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How important is the Co-op Bank’s withdrawal from renewable energy investment?

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This week the Co-operative Bank revealed it is halting new investment in renewable energy, removing one of the main sources of funding for independent and community projects. But by harnessing innovative new sources of finance, we can fill this funding gap.

Back in 2007, before the US sub-prime mortgage crisis triggered a global credit crunch and recession, the Co-op announced its intention to invest £1 billion in UK energy efficiency and renewable projects by 2013.

And by all accounts, a huge amount has been achieved over this period. The Co-operative Group’s website says that since 2007 it has committed over £800m to renewable energy, with a focus on small and medium-scale independent initiatives. These are not inconsequential sums, and have helped finance some of the UK’s best co-operative projects, like the recently completed community wind farm at Loch Carnan in the Western Isles.

Click here to read The Guide to Limitless Clean Energy 2013

However financial difficulties at the bank now mean the £1 billion target is unlikely to be met. On Monday, the Times reported that whilst all existing commitments will be honoured, no further corporate lending will take place until further notice. Instead, the bank will focus its efforts on retail customers and small businesses.

In the end then, the financial crisis caught up with the Co-op. The bad loans inherited from its buy-out of Britannia building society in 2009 have been compounded by new capital requirements designed to strengthen the banking sector. As a result, the Co-op bank recently admitted to a £1.5 billion capital shortfall that will be met through a ‘bail in’ of the bank’s investors alongside the sale of other assets held by the wider Co-op Group. In this context, further lending to renewables or anything else has become hard to justify.

But what’s in the best short-term interest of the Co-op is not in the long-term interest of renewable energy development in the UK. Earlier this year, energy secretary Ed Davey said he wants to see “a community energy revolution” in the UK, and energy minister Greg Barker described his vision of the ‘big six’ becoming the “big sixty thousand”. Delivering these objectives will be all the harder without Co-op investment on the scene.

How important is the Co-op Bank’s withdrawal?

To understand the significance of the Co-op’s move, it’s worth looking at a few key numbers.

The government estimates £75 billion is needed over the next 10 years to meet our renewable energy targets (and a further £35 billion is needed to upgrade our electricity transmission and distribution network). Whilst much of this will come from utilities and institutional investors funding large-scale offshore wind farms, much will also need to come from lending to small and medium-size projects.

Decent estimates of just how much this might be are hard to come by, in part because small and medium-sized projects come in many different forms and structures, from household solar PV systems to community wind turbines, farm-owned anaerobic digestion plants, and local authority joint ventures with larger independent generators. MPs this week said the government should carry out an assessment of the generation potential across these categories.

Nonetheless, as a broad indication of the amount of new renewable capacity that communities alone could build over the next few years, a recent study has suggested 3.5 gigawatts (GW) – equivalent to three nuclear power stations. That would require at least £3.5bn investment (1 megawatt (MW) of onshore wind capacity costs around £1m – see here).

The Co-op Bank was this week acknowledged by MPs as one of the best community energy finance providers in the country (along with Triodos), and if it were able to continue lending at the rate it did during the first half of 2012 (when it invested £232m in 17 projects), it could meet this £3.5 billion need in under eight years.

However it now can’t do this. And the prospect of other banks stepping in to fill the void appears slim. For whilst bigger banks certainly do invest in renewable energy, they tend to focus on larger-scale projects which are perceived as lower risk.

How can this funding gap be filled?

In Germany, an important reason for the extraordinary success in building community-scale renewables has been the provision of loans from KfW, the state-owned development bank. Unsurprisingly, many are calling for the UK’s new Green Investment Bank to fulfil a similar role here, for example by providing junior debt to attract private sector senior debt. This could be an important move.

Here at Abundance, we believe an additional way of levering new and additional finance is through crowd financing, where thousands of ordinary citizens come together to fund specific renewable projects of their choosing, benefiting from relatively low-risk, inflation linked returns. Our target is to raise £10m in 2013 and £1 billion within 10 years.

Whilst it’s important to stress that such investments are not risk free (Abundance debentures are long-term investments, returns are variable, and you may not get back all of your original capital) they could offer a lifeline to small and medium-sized renewable projects in the coming years.

The importance of other issues

As a final thought, it’s worth stressing here that there are a couple of other vital actions the government needs to take to facilitate ongoing financing of independent and community energy, whether by the Co-op, other banks, or the crowd.

First, communities in particular struggle to finance the initial stages of project development such as getting planning permission. Whilst there is some help available for these “at risk” costs, it is not sufficient and more must be done.

Second, there is a gap in the policy framework for mid-scale projects which must be filled. Smaller projects are guaranteed a fixed income through the feed-in tariff, and utility scale projects benefit from more complex market-based mechanisms that they can navigate at low-cost. But projects between these scales are at serious risk of not being able to secure a reliable enough income stream to offer the certainty investors need. A new framework is sorely needed here.

Take these steps, and we might not miss the Co-op’s money so much after all.

