client Authorities
         • Access neighbours
           prudential borrowing
         • Provide marketing support
         • Underwrite bad debt risks
Financing Programme – bridging finance requirement
                                                                                Illustrative
                              Bridging                        Long term

                         Project Finance                   Refinance


                         Local authority                   Capital markets

Certainty




            Deployment           Developing track record    Steady state     Time



                                             8
Local Authority Green Deal Warehouse
         LA retains         Top layer refinanced into warehouse
         first loss


                                Green Deal Warehouse

                      BCC                             Bank finance



                      NCC
                                                     Bond

                       ?
                                                      £3-500m


                       ?



           Uniformity
           requirement
Role of LAs for TGDFC

                          TGDFC


         Uses capacity                                     Expands capacity




      Customer authorities                           Financing authorities
• Delivers Green Deal customers   • Delivers Green Deal customers in batches
  individually                    • Supports TGDFC with first loss finance by using
• Uses TGDFC finance                them as banking warehouse
                                  • Uses financing margin to drive wider Green Deal
                                    social outcomes
                                  • Increases economies of scale on operational
                                    costs
                                       – Use of loan book management system from
                                          start
                                  • Aligned consumer credit strategy
                                       – Uses TGDFC credit policy
                                       – Uses same consumer contract
Summary


• Local authorities have a key role to play in financing the
  Green Deal as well as delivering
• The leading local authorities are already moving
• A banking warehouse has an important role to play
• Local authority model works well with TGDFC as the
  banking warehouse
• Next steps – roll out and ramp up

								
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