The London Energy Efficiency Fund (LEEF) has reached a significant milestone after investing over £65 million in energy efficiency measures throughout the city during its initial funding cycle.
LEEF uses funding from the European Regional Development Fund (ERDF) and the London Green Fund to invest in public, private and voluntary sector buildings and infrastructure. After the initial fund was fully committed in August 2014 – 18 months ahead of schedule – an additional £11.5 million was provided by the mayor’s London Green Fund.
This has now been fully committed following a £14.5 million deal agreed earlier this week to invest in the installation of a heat network for over 15,000 homes on the Greenwich Peninsula.
The fund has been managed by Amber Green, a division of specialist infrastructure fund manager Amber Infrastructure, and has enabled £470 million of projects throughout London. These have improved energy efficiency in over 76 public and private buildings across nine London boroughs
Leo Bedford, director of LEEF at Amber Green, said: “Since 2011, we have seen a huge rise in demand from public and private sector landlords in London to make the residential and commercial real estate they own and manage more energy efficient.
“Amber has worked with a number of public and private sector partners across the Capital to achieve a 30% average reduction in energy consumption across LEEF’s portfolio, dramatically reducing the cost and carbon output in some of London’s most iconic real estate.”
Unlike more common structures like loans, each LEEF-funded project accrues regenerated capital which is then recycled from initial investments back into the pot to ensure investment in energy efficiency continues. This has already triggered the next investment cycle, which will run to August 2018.
The funding can also be used for a range of investments, usually of between £3-10 million, but also able to consider investments as low as £1 million. These are however considered on a case-by-case basis. This serves to address a key challenge outlined at a recent round table discussion, in which members of the energy management sector claimed it was difficult to attract investment for small retrofit projects.
Bedford told Clean Energy News: “Many of the recipients in Amber’s experience have been priced out of the market for commercial lending. These types of projects don’t usually fit the risk or lending profile that the banks would normally give money to, plus the fact that they are a relatively small amount each time. LEEF is helping to fill that funding gap which was previously restricting the shift in the movement to a low carbon economy, particularly in London.”
LEEF also encourages project sponsors to outline how best to deploy the money, suggesting it can be used across a number of buildings or a suite of different energy efficiency measures and technologies. The cash can also be used for projects gaining subsidy support, such as solar or technologies that fall under the Renewable Heat Incentive.
Speaking at last week’s round table event – hosted by CEN – Alex Rathmell of energy consultancy Minimise Solutions also raised this as a challenge for the sector. He said: “Every single project that goes ahead that is just a single technology upgrade is a missed opportunity to do a bigger, more ambitious deep retrofit project.”
LEEF will continue to re-invest recycled capital generated from returns on initial seed investments maturing over the course of the next investment cycle to August 2018.