Institutional investor Phoenix Group and Energy Systems Catapult, a net zero energy innovation specialist, have called on the UK to alter its local energy project financing approach to achieve its net zero transition and encourage green investment. In a jointly published report, the companies concluded that place-based financing (the key to reaching net zero at a local level) is hamstrung by fragmented planning, higher borrowing costs in certain regions, and the need to strengthen investor confidence. The report stated that place-based models could potentially halve costs and generate significant socio-economic benefits. It pointed to estimates from Innovate UK, part of the country’s innovation agency, that savings of up to £137 billion (US$177 billion) in investment costs could be achieved, as well as wider savings of £431 billion from factors such as energy savings and wider societal benefits such as better air quality. The report sets out a four-stage framework to confront these challenges. This includes prioritising projects based on Local Area Energy Plans (LAEPs), and developing engagement and strategic partnerships between local authorities, businesses, and financial institutions to secure long-term support. “Local authorities are on the frontline of the UK’s Net Zero transition but delivering change requires the right investment [and] too many projects are stuck on paper because funding mechanisms do not match local needs,” said Tom Elliott, Senior Energy Transition Advisor – Place at Energy Systems Catapult. “The message is clear: the UK’s net zero ambitions will not be met through fragmented, project-by-project funding. Without institutional investors contributing to place-based financing, critical decarbonisation projects risk being left behind – along with the communities that stand to benefit from them.”
Local authorities play a crucial role in achieving Net Zero, but many face challenges in securing the investment required to turn plans into reality.
A report from @EnergySysCat and @PhoenixGroupUK outlines a roadmap to unlock regional funding and fast-track decarbonisation. pic.twitter.com/rc6POTlRUe
— Energy Systems Catapult (@EnergySysCat) March 6, 2025
