Why renewable energy? - Envirolink

Financing 

Renewable 

Energy Projects

Agenda 

Welcome & Introduction Nick Storer, CEO, Envirolink 

Strategic Context & Common Misconceptions Sarah Williams, Envirolink 

Project Risks and how to mitigate them James Flynn, Heatons LLP 

Legal Considerations and Case Study James Flynn, Heatons LLP 

Key Challenges of project delivery Jenn Hazlehurst & Michele Steel, Deloitte LLP 

Break 

Financial Challenges and how to mitigate them Alexander Pohl & Tom Bashford, HSBC 

The renewable energy installer’s challenge for 

accessing finance 

Discussion session: 

The Appetite of the Financial Sector to invest 

Q&A 

Ed Cattigan, Farmgen

Envirolink 

We are a low carbon consultancy 

and membership organisation. 

We help businesses to develop 

low carbon services and 

products. 

We help buyers understand low 

carbon technologies and link 

them with suppliers.

Our Services 

• Low Carbon Supply Chain Knowledge 

• Market Intelligence 

• Programme & Project Management 

• Events, Training, Networking 

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• Finance, Funding & Tender Support 

• Stakeholder Engagement 

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• Meet the Buyer/Supplier Facilitation 

Membership 

Provides free or 

discounted access 

to our services and 

resources

Get involved! 

• Become an Envirolink member 

• Enjoy benefits, such as: 

– Access to our wide and growing low carbon network 

– Business promotion 

– Daily tender notifications 

– Attendance at Special Interest Groups 

– Market intelligence updates

Sarah Williams 

Envirolink 

Strategic Context

Quiz 

Of the World’s Resources… 

1. What are the UK crude oil reserves as a %? 

• 0.2% 

2. What are the UK natural gas reserves? 

• 0.2% 

3. What are the UK exploitable coal reserves? 

• 0.02% 

4. When is Peak Oil expected to be reached? 

• 2006 (according to International Energy Association’s Annual 

Report 2010) 

Source: World Energy Council & BP Energy Statistics 2009 and Renewables UK

Oil Prices to 2035 

Oil prices to 2035 

“The age of cheap oil is over”

8.0 

7.0 

6.0 

5.0 

4.0 

3.0 

2.0 

1.0 

0.0 

Fuel price projections 

2000 2005 2010 2015 2020 2025 

Last 5 years: 

Gas Price Projection 

Low Residential (p/kWh) 

High-High Residential 

(p/kWh) 

- 100% rise in gas prices 

- 60% rise in electricity prices 

UK energy costs forecast to 

rise by at least 30% by 2020 

30.0 

25.0 

20.0 

15.0 

10.0 

5.0 

0.0 

Electricity Price Projection 

Low Residential (p/kWh) 

High-High Residential 

(p/kWh) 

2000 2005 2010 2015 2020 2025

Why renewable energy? 

• Energy Security 

(relying on politically unstable countries) 

• Energy availability (fossil fuels running out) 

• Volatile and increasing fuel costs 

(increased global competition) 

• Targets and legislative drivers 

• Stakeholder Objectives / CSR 

• New opportunities for investment

Drivers for Sustainability: 

Global Legislation 

• Global 

– Kyoto 

• Europe 

– EU Carbon Reduction Targets 

– Directive on Renewable Energy

UK Drivers 

• Climate Change Act 2008 

– “world’s first long-term legally binding framework to tackle 

climate change 

– A legally binding target of 80% cut in greenhouse gas emissions by 2050 

and at least 34% by 2020 (1990 base line) 

• Energy Act 

– Renewables Obligation: to increase the diversity of our electricity mix 

– Feed-in Tariffs: Financial support for low-carbon electricity generation 

projects up to 5 megawatts (MW) - generators receive guaranteed 

payment 

(commenced April 2010) 

– Renewable Heat Incentive: establish a financial support programme for 

renewable heat generated anywhere, from large industrial sites to 

individual households

Renewable Energy Targets 

• The UK has made significant commitments to reduce GHGs 

• Scale of the challenge: 15% Renewable Energy by 2020 

• Where are we in reaching this 15% target?

