green finance business seminar 24 march 2011

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www.winterrule.co.uk

Green Finance

A breakfast time guide to finance and support available in the South West (Cornwall) to Businesses looking to embrace Low Carbon/Renewables

Administration

Admin

Timetable

Presenters…

Presenters

www.winterrule.co.uk3

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Green Finance

Presentations

• Summary of ‘green finance’

• ‘Low Carbon Grant Fund’

• SW Cleantech Co-Investment Fund

• Venture Capital

• Investment Readiness

Q&A session


Green Finance: what’s out there today? (in 7 minutes)

Summary of ‘Green Finance’ potentially available to SW Companies/ Entrepreneurs’ looking to engage with Low Carbon Economy

Richard Wadman, Corporate Finance Director, Winter Rule LLP

Assessment: Recognition of opportunity and requirements?

• The Carbon Trust commissioned independent research which found that:• While more businesses in the South West see green growth as

an opportunity (67%) compared to the rest of the UK

• And over three quarters recognise the business benefits anenhanced ‘green’ reputation can bring to their organisation(76%)

• fewer than 1 in 3 are actively developing greener products andservices (30%)

• and two thirds do not have an annual plan to reduce carbonemissions (65%)

• Attendance at events incl. ‘M&S event’

• Finance required to stimulate action?


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Caveats and acknowledgements…


Fluid: watch this space

In the past month…

• Green Investment Bank: House of Commons Report

• “Feed-in Tariffs: Consultation on fast-track review for small scale low carbon electricity” - DECC

• “£550m green funding package unveiled”(Carbon Trust and Siemens)

• Low Carbon Grant Fund?


Green Finance: What’s not in?

Green Investment Bank• “£1bn of capital to fund clean energy and low-carbon projects.”

• Report on 12 March by House of Commons Environmental Audit Committee

• Treasury: ONS classify bank as Public Sector (impact on deficit reduction?)

• No decision until 2014 / 15 as to whether bank can borrow?• http://www.guardian.co.uk/politics/2011/mar/18/green-revolution-hit-curbs-bank

• Budget (yesterday) – £3bn to be in funds by 2012/13; able to borrow in 2015

Business Link Capital Grants• Close 31 March (- 10 days)


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What’s out

EIS/ VCT for investment in companies whose trade exists whose trade [ ] in the receipt of FITs

• where commercial electricity production commences after 6 April 2012

• For shares issued after 23 March 2011


Green Finance: What’s in and/or coming soon?

National SW Region/ Cornwall

Renewable Energy

Production

FITs and ROCs

RHIs

Low Carbon Grant Fund

RDPE

Carbon reduction/

Energy and/or Resource

Efficiency

The Carbon Trust –

interest free loans

‘Green Equipment

Finance – Siemens

Property Gap Funding

RDPE - SWARM

Cleantech businesses Venture Capital/

Business Angel (Note 1)

SW Cleantech Co-

Investment Fund

Grant for Business

Investment (Note 1)


Note 1: Funding source not explicitly for this

Note 2: Banks, including Triodos, Co-op and Santander and VCTs actively engaged in Renewable Energy

Finance: Renewable Energy

FITs• FITs introduced 1 April 2010

• Consultation of Fast Track Review – March 2011

• Solar PV > 50kWh, proposed new FITs• 50kWh – 150kWh TIC: 19.0p/ kWh (31.4p or 29.3p/kWh + RPI)

• 150kWh – 250kWh TIC: 15.0p/kWh (29.3p/kWh + RPI)

• 250kWh – 5MW TIC and stand alone: 8.5p/kWh (29.3p/kWh + RPI)

• Effective from 1 August 2011

• Farm scale AD (of up to 500kW)• <250kW TIC: 14.0p/kWh (11.5p/kWh)

• 250kW – 500kw TIC: 13.0/kWh (11.5p/kWh)

• Responses by 6 May 2011

• Cornwall specifically mentioned in consultation document (6/10 planning permissions for solar PV farms)


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Finance: Renewable Energy

• FITs• Co-ordinated response from ‘Cornwall’?

