District heating projects, city-wide energy efficient street lighting, and renewable energy technologies are set to get a major boost over the next five years as much needed investment from government and private sector increases, writes Antony Akilade.

That was the message delegates attending the MacKay Hannah fiftth Annual Infrastructure and Investment conference heard in Edinburgh on Tuesday.

Opening the conference, Deputy First Minister Nicola Sturgeon said: "I and the whole government view infrastructure investment as absolutely vital to everything we do to grow our economy."

Key to the Government's investment plans is the Non-Profit Distributing (NPD) programme which replaces previous public-private partnership investment schemes.

"The NPD programme is very much the central component of our effort to maximise investment. The £2.5bn pipeline of projects is currently one of the biggest investment projects of its kind in Europe," said Ms Sturgeon.

The Deputy First Minister said the Government was building its financial understanding of the needs of low carbon opportunities with initiatives such as the Scottish Green Investment Portfolio Group, a collaboration between Scottish Government, the UK Green Investment Bank and Scottish Enterprise.

Ms Sturgeon said initiatives such as the deployment of energy efficient street lighting promised to deliver substantial savings and a nationwide programme to accelerate investment in LED street lighting was being developed. A £298m investment in LED street lighting could generate savings of £1.3bn over a 20-year operational period, she added.

The Deputy First Minister also highlighted the potential for low carbon technologies in NHS Scotland. A pilot energy audit at a large acute hospital within the NHS estate identified economies and a carbon saving of £1.5m and 9,000 tonnes of CO2 for a capital cost of £10m, she said. The findings of this study will now be used to develop a wider programme across the entire NHS Scotland estate.

Ms Sturgeon also identified opportunities in developing low carbon heat, resource efficiency schemes and the ongoing development of renewable energy generation in Scotland

Allan Vlah, fund manager with Aviva Investors, urged delegates to bring projects forward for funding. "There is a lot of money out there. A huge amount of capital for UK infrastructure projects," Mr Vlah said.

A substantial portion of the investment for infrastructure projects is set to come from the pension sector. These investors would normally invest in the bond market but following an extended period of historically low interest rates, pension funds are now seeking returns to cover future liabilities.

"The problem the big pension funds have right now is that the bond market is yielding nothing. They know that in 10 to 20 years they are in real trouble, there is a big hole. The solution is to put some money into safe, real assets," explained Mr Vlah.

Aviva Investors has an immediate £500m pot to invest in UK infrastructure projects, Mr Vlah said. This is the first tranche of the wider insurance industry's commitment to invest £25 billion in UK infrastructure over the next five years

"The large projects, £1bn plus will get funding but smaller projects will definitely struggle. The money we have is long-term capital for long term assets, these could be as long as 30 or 40 years. We're happy if it makes financial sense. We will supply 100% of the capital. This allows us to do small investments, £100m and below. In fact today I'm expecting to close on a £3m project for which we are providing 100% of the capital," said Mr Vlah.

For the low carbon market this is welcome news. In particular sectors such as district heating schemes will benefit. These schemes have struggled to attract investment as they require large upfront capital investment for assets which may not provide payback for 10 years. Traditional venture capital however prefers investments with much shorter payback periods.

Aviva is already a large investor in the renewable sector. With around 18,000 rooftop solar implementations under its belt, it is the largest owner of solar assets in the UK. These investments deliver predictable, index-linked returns due to the fixed rise in feed-in-tariff over the next 25 years. Aviva is also investing in a number of large combined heat and power (CHP) schemes including a £20m investment in Cambridge University Hospital CHP system.

"I'm a long-term investor trying to solve a pension liability problem," Mr Vlah said.

However, it was acknowledged that securing funding was proving to be a major difficulty for many developers. "The problem is that projects are bespoke and there is no fixed process," said Jonathan Guthrie, of the Scottish Green Investment Portfolio.

"Perhaps the biggest problem is indecision. Decision-makers are asking questions such as whether technologies are going to change and they are trying to keep their options open."

Mr Guthrie stressed, though, that there were now many sources of informed and experienced, help and advice within Scotland to assist in getting potential developments through the door and urged delegates to "pick up the phone".

The conference was delivered by Mackay Hannah in partnership with Scottish Enterprise as part of the Scottish Low Carbon Investment Programme which aims to facilitate the flow of investment in low carbon in Scotland.