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Return home8.1. Public financing models
Public financing models for funding depot charging infrastructure include options such as the Public Works Loan Board, UK Infrastructure Bank, and Community Municipal Investments. Discover the unique benefits, costs, and suitability based on project scale and financial capacity of each of these options.
Public financing models
Publicly available financing models worth considering include:
- Public Works Loan Board
- UK Infrastructure Bank
- Community municipal investments
You can find more details on each of these below.
When capital budgets are limited, public financing is usually the next most cost-effective way to fund depot charging infrastructure. However, it’s important to consider whether the PSB has enough borrowing capacity and budget for the skills, labour, and maintenance costs to install and manage the infrastructure.
In some cases, these additional costs might make public financing less cost-effective, or even unfeasible. To ease these challenges, PSBs could consider shared charging solutions to reduce expenses.
The financing models below focus on local authorities. Public bodies without borrowing powers could work with local authorities to access shared charging. This would benefit both parties.
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The Public Works Loan Board (PWLB) lending facility provides loans to local authorities for capital projects. PWLB is a statutory body operated by the UK Debt Management Office on behalf of HM Treasury.
During 2023/24, PWLB provided over £11 billion in loans to local authorities. Over £2 billion was awarded to local authorities in Scotland.3 There are two types of loan available:
- Fixed rate loans (with a maximum repayment period of 50 years).
- Variable rate loans (with a maximum repayment period of 10 years).
Borrowing costs through the PWLB have risen due to Bank of England interest rate increases. However, it’s still a relatively cost-efficient and flexible option for local authorities to fund capital projects.
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The UK Infrastructure Bank (UKIB) was set up in 2021 by the UK Government. It has a mandate to lend up to £4 billion to UK local authorities. It focuses on infrastructure projects in five priority sectors, including clean energy and transport.
In September 2023, it reduced its lending rate for local authorities to gilts plus 40 basis points (bps). This is 40 bps lower than the PWLB Certainty Rate.
UKIB lending is available for projects with a minimum budget of £5 million. This makes it suitable for large-scale infrastructure projects or collaborations between multiple PSBs. It offers terms of up to 50 years.
In August 2024, UKIB announced a £17 million loan facility to West Suffolk Council to deliver net zero projects including electric vehicle fleet upgrades. The innovative portfolio approach allows West Suffolk Council to take advantage of UKIB’s low lending costs by financing smaller net zero projects through one large loan facility.
Borrowing through UKIB could be an attractive option for local authorities considering a large-scale expansion of their depot charging infrastructure or working as part of a larger group. It’s currently the cheapest borrowing option for financing infrastructure projects.
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Community municipal investments (CMIs) raise funds from the public through a crowdfunding platform such as Abundance. These funds are designated as local climate bonds.
West Berkshire Council was the first local authority to use Abundance’s local climate bonds system in 2020. Hammersmith and Fulham Council also completed a first phase in 2023 and a second phase this year. The bonds are priced below PWLB (averaging 20-30 bps) and have a minimum term of five years.
So far, no Scottish local authorities have used local climate bonds, but councils in England and Wales are showing they work. CMIs are a good fit for smaller or rural councils that might not be able to use larger funding options like UKIB.