• Better handling = one key message

• Investors require certainty…

• Electricity Market Reform• Consultation Document – December 2010

• Responses closed – 10 March 2011

• RHI• Details announced 10 March 2011

• Two phases – first targeted at ‘big emitters’/ non-domestic

• Tariff tables

• Approval by parliament Summer 2011?• http://www.decc.gov.uk/en/content/cms/what_we_do/uk_supply/energy_mix/renewable/policy/incentive/incentive.aspx


Finance: Renewable Energy/ Energy Efficiency

Low Carbon Grant Fund

RDPE

• Farmers (R4F and S4P): • free advice on Resource Management and

• up to £10k grant for capital works

• Food processor (with expansion plans)• Upgrade of existing equipment (if not replacing like 4 like)

• www.sw-ruralgateway.info


Finance: Energy Efficiency Finance Scheme

• “Energy Efficiency Finance Scheme” • Siemens and The Carbon Trust

• Loan: “affordable” payback to mirror energy savings

• 1 to 7+ years

• £1k min; £30k average

• Energy Efficiency Equipment and Low Carbon Technologies

• Efficient Lighting and Biomas Heating

• Carbon Trust List of suppliers +

• Applications open 4 April 2011

• www.carbontrust .co.uk?

• The Carbon Trust• Interest Free Loans – until 28 March 2011

• www.carbontrust.co.uk


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Finance: Cleantech

• Business Angels• www.swain.org.uk

• Venture Capital • E.g., Horatio Investments

• South West Cleantech Co-Investment Fund


Finance: Low Carbon

• Own Funds• “Retailer Marks and Spencer is another firm reaping the

benefits of its greener products. Its Plan A initiative saving the firm £50m a year in efficiency savings alone” – Mike Barry, Head of Sustainable Business at M&S

• Other• Triodos Bank ‘cheap loans to sustainable caterers’

• Gold or Silver Food for Life Catering Mark from Soil Association

• > £25,000 @ 1% discount from their normal interest rates (of 3-6%)


The Low Carbon Grant Fund (LCGF).

Stuart Farmer - Cornwall Development Company (CDC)Josie Gough - South West Regional Development Agency (SWRDA)

24 March 2011

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www.cornwall.gov.uk

� To raise awareness early, during LCGF development

Phase

� To provide an opportunity for Cornwall and Isles of

Scilly businesses to provide input & comment on design

� To answer some key questions we suspect may come up:

What...?

Why...?

Who...?

When...?

Where...?

Aim of presentation

www.cornwall.gov.uk

What is LCGF?� LCGF is a fund up to £4m - £5m (first Call)

which is proposed to support ERDF eligible businesses

� Improved their energy / resource efficiency

� Enable the generation of low carbon energy

…….. In order to reduce their carbon footprint

www.cornwall.gov.uk

What will investment propositions be judged on?

� Key Factor....

Carbon saved per £ invested

� Other Factors….

Innovation

Economic benefits to the business (productivity / jobs)

Wider economic benefits to Cornwall & IOS (Supply-chain

development/ R&D Links/ Best practice dissemination)

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www.cornwall.gov.uk

Why is LCGF needed?

� Supports ERDF Convergence cross cutting commitments to

Carbon Reduction

� LCGF will invest in projects that have Carbon Reduction as

their primary outcome where

� They are not supported through existing schemes (FIT /

RHI etc…..)

� Mandated through the existing regulatory framework

� Would otherwise be undeliverable due to issues of

commercial viability

www.cornwall.gov.uk

Who can be apply for LCGF?

� ERDF eligible businesses in Cornwall and the IOS

� Projects which are seeking an ERDF Convergence

investment between £70K to £1m (appropriate level of

match will be required)

� Further eligibility details will be provided with the call

www.cornwall.gov.uk

Design LCGF

1st Stage EOI

Call For EOI’s

Invites for 1st Stage EOI

Close Call

Asses EOI’s

Successful Letter Advising

Unsuccessful

No

Yes

Invite Full Application

Receive and appraise

Full Application

ERDF Appraisal

Successful Letter Advising

Unsuccessful

No

Yes

Endorsement &

Advisory Group

Grant Awarded

Successful

No

Yes

Letter Advising

Unsuccessful

Monitoring &

Contract Management

Currently Here

Expected Early

May 2011

Expected

June 2011

Expected

Late July 2011

Expected

September 2011

Expected Late

November 2011

Expected Late

October 2011

Expected

Early 2012

Stage One Stage Two

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www.cornwall.gov.uk

Where can business go to engage?

