The next phase of the energy transition will have a local focus and will require unprecedented of investment. To ensure a just transition, investment in decarbonisation must be undertaken in a way that is fair to and inclusive of communities, workers and local supply chains.

What are the barriers and opportunities associated with scaling up Net Zero investment at the local authority level in the UK, that is what this study by the LSE was set to address examining the experiences of Westminster City Council (WCC) and Cumberland Council, two areas with different contexts, one a high-density urban area the other a rural one with industrial heritage.

The aim was to identify context specific opportunities for local Net Zero projects, how to advance investment readiness, and assess the enabling policy environment at the two councils, providing insights for other local authorities seeking to accelerate their transition to Net Zero.

Project workshops were held with investors and council stakeholders, with analysis from Energy Systems Catapult and the University of Edinburgh, which analysis explored a wide range of business models, from renewable energy power purchase agreements to electric vehicle charge point concessions. The business model and innovation analysis revealed a range of possible place-specific opportunities for each locality.

The innovation

This project explores how local authorities in the UK can scale up Net Zero investment by addressing barriers and leveraging opportunities specific to their context. By studying Westminster City Council and Cumberland Council, it identifies tailored business models and innovative approaches for advancing investment readiness, fostering community involvement, and supporting a just transition.

The initiative includes analysis exploring a wide range of business models, from renewable energy power purchase agreements to electric vehicle charge point concessions. The business model and innovation analysis revealed a range of possible place-specific opportunities for each locality and utilised expertise from Energy Systems Catapult, and analysis from the University of Edinburgh.

The challenge

The UK requires £550 billion by 2050 to fund local Net Zero projects like renewable energy, energy efficiency retrofits, and clean transport. Despite the urgency, investment has lagged due to several barriers, including:

• Small-scale projects with limited capacity for development.
• Revenue uncertainties for critical projects.
• Inconsistent government policies.
• Limited participation by institutional investors.

A fair and inclusive transition also demands ensuring benefits for communities, workers, and local supply chains.

The solution

The project proposed innovative, place-specific business models to overcome these challenges, including:

• Pay-as-you-save retrofit model (Westminster): Supporting heritage building retrofits while developing local retrofit skills.
• Community energy co-investment (Cumberland): Facilitating larger projects through shared investment with local communities.

Both models address technical and financial feasibility while emphasising co-benefits like job creation and community participation. Additionally, the project advocated for local authorities to adopt Local Area Energy Plans and collaborate with a wide spectrum of public and private investors.

Impact

The proposed models demonstrate transformative potential:

• Westminster could achieve £1.3 billion in gross value added (GVA) and co-benefits of £171 million by 2050.
• Cumberland’s interventions could deliver £25.6 billion in GVA and co-benefits of £1.01 billion.

The project underscored the importance of ambition, vision, and delivery track records in attracting investment. It also highlighted the role of government support in enabling councils to engage investors effectively.

Next steps

• For councils: Given the wide range of technology and interventions required, Councils should pursue LAEPs to help identify and communicate scale of investment required followed by a focus on investment readiness conducting feasibility analysis, and prioritising scalable models like retrofits and community energy.
• For government: Provide consistent, long-term funding and partner with councils via initiatives like GB Energy and the National Wealth Fund to de-risk early-stage projects.
• For investors: Strengthen engagement with councils, refine financing models, and prioritise place-based investment opportunities, particularly for retrofits and community energy.

By fostering collaboration across stakeholders, the project offers a replicable blueprint for accelerating the transition to Net Zero at the local level.

Tom Elliott – Senior Energy Transition Advisor:  “It is important to acknowledge that the approach to local Net Zero delivery in one area may not be suitable for another. Different areas will have different priorities and resources which will require different activities and partners, respectively. For example, business models may focus on delivering non-financial benefits to the local area and will ultimately require grant funding support. Alternatively, business models may seek to capture a commercial return and in which case will require robust cash flows if they are to attract private investment. 

“Whichever path is chosen by places, the end goal should be focused on addressing specific Net Zero technology and market readiness challenges, which will vary across areas and regions. The information in this report highlights how the role, approach and business model for delivery varies.”