The opportunities 

• Despite challenges created by Government changing policies 

and frameworks, there is still a need for Renewable Energy 

• And with energy prices increasing, renewable energy will be 

part of our future energy mix. 

• And this presents great opportunities for investors 

• So, what are the opportunities…?

UK Environmental Goods & Services Sector valued at £122bn 2009 

Renewable Energy Market size (Sales) - £28bn for 2010/2011 

UK Sales £ bn 

16 

14 

12 

10 

8 

6 

4 

2 

0 

2.141 

5.728 

UK Renewable Energy Market 

0.5442 

Anaerobic Digestion Biomass Hydro Photovolatic Wind 

5.315 

14.02

UK Wind Sales £ bn 

Of this, the breakdown of wind energy is: 

6,000 

5,000 

4,000 

3,000 

2,000 

1,000 

0 

3,933 

UK Wind Market 

4,403 

5,681 

Small Wind Large Wind Wind Farms

UK Growth % 

Forecasts up to 2015 

6.5 

6.3 

6.1 

5.9 

5.7 

5.5 

5.3 

5.1 

4.9 

4.7 

4.5 

Renewable Energy Forecast 

08/09 09/10 10/11 11/12 12/13 13/14 14/15 

Forecasted Growth for 2008 - 2015

UK Growth % 

Of this, the PV Industry’s forecast: 

7.2 

7 

6.8 

6.6 

6.4 

6.2 

6 

5.8 

5.6 

5.4 

PV Industry Forecast 

08/09 09/10 10/11 11/12 12/13 13/14 14/15 

Forecasted Growth for 2008 - 2015* 

* Figures prior to the recent FITs consultation

UK Growth % 

UK Growth % 

5.8 

5.6 

5.4 

5.2 

5 

4.8 

4.6 

4.4 

8.4 

8.2 

8 

7.8 

7.6 

7.4 

7.2 

7 

6.8 

6.6 

6.4 

The Wind Industry looks like this: 

Small Wind Industry Forecast 

08/09 09/10 10/11 11/12 12/13 13/14 14/15 

Forecasted Growth for 2008 - 2015 

Large Wind Industry Forecast 

08/09 09/10 10/11 11/12 12/13 13/14 14/15 

Forecasted Growth for 2008 - 2015 

UK Growth % 

10.5 

10 

9.5 

9 

8.5 

8 

7.5 

Wind Farm Industry Forecast 

08/09 09/10 10/11 11/12 12/13 13/14 14/15 


UK Growth % 

And the future of AD looks like this: 

2.3 

2.2 

2.1 

2 

1.9 

1.8 

1.7 

1.6 

1.5 

Anaerobic Digestion Industry Forecast 

08/09 09/10 10/11 11/12 12/13 13/14 14/15 


Key Drivers for Renewable Investment 

• The statistics show clear increases in the renewable energy 

markets 

• This providing opportunities to invest

Common Misconceptions 

•Key Technologies

Common Misconceptions : 

Solar Photovoltaics 

1. Solar PV cannot deliver much power in the 

UK 

2. The UK is cloudy and wet and not well 

suited to solar 

3. PV cells are Chinese, so there’s not point

Common Misconceptions : 

Wind Turbines 

1. Building a wind farm uses more energy that it ever 

makes 

2. Wind farms are inefficient and only work 30% of 

the time 

3. The UK should invest in other renewable energy 

technologies & energy efficiency instead of wind

Sarah Williams 

01925 855 782 

s.williams@envirolink.co.uk 

Thank You

Boutique law firm at the forefront of the 

renewable industry 

1. Project risks and how to mitigate 

them 

2. Legal considerations and case study

Why Heatons LLP? – Renewable Projects 

__________________________________________________________________________________________ 

Wind 

� Advising on development of a 8MW wind farm in Lancashire (options, lease agreements and planning issues). 

� Acting for a wind turbine manufacturer and developer dealing with traditional large scale wind farms, wind harvesting and turbine supply 

agreements. 

