The local authority is borrowing £9.87m from the Green Investment Bank (GIB) to install light-emitting diodes (LEDs) instead of traditional sodium bulbs in 12,000 streetlights over four financial years.

The council will also replace 4000 lampposts, marking a major investment in local infrastructure.

Stirling is expected to cut its streetlight power consumption by 63 per cent and reduce its greenhouse gas emissions by the equivalent of 14,400 tonnes over the lifetime of the project. The energy saved each year would be equivalent to the total electricity consumed by over 850 homes.

GIB launched its Green Loan for local councils to help them reduce their streetlight electricity bills by up to 80 per cent.

The Green Loan offers UK local authorities a low, fixed-rate financial arrangement over a period of up to 30 years. It has been specifically designed to finance public sector energy efficiency projects where repayments are less than the savings realised.

The UK currently spends about £300m a year powering its seven million streetlights, with fewer than one million lamps so far using low-energy LEDs.

Stirling is following in the footsteps of local authorities in Glasgow and Southend-on-Sea, making it the second council in Scotland and the third in the UK to take out a GIB Green Loan to replace its inefficient and costly old street lamps with modern, energy efficient models.

GIB and its legal adviser Shepherd and Wedderburn LLP have standardised the Green Loan investment process to save the public sector time and money in agreeing a financing package for energy efficiency projects.

Stirling Council’s director of housing and environment, Robert Steenson, said: “We are investing in the LED streetlights both to save money and make sure that Stirling Council provides high-quality services that are as sustainable as possible. We are very pleased to have worked with the UK Green Investment Bank on this deal.”

Edward Northam, head of investment banking, GIB, said: “Replacing its existing streetlights with more efficient and cost effective alternatives will see Stirling Council make immediate budget savings while contributing to the wider movement to decarbonise our economy. There are signs that more and more local authorities are considering the benefits of the spend-to-save approach, with Stirling becoming the third UK council to opt for a Green Loan.”