Pioneering bond enables solar panel project
10 September 2020
Local authorities in the UK are on the frontline of big issues like decarbonisation, but finding the money and time for such schemes against a backdrop of austerity and the ongoing Covid-19 pandemic is a major challenge.
Research funded by the Place-Based Climate Action Network (PCAN), which has a team based at the University of Leeds, found that residents want their local authorities to act on sustainable energy and were also attracted by the prospect of being part of a collective solution.
Now, a new model of financing devised by the University of Leeds is helping to bring the two together. Community Municipal Investments were devised by Dr Mark Davis, Associate Professor of Sociology, to encourage residents to fund local projects that help to tackle climate change. Individuals can invest as little as £5 in a council-issued bond that supports a specific infrastructure project. The bonds are administered by ethical finance group Abundance, and give savers more appealing interest rates than standard savings accounts.
The funding model, first piloted in Berkshire, is now being used by Leeds City Council in a £1m project to provide solar energy for up to 10 high-energy-consuming public buildings. The bond is due to be advertised to investors in late 2020.
When the solar panels are attached, the electricity generated will be used for the buildings themselves and will be cheaper than buying from suppliers, allowing investors to be repaid when the bond matures.
Reducing the administrative burden
Since the model uses Abundances internet-based platform to distribute the crowdfunding side of the bond, there are no administration costs for councils.
Dr Tom Knowland, Head of Sustainable Energy & Climate Change at Leeds City Council, explains:
We know our local residents want us to prioritise environmentally friendly and sustainable energy projects, and as a council we are very keen to do so we have set ourselves an ambitious target to be carbon neutral by 2030. But crowdfunding just hasnt been an option previously because it has been far too complex administratively for councils to manage.
He added: We wouldnt have got involved with this if it hadnt been for the University of Leeds. They came to us with the possibilities, and were able to do a lot of legwork that we simply didnt have the capacity to do.
A pipeline of projects
The project has been championed by the Leeds Climate Commission, a city-wide partnership that aims to bring the public, private and civic sectors together to drive climate action across Leeds. The Climate Commission is chaired by Andy Gouldson, Professor of Environmental Policy at the University of Leedss School of Earth and Environment, and was the inspiration for PCAN (which now boasts further Climate Commissions in Belfast and Edinburgh, as well as other places in the UK). PCAN is funded by the Economic Social and Research Council.
Kate Lock, Communications and Policy Officer for the Place-Based Climate Action Network, says: The research shows that residents need to know that local authorities are acting on their behalf. These new financial structures are absolutely key to unlocking investment and getting a pipeline of low carbon projects starting. Those are the ones that will ultimately help to turn things around for the environment.