Solar 

� Acting for the panel and inverter supplier and installation contractor on a large scale 400 kw solar farm. 

� Acting for the EPC contractor on a 1.2 MW solar farm extension project. 

� Acting for the developer of a project for the installation of Solar PV on over 4000 social housing units. 

� Acting for the developer of a project for the installation of Solar PV on approximately 150 individual sites owned by Thames Water Plc. 

AD 

� Acting for developer of an 800KW bank funded AD plant in Lancashire. 

� Ongoing advice in relation to development of AD plants with FarmGen, including a 1.2MW plant commissioned within the last few weeks. 

� Advice to a family owned farm on the funding and procurement of a 500kw on farm AD plant in Cumbria. 

General 

� Acting for M&S in relation to their power purchase agreements. 

� Ongoing advice for Inenco on corporate and commercial issues. 

_____________________________________________________________________________________________________________________________

Contact Details 

__________________________________________________________________________________________ 

Matthew Fleetwood 

Partner 

+44 (0) 161 835 8016 

+44 (0) 7971 616 573 

matt.fleetwood@heatons.co.uk 

http://www.heatons.co.uk/ 

James Flynn 

Partner 

+44 (0) 161 835 8033 

+44 (0) 7957 363 939 

james.flynn@heatons.co.uk 

http://www.heatons.co.uk/ 

_____________________________________________________________________________________________________________________________

Project risks and how to mitigate them 

__________________________________________________________________________________________ 

Project Risks 

� Land 

� Planning and permits 

� Plant and machinery 

� Construction 

� Programme 

� Regulatory 

� Completion 

� Commissioning 

� Grid connection 

� Operation and maintenance 

_____________________________________________________________________________________________________________________________

Land 

__________________________________________________________________________________________ 

� Freehold or leasehold? 

� Restrictive covenants 

� Access arrangements 

_____________________________________________________________________________________________________________________________

Planning and Permits 

__________________________________________________________________________________________ 

� Is planning permission or any regulatory permit required? 

� Nimbyism 

� Consultation 

_____________________________________________________________________________________________________________________________

Plant and Machinery 

__________________________________________________________________________________________ 

� Bankable? 

� Payment terms 

� Delivery times 

� Governing law 

_____________________________________________________________________________________________________________________________

Construction 

__________________________________________________________________________________________ 

� Procurement route 

� Form of contract 

� Security documents 

� parent company guarantee 

� bonds 

� sub-contractor warranties 

_____________________________________________________________________________________________________________________________

Programme 

__________________________________________________________________________________________ 

� LADs 

� What are your losses? 

_____________________________________________________________________________________________________________________________

Regulatory 

__________________________________________________________________________________________ 

� Timing 

� Knowledge 

� Change in law? 

_____________________________________________________________________________________________________________________________

Completion 

__________________________________________________________________________________________ 

� Definition 

� Advice from consultants 

� Sectional? 

_____________________________________________________________________________________________________________________________

Commissioning 

__________________________________________________________________________________________ 

� Performance test regime 

� Monitoring 

� Get it right before you go into contract 

_____________________________________________________________________________________________________________________________

Connection to Grid 

__________________________________________________________________________________________ 

� Route 

� Cost 

� Agreement? 

_____________________________________________________________________________________________________________________________

Operation and Maintenance 

__________________________________________________________________________________________ 

� Length of contract 

� Warranty for performance during O&M period 

� Cost 

_____________________________________________________________________________________________________________________________

Legal considerations and case study 

___________________________________________________________________________________________ 

� Project funded 800kw anaerobic digestion plant 

� First project funded anaerobic digestion plant in the UK 

� Fuel supply guarantee 

� Retentions, bonds and guarantees 

� Commissioning and performance testing 

� Warranties 

� Operation and maintenance 

� Grid connection 

_____________________________________________________________________________________________________________________________

