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The Climate Group LED Street Lighting Workshop: Overcoming the Financial Barriers 28 th April 2014
The Climate Group
LED Street Lighting Workshop:
Overcoming the Financial Barriers
28th April 2014
An overview
• 7.4 million streetlights in the UK with less than 10% using low energy LED
• 30% of a local authority’s energy bill is for streetlighting – 50-80% savings
are possible for each authority
• £200m annual energy cost saving possible
• Streetlights currently emit 1.3m tonnes of CO2 – equivalent to > ½ m cars
• Finance models exist – self-funding, PPPs, ESCOs and leasing, but take-up
is poor
The prize is huge, so what are the barriers to widescale implementation?
What can we do to jump-start a transformational change in LED adoption?
LED Street Lighting Workshop
Section Timing Content Format
Introduction and background to
the workshop
9:00 – 9:20 Short welcome and introduction.
Background and objectives of the workshop
Current finance barriers/ issues
to LED adoption
9:20– 10:10 Discussion on the current finance issues that public
authorities face in funding LED schemes
Examine the role individual risks (e.g. performance,
cost, energy prices) are playing and potential
allocations of them
Currently available funding
sources and models
10:10 – 10:45 Group discussions on sources of funding:
characteristics and difficulties involved in each, with
feedback to the wider group
Workgroups
Tea/ Coffee Break 10:45 – 11:00
Potential solutions to finance
issues/ improvements to current
models
11:00 – 11:30 Group discussions on how funding structures/
sources could be used to address constraints and
improvements that would assist implementation
Workgroups
Workgroup feedback and wider
discussion on solutions
11:30 – 11:50 Groups to feedback with wider discussion Round table
Summary of key messages and
wrap up
11:50 – 12:00 Run down of key messages and conclusions of
workshop
Lunch 12:00 – 1:00
Introductions, Background
and Objectives
The Climate Group – Who we are
The Climate Group is an award-winning, international non-profit. Our goal is a
prosperous, low carbon future. We believe this will be achieved through a ‘clean
revolution’: the rapid scale-up of low carbon energy and technology.
Our mission is to inspire and convince leaders at the top of government,
business and society to reduce carbon emissions now and accelerate the
transition to a vibrant low carbon economy.
The Climate Group
The Clean Revolution
Our Clean Revolution
is truly GlobalChina
India
Australia
North and
South
America
Europe
Lighting and Climate Change
The case for energy efficient LED lighting
Lighting accounts for 19% of
global electricity use
*
19%
81%
Lighting Other electricity use
Lightsavers and our Rio+20 call in 2012
Focus on Cities – Call for large scale LED adoption
*or as energy efficient
LED Trials Around the Globe
Kolkata, Toronto, New York,
London, HK, Sydney,
Adelaide, Guiyang, Haldia,
Mumbai, Tianjin
2020:
Aim of all public
lighting being
LED by 2020.’’
2015:
All new public
lighting LED*
LED products have now reached
technological maturity for applications
such as street lighting
Accelerating Adoption of LED Street Lighting
Removing local barriers to adoption
— 9
Consultation Participants
1. Current users of LED street lighting : Key lessons learned, best practices
2. New Adopters: Cities, States and Regions
3. Commercial and Policy Stakeholders
4. Solution Providers
Areas of Focus
Examples will include;
• LED financing and risk allocation
• ‘Intelligent’ and ‘Smart’ Luminaires
• Smart controls, smart cities, future-proofing
• Procurement Process
• Public perception / reaction
• International standards, and warranties
• Quality thresholds
• Regional aspects
• Trialling LEDs
Accelerating Adoption of LED Street Lighting
Local Barriers
Key dates:
Global Workshops / webinars and
consultations:
Apr 2014 London / 10th Anniversary
Apr 2014 India – Action planning
May2014 Dubai workshop
Jun 2014 Brazil – Sao Paulo
Sep 2014 China / HK
Oct 2014 North America
TBD Singapore / Malaysia
TBD India
TBD Brussels / Eindhoven
Summary Procurement Guidance Report
The Climate Group
10th Anniversary Celebrations
Workshop Objectives
1. Identify the finance related barriers that are holding back the uptake of LED technology
Bring together a full range of perspectives from the industry to….
2. Judge to what extent current funding models and support structures are able to overcome these barriers
3. Develop ideas for modifications to existing models, new funding models, or additional support that will help
overcome the barriers that exist
A summary of conclusions will be shared and discussed with wider
stakeholders to push the industry forward
Financial Barriers to Adoption
Reducing costs for LED solutions, improving technology and rising energy prices
have significantly improved the economics of installing LED street lighting
Typical ‘pay-back’ periods range from 5-15 years
Length and extent of guarantees has strengthened
When combined with environmental and social benefits, a boom in LED take-up has
been expected for some time. However, major UK installations have been largely
limited to PFI highways contracts
Background to Financial Barriers
Need for initial finance to cover up-front installation and project development costs
has been a major barrier, particularly given pressures on local finances
The nature and size of funding is heavily dependent on type of scheme undertaken:
Barriers and solutions can often specific to type of scheme
Risk allocations can be tailored to suit the requirements and individual situations of
local authorities
Key lessons on project development and specification, risk transfer, and making
best use of all finance sources should be learned from international ‘early adopters’
Background to Financial Barriers
Retrofit Replacement System Upgradevs vs
Current Barriers
What are the finance and other barriers that are holding back greater adoption?
Are constraints focused on short term capital requirement or long term
affordability?
How are they influenced by delivery structures, including PPP contracts?
Are these barriers common across authorities and between retrofit vs new
installation solutions?
Key Risks and Allocation
What are the key risks involved and are any of them proving particularly
problematic for adoption?
What is the appropriate allocations of these risks between different parties?
How can these allocations be adapted for the requirements of individual
authorities?
Current Finance Barriers to Adoption
Currently Available Funding
Models and Sources
A range of solutions to overcome this barrier that have seen significant
development:
Self-funding from local budgets
External funding from public sector sources (e.g. GIB, SALIX, PWLB) that are
on-balance sheet
Private sector finance, including PPPs, that can be off-balance sheet and
cover retrofit, newbuild, street maintenance and system upgrade
ESCOs, including led by manufacturers/ energy companies, that may take
energy price risk
Each has advantages and disadvantages - the most appropriate model depends on
the circumstances of the procurer and the type and size of scheme undertaken
Background to Financial Barriers
Are there different models that can be used for self-financing schemes?
What external sources of finance are currently available?
What are the key differentiating characteristics of each model?
How are the key risks dealt with under different funding routes?
What circumstances would make the different funding models appropriate (e.g.
scheme size/ structure, financial position of authority)?
How well do the different models meet authority requirements?
What are the key difficulties with each funding model/source?
Current Funding Models and Sources
Solutions to the Financial
Barriers
How could the current barriers that are holding back adoption be overcome?
Are the current range of funding structures available enough?
What adaptations to the current models would make them more attractive? Are
these changes realistic and how can they be achieved?
Are there ‘new’ financing structures required? If so, what sort of structures and
how could these be developed?
What support do authorities need in implementing LED solutions, particularly in
relation to finance?
What strategies could authorities adopt to help overcome the barriers?
Solutions to the Financial Barriers
For further information please contact:
Mark Kenber, CEO;
Email: [email protected]
Dr Ben Ferrari, Climate Group;
Email: [email protected]
Paul Davies. PwC;
Email: [email protected]
Peter Brown, PwC;
Email: [email protected]
Thank you for attending:
The Climate Group
10th Anniversary Event
