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Salix Finance; Interview with Paul Smyth, Head of Programmes

by Fraser Wallace

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Salix Finance
is a Government funded organisation set up to enable public sector investment in energy efficient technologies. [Note 1]

The programme has delivered interest free loans for more than 10 years and has financed over 13,000 energy saving projects, valued at £420million. Salix continues to have funding to support the public sector in delivering further projects.

Here, Paul Smyth, the Head of Programmes, answers some frequently asked questions.


1. What was the motivation for the creation of Salix Finance?

The public sector was recognised as a key element in delivering the UK’s Climate Change Programme, and their engagement on emission reduction was considered essential if the UK was to deliver its targets of a 20% CO2 emissions reduction by 2010.

Although the public sector emitted a relatively small proposition of UK emissions, public bodies had the opportunity to take a clear leadership role by influencing carbon savings. There was also a growing need to accelerate the update of low carbon technologies in the sector. The Carbon Management programme ran by the Carbon Trust demonstrated an appetite to engage in such work, however the public sector appeared to be hampered by a lack of consistent funding available for capital purchases.

Unlike the private sector, the public sector was not able to benefit from some of the existing financing mechanisms designed to accelerate the uptake of low carbon technologies, such as Enhanced Capital Allowance (ECA’s) and Action Energy Loans and so Salix was established.

Salix Finance was therefore established in 2004 as a pilot programme of 19 clients and it was their success that gave government funders the confidence to reinvest in further programmes

2. You mentioned Salix Finance was created as a pilot scheme. Can you give some indication of how the organisation has grown from there?

From the pilot of 19 local authority clients, the company has now worked with over 1,500 clients throughout the UK.

The funding has enabled the work with local authorities to provide internal loans for energy efficiency projects within their estate and local schools. Recycling Funds were established and financial savings delivered by these projects returned to the fund further projects.  Reduced energy bills helped to protect front line services.  Focus was on capital with paybacks of less than 5 years.

The organisation has expanded into supporting other areas of the public sector with programmes for universities, colleges and hospitals and more recently academy schools.

In terms of project value, the average total project cost has increased from approximately £10,000 to £200,000. Examples of large scale projects include a CHP solution costing £6.2million with the University of Liverpool and a £4.3million street-lighting programme with Bournemouth Borough Council. The latter project is expected to make £17million savings across its lifetime.

Since 2004, Government funders have invested in Salix, which will generate £1.4billion lifetime savings. For every £1 invested in Salix funded projects, on average £4 saved.

3. How does Salix Finance support clients, above simply providing capital injection?

The relationship between Salix and the public sector is now very strong and well established. In particular, our website has been hugely successful in promoting this priority policy area of the Government.

The knowledge sharing facility has over 300 project knowledge slides for public sector clients to share. There are also over 60 detailed case studies that are openly available.

We regularly arrange regional workshops to support current and prospective organisations. This gives organisations a chance to present successful projects and provides support for clients looking to develop their projects and associated savings.

When clients submit applications we always try to give feedback on their business cases to ensure successful delivery and reduced risk.

When we have hosted technical workshops they have always been on topics where interest is expressed by the public sector bodies, for example, laboratories and street lighting.

We are keen to promote the proactive work of our clients and there are a number of excellent education-focused films that highlight the energy saving potential for schools.  Salix led Ministerial visits, such as visit to schools, always involve the students as well as the teachers. It is always our aim to showcase the good work they have been undertaking on their wider energy and carbon agenda, not just the Salix projects.

We regularly celebrate their successful work by tweeting about great projects and their associated saving as well as regular news updates.

4. Your activities are targeted at the public sector. Is there any means for private sector companies to support the more social goal of delivering energy efficiency in public buildings?

Yes indeed, be it a consultant, contractor or supplier, all have the potential to work with the public sector to help them develop and deliver Salix funded projects.

Our online loan application process is completed in five simple steps and private sector bodies can apply on behalf of the public sector clients.

We provide guidance to private sector organisations and have a page on our website dedicated to advising them on the use of Salix. This can be found here link.

Our funding appeals to a very wide supply basis. We recognise that technology has evolved since 2004 and Salix currently finances over 120 energy efficient measures. These are a blend of replacing old with new technology, such as boilers and lighting and also increasing the efficiency of existing systems and building stock, such as heating controls, insulation and variable speed drives.

As well as the established technologies, such as the above, clients are moving into more innovative areas such as highly efficient ICT data centres and laboratories. These are particular areas of high intensity energy use and, as such, provide significant savings and potential for quick paybacks.

In areas such as these, the funding is not just used for the replacement of equipment. It can be used to take new builds beyond their normal level of efficiency enabled by existing budgets, to go to the highest possible level of energy efficiency.

Therefore the private sector has a strong role to play. Lastly, Salix continues to have funding to support further projects and more information can we found when you visit our website

Note 1: Salix is funded by the Department for Energy and Climate Change, the Department of Education, the Welsh Assembly Government and the Scottish Government and provides funding for energy efficiency projects in England, Scotland and Wales.  

Case studies and links to Salix Finance funded projects:

The University of St Andrews used a 100% interest free, funding from the Revolving Green Fund (RGF) and match funding to deliver over £2.4m of energy efficiency projects. Measures adopted included; boiler replacements, motor controls, CHP plant, insulation and lighting. Savings amounted to over £615,100 in annual energy costs. (Link to project data, here)

Frimley Park Hospital NHS Foundation Trust used a £907,192 Salix loan funding and match funding to implement 17 energy efficient projects. Measures adopted included lighting, motor controls, heat recovery and insulation. Together, these energy efficiency projects will save them over £255,700 on annual energy costs. (Link to project data, here)

Northamptonshire County Council used a 100% interest-free loan of £264,064 to reduce energy waste in 13 schools. They utilised T5 and LED lighting, replacement boilers, burner management, pipework insulation, hot water heaters and Building Energy Management Systems (BEMS). Annual savings from this initiative are over £41,600. (Link to project data, here)

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Tuesday, March 1st, 2016