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A group of investors has launched a £100m fund to help finance the electrification of London's iconic red buses.
Insurer Aviva and UK-based rail vehicle owner and asset manager Rock Rail have teamed up with the UK's national infrastructure investment bank to spend a significant amount of money decarbonising more than 35,000 UK rolling stock. devised a new method of raising funds. diesel bus.
The partnership has announced an initial £100m commitment to fund up to 250 zero-emission buses across the UK. The first 60 battery-powered buses will be leased to Go Ahead Group, one of the UK's largest transport operators, and will operate on routes across London.
The UK bus industry is at a tipping point, facing the costly challenge of replacing diesel buses with electric and hybrid vehicles. A double-decker electric bus costs around £450,000, while a typical diesel car costs around £250,000.
Mark Swindell, chief executive of Rock Rail, said that with only 2,000 of the UK's 36,500 buses currently electric, the transition to zero-emissions vehicles could cost anywhere from £10 billion. It was estimated to cost £15 billion.
“If you're a bus operator, you can't make that kind of investment. . . . This is about finding ways to attract institutional capital,” he said.
The UK Infrastructure Bank, along with financial institution HSBC, is providing £50m of debt financing for the project. The buses will ultimately be owned by a joint venture controlled by Rockrail and Aviva.
UKIB was established in 2021 with the aim of investing private sector capital into projects that help meet the government's net zero climate targets and tackle regional inequality.
“replace [diesel buses] Access to cleaner, greener alternatives will be key to decarbonising the transport sector and achieving the UK’s net zero targets,” said John Flint, CEO of UKIB. Ta. “This will require significant investment.”
Rock Rail's Mr Swindell said the deal marks the first time the leasing model used to finance new trains in the UK has been used on a large scale in the bus sector.
The rolling stock leasing company (Roscos), owned by financial investors, was set up to supply new trains to British Rail after privatization in the 1990s and has proven highly profitable.
According to the rail industry regulator, Rothkos will pay out £409.7m in dividends to shareholders in the financial year ending March 2023, while the rest of the rail industry is struggling financially and receiving significant government support. paid.
Buses in the UK have typically been bought by operators, leased from traditional banks or financed by local authorities.
The British government also subsidizes some electric vehicles for local transport authorities in the UK outside of London.
