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Crossing the energy efficiency chasm: an assessment of the barriers to institutional investment at scale, a UK perspective

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  • Martin Parker
  • Peter Guthrie

Abstract

Significant savings in CO 2 can be won from fabric upgrades, and improved forms of heating. An increase in the number of building retrofits and installations of energy efficient plant such as biomass boilers or combined cooling, heating and power plants must be the aim if the UK is serious in meeting its commitment to CO 2 reduction at both the domestic and EU level. A way of achieving this increase, which will need to be significant, would be to tap into the vast funds under management by institutional investors who are required to invest those funds to optimise its monetary return, taking into account the level of risk. The aim of the research is to identify the enabling conditions that would need to exist to attract institutional investment in energy efficiency at scale. The UK Green Investment Bank (GIB) has invested £50 million into three energy efficiency funds, requiring each fund manager to match the amount by attracting investment from institutional investors. It is these funds that have been analysed as a single GIB case study. Embedded units of analysis are on two levels with the individual funds being the first and the institutional investors investing in those funds as the second. The early findings of the research reported here indicate that the emerging key enabling conditions that would make energy efficiency an attractive proposition are (i) the way energy efficiency investments are classified, (ii) the contractual structure of the individual transactions made by the funds and (iii) the experience and familiarity of the fund manager.

Suggested Citation

  • Martin Parker & Peter Guthrie, 2016. "Crossing the energy efficiency chasm: an assessment of the barriers to institutional investment at scale, a UK perspective," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 6(1), pages 15-37, January.
    • Handle: RePEc:taf:jsustf:v:6:y:2016:i:1:p:15-37
    DOI: 10.1080/20430795.2016.1159650
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    Cited by:

    1. Brocks, Annette & Nyangon, Joseph & Taminiau, Job, 2016. "Utility 2.0: A multi-dimensional review of New York’s Reforming the Energy Vision (REV) and Great Britain’s RIIO utility business models," MPRA Paper 91489, University Library of Munich, Germany, revised 30 Sep 2016.
    2. Nadia Ameli & Paul Drummond & Alexander Bisaro & Michael Grubb & Hugues Chenet, 2020. "Climate finance and disclosure for institutional investors: why transparency is not enough," Climatic Change, Springer, vol. 160(4), pages 565-589, June.
    3. Vasundhara Saravade & Olaf Weber, 2020. "An Institutional Pressure and Adaptive Capacity Framework for Green Bonds: Insights from India’s Emerging Green Bond Market," World, MDPI, vol. 1(3), pages 1-25, November.

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