Bristol City Council has received a £2.5 million grant from the European Investment Bank to set up an energy services company (Esco). The authority eventually hopes to secure around £70 million investment from the EIB to set up the company that it will own on behalf of Bristol citizens.

The authority’s aim is to generate income through energy savings and energy generation via thousands of microgeneration installations eligible for subsidies under the feed in tariff and renewable heat incentive schemes. The Esco may set up some small district heating schemes and could also become a Green Deal provider, offering city residents funding for energy efficiency measures.

“In practical terms this will lead to cheaper bills for thousands of residents,” said council leader Barbara Janke. “It will help generate up to 1,000 new jobs in the construction and environmental technologies sectors – many I hope going to local firms and employees. The investment programme should also attract much bigger investment in the city potentially up to £2 billion.”

The finance was provided under the European Local Energy Assistance programme, with other UK cities seeking funds for similar projects.

“The European Investment Bank can confirm that it is currently in talks with authorities in two UK cities about specific ELENA projects where funding would be around EUR 3 million,” an EIB spokesman told Utility Week. “The Bank has also been approached by a number of cities and is at an early stage of evaluating potential funding opportunities.”

The EIB has signed contribution agreements with the European Commission for a total budget of EUR 49 million. The funds come from the Intelligent Energy Programme. Additional EUR 22 million have been earmarked by the commission under the 2012 budget. The bank said were no country specific allocations.