government funds further energy initiatives

The UK government is providing £51.5m in interest-free loans to help public sector organisations go green.

The initiative, which is being administered by the Carbon Trust's financing arm Salix Finance, will fund about 80 energy-saving measures in areas such as building insulation, boiler and lighting upgrades and improvements in IT energy efficiency.

The scheme could save £14m in fuel bills, according to Joan Ruddock, minister for energy and climate change.

In the 2009 Budget, chancellor Alastair Darling announced a £100m commitment to low-cost loans for small businesses to make themselves more energy efficient, along with £65m in loan funding for public sector organisations.

Some £50m of this latter amount is to be administered to public sector organisations by Salix, with the remainder given to developed administrations for use in energy-efficiency measures.

The loans mimic an energy services company arrangement, in which an energy-efficiency solutions company bears the capital expenditure involved with a retrofit, recouping the investment over a period of years from the resulting energy savings.

In the Salix model, repayments will be made within four years, and are expected to be covered by the energy savings achieved by the projects.

It is not the first time the chancellor has funded public sector energy-efficiency measures. He awarded £30m last year for similar awards through Salix, in an initiative that will run until 2012.

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