Highland Council secures largest ever Salix loan in Scotland to fund energy improvements

27th May 2019

The Highland Council has secured a £3.5m interest-free loan from Salix Finance to invest in energy efficiency measures across the Council estate. The loan, which is the largest Salix has awarded in Scotland, match-funds the Council's self-financing investments in energy efficiency to create a £7 million Energy Efficiency Fund.

The fund is ring-fenced for investment in projects that will reduce the Council's energy spend and carbon emissions. This will include switching internal and external building lights to efficient LED lighting, installing Solar Photovoltaics, and upgrading inefficient oil boiler systems.

Salix Finance is an independent organisation that provides interest-free loans for investment in improving energy efficiency. Salix is funded by the Scottish Government, the Welsh Government and the Department of Business, Energy and Industrial Strategy and provides finance to public sector bodies to reduce their carbon emissions and energy spend.

Work is being undertaken by Council officers to refine the projects and determine the best sites to maximise financial and carbon savings. Thanks to these upgrades, the Council forecasts a potential saving of over £600,000 per annum on energy bills and annual carbon savings of over 1,600 tonnes of carbon dioxide equivalent.

Lighting and heating upgrades are also anticipated to make considerable improvements to the working and learning environments for both staff and school pupils.

Councillor Margaret Davidson, Leader of the Council, said: "We are delighted to have secured this loan from Salix Finance. Investing in energy efficiency measures across our Council estate is vital to both our financial and environmental sustainability."

She added: "The Council recognises that it has a vital leadership role in terms of reducing the region's climate change impact to support both national and global emissions reduction targets. This funding from Salix, alongside work which has already been programmed, will allow us to go further and faster in terms of mitigating our impact."

Councillor Gordon Adam, Chair of the Commercial Board, said: "Advice from Procurement Scotland has indicated that electricity prices are going to rise significantly by 2020/21. The Council must reduce our consumption of energy to protect us from future increases to our energy bills and reduce this budget pressure, therefore helping us protect our frontline services.

"Securing this interest-free loan enables us to significantly increase the amount of energy efficiency work we can undertake. It is a really exciting opportunity and an important component of our Energy Strategy, alongside reducing energy use through behaviour change and increasing the Council's renewable energy generation."

The Council will operate the loan as a ‘Recycling Fund', whereby savings made from these projects will be ‘recycled' back into the Energy Efficiency Fund for investment in additional energy efficiency measures. The Council can continue to ‘recycle' this funding, without interest, for as long as it has projects that meet Salix criteria to reduce carbon emissions and energy spend.

To date, Salix has worked with the public sector in Scotland to invest over £51 million in energy efficiency projects, saving an estimated £146 million over the lifetime of the projects.

A Highland council paper on lighting in February 2018 said, "The LED replacement programme has seen the number of lights converted across the Highlands rise from 7,000 units in 2015/2016 to 12,500 in 2016/2017 with a projected figure for the end of 2017/2018 of 19,000 which represents 35% of our lighting stock. The programme has reduced our electricity consumption by 25% saving 3.5 million kWh per year and is helping offset energy price increases.

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1 March 2018 - Highland council

Highland Council to generate income through solar energy

The Highland Council is to progress with plans to generate over £4 million profit and significantly reduce its carbon emissions by installing solar panels on its estate.

The Council’s Corporate Resources Committee yesterday (28 February 2018) approved a self-financing project using £2.3 million of capital to install 2.5 megawatts of solar panels on sites across the Council estate. The portfolio is estimated to generate net profit of £4.01 million over the course of 20 years. This is after repayments for the £2.3 million investment have been made, and accounting for maintenance, insurance, fees and charges.

Solar Photovoltaics, or Solar PV for short, is a technology that converts daylight into electrical power. Energy generated will be ‘sold’ to power Council buildings in close proximity.

Net profit can be achieved each year for the anticipated 20-year lifespan of the panels. It will also reduce the organisation’s annual carbon footprint by an estimated 1,000 tonnes per year.

It is hoped that this will be the first of multiple projects to generate income by from renewable energy on the Council estate. Solar has been selected for the first project as it is most efficient for the desired time scales, relatively straightforward to deploy, reliable, and market proven.

Chair of the Corporate Resources Committee, Cllr Alister MacKinnon said: "The Administration is committed to looking at new ways to generate income, make savings and for the Council to become more commercial so I am glad the Committee has given the go-ahead so work can progress."

The Council’s Commercial & Continual Improvement Team have been working closely with the Redesign Board to identify opportunities for how the Council could both generate income and reduce expenditure through energy related opportunities

Chair of the Redesign Board, Cllr Bill Lobban added: "This is a fantastic project which will bring substantial income to the Council. Staff and Members of the Redesign Board have done a huge amount of work in bringing these plans to fruition and I look forward to yet more innovative projects coming forward."

The next stage of the project will see the Commercial & Continual Improvement Team work with the Energy and Sustainability Team, Councillors and building users to confirm the optimal locations for the panel sites and coordinate implementation.

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