- GIB and Aviva Investors announce £1.1m investment in Cheltenham General Hospital, the fourth NHS energy efficiency project backed by GIB
- GIB publishes a new report showing how the NHS can reduce its energy costs by 20 per cent (£150 million) a year
- GIB announces a programme of support for the NHS and allocates several hundred million pounds to finance new projects
The UK Green Investment Bank (GIB) has today announced its fourth investment in the NHS. GIB will be providing £1.1m to finance the £3.1m energy efficiency project with Cheltenham General Hospital, managed by Gloucestershire Hospitals NHS Foundation Trust (the Trust).
This has mobilised an additional £1.1m of private sector investment, from the Aviva Investors REaLM Infrastructure Fund. The project will also receive a £900,000 grant from the Department of Health.
The investment is being made by the Aviva Investors REaLM Energy Centres Fund, in which GIB is the cornerstone investor. GIB has committed £50m to the fund, to make investments in small scale energy efficiency projects.
The project will finance the installation of a 1.3 MW combined heat and power (CHP) unit at Cheltenham General Hospital. The project is structured so that the Trust does not have to make any upfront capital investment. This 'spend to save' model means that the repayments will be paid for from the cost savings generated by reducing electricity consumption. The project will save the Trust money from day one.
As well as reducing the Trust's energy costs by 40 per cent, the project will reduce the Trust's greenhouse gas emissions by 30 per cent.
As one of the most energy intensive organisations in the UK - spending more than £750 million on energy costs each year - the NHS is actively exploring ways to reduce energy use and save money. In response, GIB has created the Health Sector Energy Efficiency Financing Programme to help Trusts and Health Boards finance energy efficiency measures. GIB estimates that energy efficiency measures could cut the current energy bill by up to 20 per cent, £150 million each year.
GIB has today published a report 'A healthy saving: energy efficiency and the NHS' which sets out the scale of the opportunity and the help GIB can offer.
Investment in energy efficiency could provide the NHS with more reliable and resilient systems that would significantly reduce costs and operating risks. It is estimated that the capital investment requirement in the NHS estate could be up to £1.5 billion.
The NHS has already adopted a target to cut its greenhouse gas (GHG) emissions by 10 per cent by 2015. By introducing energy efficiency measures such as combined heat and power systems, LED lighting, heating, ventilation and control systems and biomass boilers, GHG emissions could be quickly cut by 25 per cent.
GIB and its partners are running a series of seminars on NHS Energy Efficiency across the UK, the events began in Birmingham, and future events are planned.
Shaun Kingsbury, chief executive, UK Green Investment Bank, said::
As we would expect, the NHS is one of the most energy intensive organisations in the UK. We want to help it reduce its energy costs by providing a package of support to finance energy efficiency measures. These investments require no upfront outlay by the NHS and the costs are more than covered by lower bills, saving money overall.
Investing in energy efficiency isn't just about cost savings and environmental benefits. Projects - like the four we've already supported - can help the NHS upgrade its facilities while improving the reliability and resilience of its systems.
Norman Lamb, Minister of State for Health, said:
I am delighted to see the Green Investment Bank making another NHS investment, helping save money and reduce emissions. Dealing with more than a million patients every 36 hours across some 2,300 hospitals, the NHS is a heavy user of energy. Energy efficiency measures are good for the health service and, by freeing up money that can be spent on front line services, are also good for patients.
Allan Vlah, Infrastructure Fund Manager, Aviva Investors, said:
This project embodies what the energy centres mandate is about: supporting a hospital to realise a substantial reduction in its energy bill and carbon foot print, employing British workers and helping our investors achieve their long-term goals. We have shown that we can work with our partners to quickly and efficiently develop a project that will improve the energy security for Cheltenham Hospital for decades to come and we look forward to rolling out this programme across the nation in the months and years ahead.
Notes to editors
UK Green Investment Bank
The UK Green Investment Bank began operations in November 2012. Created by the UK Government and capitalised with £3.8 billion of public money, its mission is to help the UK transition to a greener economy by supporting projects that are both green and commercial. One of GIB's priority areas for investment is public sector energy efficiency.
GIB can provide the full spectrum of financing across debt and equity with the ability to fund long tenor. It has a dedicated team of energy efficiency project and finance experts set-up to work with private and public sector organisations and co-investors.
GIB has backed three other investments in NHS energy efficiency at Addenbrookes Hospital, St Barts Hospital and Rampton Hospital. GIB works closely with a number of partners on NHS energy efficiency including Aviva Investors, Societe Generale Equipment Finance, Equitix and SDCL.
Aviva Investors is the global asset management business of Aviva plc. The business delivers investment management solutions, services and client-driven performance to clients worldwide. Aviva Investors operates in 15 countries in Asia Pacific, Europe, North America and the United Kingdom with assets under management of £246 billion at 30 September 2013.
Gloucestershire Hospitals NHS Foundation Trust
The Trust is one of the largest hospital trusts in the country and provides high quality acute elective and specialist care for a population of more than 612,000 people. It has over 7,500 staff, and operates two large district general hospitals in Cheltenham and Gloucester.