� The EOI to be issued in May will contain detailed

information and contact details

� An open LCGF workshop will be held in ???? for interested

businesses

� We would suggest businesses wait until the call for EOI is

issued. However in the case of any URGENT queries or

points, please contact Janet Bowen at

[email protected]

www.cornwall.gov.uk

Cornwall Council

County Hall

Truro TR1 3AY

Tel: 0300 1234 100

www.cornwall.gov.uk

Thanks For Your Time

www.winterrule.co.uk

South West Cleantech Co-investment Fund

A fund aimed at stimulating equity investment into Cleantech businesses in the South West

Richard Wadman, Corporate Finance Director, Winter Rule LLP

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SW Cleantech Co-investment Fund

The “concept”• ‘At Risk’ Funds Loaned

• Encouragement for equity investment from Business Angels and VC’s

Targeted at• Cleantech sector

• SW Region

Amount• Min £50k, Max £100k

• Match with equity in investment

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Risk Funds

Term Loan• 3 or 5 years

• Interest @ 10%

• “No capital or interest for term of the loan”

Security• Debenture (subordinated to existing commercial lenders)

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Fund Secretariat (Not Fund Management)

Why?• Not to be a barrier to applications (costs of DD etc)

• Maximisation of use of funds (£2.5m pot)

How?• Equity investor does ‘due diligence’

• If they invest in ordinary shares then ‘ok’ for fund

Fees• Arrangement fee of 2%

• Annual monitoring fee 1%

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Fund Secretariat

Implications• Keystone Investor required

• Experienced investor

• ‘Sign off’ by SWAIN www.swain.org.uk

• No previous relationship with company

• Can not be connected (EIS rules, < 30%)

• Due Diligence performed by Investor (but no explicit reliance taken by Fund on this)

• Investment in cash

• Investment to be in ordinary shares

• No business plan required

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Cleantech?

Companies which“support and deliver low carbon’ technologies”

Low carbon/CleantechKnowledge based products or services, that:

Provide superior performance at lower

Greatly reducing or eliminating carbon production,

Improving the productive and responsible use of natural resources

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Cleantech?

Cleantech: areas of activity

Certification process

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Core technologies Other technologies?

Energy Generation

Energy Infrastructure

Energy Efficiency

Energy Storage

Transportation

Agriculture

Materials

Recycling & Waste

Water & Wastewater

Manufacturing/Industrial

Air & Environment

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Application Process

Pre-Application• SWAIN www.swain.org.uk

• Keystone Investor

• Qualifying Company – SME based in SW

• Cleantech certification

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Application Process

Application • Fund Secretariat

• Application Form, including Carbon Compass

• Cleantech and Keystone Investor

Draw-Down• Fund Secretariat

• Draw Down Form

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Applications to date and issues...

IssuesExisting relationship b/w Investor and Co

Cleantech?

No Keystone Investor

SW?

One offer made

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Post investment

MonitoringFinancial

Employment

Environmental

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Summary

• Matched funding for Investment in Cleantech companies

• Keystone Investor required

• Initial enquires to SWAIN www.swain.org.uk

• More informationhttp://www.swain.org.uk/CleanTech.aspx

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Andrew Maynard

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� Horatio Investments

� What do Venture Capitalists look for?

� What does Horatio look for?

� Some dos and don’ts

� Is Cleantech different?

� Opportunities for strong returns

� Very selective – 2% succeed

� Alignment (in theory)

� More than just ideas

� Ultimately a “Leap of Faith”

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� Opportunity to invest £100k to £500k

� Wide range of sectors

� Potential for significant growth

� Work with the team to develop their business

� Based in South West and South Wales

� Do:◦ Research the VCs

◦ Prepare a detailed plan

◦ Demonstrate your commitment

� Don’t:◦ Have an unrealistic valuation

◦ Leave it too late

◦ Use a top down sales approach

� Not really

� Technical knowledge

� Market Factors

� Specific sources of funding

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Winter Rule 24 MarchUEC Enterprises Ltd

Dr Mark Scibor-Rylski

Rob Misselbrook CFA

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What we do

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How we select – Proactive approach to

-Value Proposition – why will customers buy your product or service

-Market Potential – local, UK, International

-Barriers – IP, know-how, relationships

-Management – Experience, knowledge

-Financials – What’s required, structure

[ESI Impact – Environmental Benefit, Job Creation]

green finance business seminar 24 march 2011

Documents