Sam Friggens is a writer for renewable energy funding platform Abundance Generation. You can follow him on Twitter: @Sam_Friggens. This article originally appeared on Abundance’s blog

Further reading:

Co-op to ‘honour all existing commitments’ in lending to renewables sector

We’re still ethical, says Co-op Bank chief after unveiling rescue plan

Abundance Generation: crowdfunding the future of energy

Top 10 reasons to invest in renewable energy projects

The Guide to Limitless Clean Energy 2013

Economy

How Going Green Can Save A Company Money

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going green can save company money
Shutterstock Licensed Photot - By GOLFX

What is going green?

Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.

The first step in going green

There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.

Making needed changes within the company

After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.

Reducing the common paper waste

paper waste

Shutterstock Licensed Photo – By Yury Zap

Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.

Make money by spreading the word

Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.

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Energy

5 Easy Things You Can Do to Make Your Home More Sustainable

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sustainable homes
Shutterstock Licensed Photot - By Diyana Dimitrova

Increasing your home’s energy efficiency is one of the smartest moves you can make as a homeowner. It will lower your bills, increase the resale value of your property, and help minimize our planet’s fast-approaching climate crisis. While major home retrofits can seem daunting, there are plenty of quick and cost-effective ways to start reducing your carbon footprint today. Here are five easy projects to make your home more sustainable.

1. Weather stripping

If you’re looking to make your home more energy efficient, an energy audit is a highly recommended first step. This will reveal where your home is lacking in regards to sustainability suggests the best plan of attack.

Some form of weather stripping is nearly always advised because it is so easy and inexpensive yet can yield such transformative results. The audit will provide information about air leaks which you can couple with your own knowledge of your home’s ventilation needs to develop a strategic plan.

Make sure you choose the appropriate type of weather stripping for each location in your home. Areas that receive a lot of wear and tear, like popular doorways, are best served by slightly more expensive vinyl or metal options. Immobile cracks or infrequently opened windows can be treated with inexpensive foams or caulking. Depending on the age and quality of your home, the resulting energy savings can be as much as 20 percent.

2. Programmable thermostats

Programmable thermostats

Shutterstock Licensed Photo – By Olivier Le Moal

Programmable thermostats have tremendous potential to save money and minimize unnecessary energy usage. About 45 percent of a home’s energy is earmarked for heating and cooling needs with a large fraction of that wasted on unoccupied spaces. Programmable thermostats can automatically lower the heat overnight or shut off the air conditioning when you go to work.

Every degree Fahrenheit you lower the thermostat equates to 1 percent less energy use, which amounts to considerable savings over the course of a year. When used correctly, programmable thermostats reduce heating and cooling bills by 10 to 30 percent. Of course, the same result can be achieved by manually adjusting your thermostats to coincide with your activities, just make sure you remember to do it!

3. Low-flow water hardware

With the current focus on carbon emissions and climate change, we typically equate environmental stability to lower energy use, but fresh water shortage is an equal threat. Installing low-flow hardware for toilets and showers, particularly in drought prone areas, is an inexpensive and easy way to cut water consumption by 50 percent and save as much as $145 per year.

Older toilets use up to 6 gallons of water per flush, the equivalent of an astounding 20.1 gallons per person each day. This makes them the biggest consumer of indoor water. New low-flow toilets are standardized at 1.6 gallons per flush and can save more than 20,000 gallons a year in a 4-member household.

Similarly, low-flow shower heads can decrease water consumption by 40 percent or more while also lowering water heating bills and reducing CO2 emissions. Unlike early versions, new low-flow models are equipped with excellent pressure technology so your shower will be no less satisfying.

4. Energy efficient light bulbs

An average household dedicates about 5 percent of its energy use to lighting, but this value is dropping thanks to new lighting technology. Incandescent bulbs are quickly becoming a thing of the past. These inefficient light sources give off 90 percent of their energy as heat which is not only impractical from a lighting standpoint, but also raises energy bills even further during hot weather.

New LED and compact fluorescent options are far more efficient and longer lasting. Though the upfront costs are higher, the long term environmental and financial benefits are well worth it. Energy efficient light bulbs use as much as 80 percent less energy than traditional incandescent and last 3 to 25 times longer producing savings of about $6 per year per bulb.

5. Installing solar panels

Adding solar panels may not be the easiest, or least expensive, sustainability upgrade for your home, but it will certainly have the greatest impact on both your energy bills and your environmental footprint. Installing solar panels can run about $15,000 – $20,000 upfront, though a number of government incentives are bringing these numbers down. Alternatively, panels can also be leased for a much lower initial investment.

Once operational, a solar system saves about $600 per year over the course of its 25 to 30-year lifespan, and this figure will grow as energy prices rise. Solar installations require little to no maintenance and increase the value of your home.

From an environmental standpoint, the average five-kilowatt residential system can reduce household CO2 emissions by 15,000 pounds every year. Using your solar system to power an electric vehicle is the ultimate sustainable solution serving to reduce total CO2 emissions by as much as 70%!

These days, being environmentally responsible is the hallmark of a good global citizen and it need not require major sacrifices in regards to your lifestyle or your wallet. In fact, increasing your home’s sustainability is apt to make your residence more livable and save you money in the long run. The five projects listed here are just a few of the easy ways to reduce both your environmental footprint and your energy bills. So, give one or more of them a try; with a small budget and a little know-how, there is no reason you can’t start today.

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