Salix energy efficiency loans driving efficiency in the UK Public Sector

Paul Taylor
We are supporting Salix Finance as their technical contractor, assessing energy efficiency and renewable energy projects

Salix was established in 2004 as an independent, publicly funded company, dedicated to providing the public sector with interest-free loans for energy efficiency projects. Upfront capital is a common barrier for public sector organisations seeking solutions that reduce their energy consumption. Salix removes this barrier by making this capital accessible.

We have been working with Salix for 8 years helping drive a new business model which has seen over 12,000 public sector projects funded through a shared fund of £300m, resulting in estimated savings of £1.1 billion over the lifetime of the measures.

Through our collaborative partnership with Salix we have helped them design and deliver the processes which have enabled this large-scale engagement of projects in energy efficiency.

But it’s not just the loans that bring about the change. It’s knowing what technologies to invest in.  New technologies are coming on line all the time, systems are becoming more efficient and costs are coming down as economies of scale are reached with some of these technologies. Our expertise has provided Salix the assurance that the technologies being suggested will work and will pay back the loan.

Another important aspect is the bundling of the technologies.  You can’t assume that you should invest in all of these energy efficiency measures on a technology list because they may not all work well together. You need sound engineering expertise to understand the issues.

We are in a unique position. Our team has the most in-depth and extensive project knowledge in this field due to our eight-year collaboration with Salix. We have programme managed over 12,000 transactions which involved assessing the technical feasibility of technologies and carrying out financial and project risk assessments.

This is a really good example of bringing the Group’s expertise to this partnership. We provide technical appraisals through Faithful+Gould with additional support from Atkins and this is programme managed through Faithful+Gould. Salix is one of our most important clients in the energy efficiency space. All government departments have heard of Salix, and they are very active in the Public Sector.

The way the scheme works is illustrated in the diagram below.

Capital is provided by Salix, to be spent on energy saving projects with paybacks of up to 5 years. The financial savings delivered by the projects are returned to the fund allowing further spending on projects.

Over 100 technology types are supported by the funding programmes including building energy management systems, cavity wall insulation, combined heat and power systems, evaporative cooling, heat recovery systems, LED lighting, lighting controls, loft insulation, pipework insulation, server virtualisation, and variable speed drives.

Salix funding includes all public-sector organisations in the UK, including schools, higher and further educational institutions, emergency services, the NHS, leisure centres, and local authorities.

There is a growing focus to commit more resources to increasing energy efficiency and driving down energy costs which we continue to address in collaboration with Salix.