Heatons LLP - Overview 

___________________________________________________________________________________________ 

Advised and participated in 

transactions with an aggregate 

value in excess of £1 billion 

[ 

Demonstrable industry and 

sector experience which is 

often underestimated 

Efficient and cost-effective 

national and international 

capabilities 

Focussed and experienced 

teams which take responsibility 

in for excess project management, client 

service and execution 

A track record which 

demonstrates our experience, 

quality and client commitment 

A credible and well respected 

alternative to national legal 

service providers 

Commercial and 

Technology 

Intellectual 

Property 

Project 

Management 

Corporate Real Estate 

Dispute 

Resolution 

and Regulatory 

Execution 

Trusted 

Advisors 

and 

General 

Counsel 

Client Service 

Client 

Relationship 

Management 

Outsourcing 

Construction 

Human 

Resource 

Long-established 

professional team providing 

continuity and stability 

Delivering service with a 

sense of perspective, 

practicality and common 

sense 

Providing more general and 

rounded advice cultivating a 

genuine connection with our 

clients’ businesses 

Developing professionals 

with broader commercial, 

industry and financial 

knowledge 

Always retaining a sense of 

perspective and being 

mindful of the wider 

commercial picture and 

environment 

An approach and service 

designed around our clients 

_____________________________________________________________________________________________________________________________ ___

Key challenges of project delivery 

Planning hurdles and financial incentives 

December 2011 

42 

© 2011 Deloitte LLP. Private and confidential.

Deloitte in renewable energy 

A key focus area for Deloitte 

Deloitte overview 

• Leading global professional services firm 

• 120,000 people across 142 countries 

• Clients include multinational corporates, private 

companies, government bodies, private equity and 

entrepreneurs 

• A comprehensive range of integrated services across 

audit, tax, consulting and corporate finance 

Deloitte UK Renewable Energy Team 

• Specialist teams across the UK 

• Broad range of advice including strategy, M&A, fund 

raising, debt advisory, specialist business modelling and 

valuations. 

• Specialist environmental tax teams, delivering real 

solutions 

• Clients: utilities, independent developers, industrial 

groups, finance providers, government bodies 

43 

Renewable Energy thought-pieces 

© 2011 Deloitte © 2011 Deloitte LLP. LLP. Private Private and and confidential. 

confidential

Agenda 

Key issues and challenges for renewable energy projects 

Planning 

Financial incentives 

Questions 

44 


confidential

45 

Key issues and 

challenges for 

renewable energy 

projects 


Key issues and challenges for renewable energy projects 

A number of issues affecting investment appeal 

46 

Growth 

forecasts 

Valuation 

Debt 

markets 

Regulatory 

uncertainty 

Investment 

appeal 

Balance sheet 

constraints 

Electricity market 

reform 

Supply 

chain 

Speed of 

deployment 


confidential

The complete bank jigsaw..... 

What does the bank need to see and gain assurance over: 

Internal factors: 

• the company: products/ technology 

• who are the customers? Relationships? 

• what are the business drivers? 

• management: 

•experience in business and industry 

• working capital management 

47 

• equity investment: by who? 

• refinancing? 

• exit route? 

• security? 

“proven 

technology” 

“Land: Planning approval?” 

Financing: “Contracted 

revenue 

streams” 

Business plan: 

• internal and external factors 

• business strategy: how will it grow? 

• historicals? 

• forecasts for the financing period 

• cash and profit 

• sensitivity analysis 

• assurance? 

“fuel security” 

External factors: 

• industry and market analysis 

• competitors 

• alternatives 

• regulation 

• supply chain and key contracts 


confidential

48 

Planning 


The Key Issues 

Land Requirement 

Consenting 

Pre-Application Consultation 

Environmental Impact Assessment 

Grid Connection 

49 


Land Requirement 

Compulsory Purchase 

• Prepare strategy early 

• Negotiate consistently 

• Be aware of statutory process & best practice 

• Only include land actually required and for the correct 

purpose (i.e. permanent or temporary land take, or 

new rights only) 

• Keep a comprehensive paper trail! 

50 


Consenting 

Overview 

• Threshold – Nationally Significant Infrastructure 

Project? 

• NSIP or not, the goal is the same – to secure the 

necessary statutory & regulatory approvals 

• Planning policy is king 

• Consultation is crucial 

51 


Consenting 

The Process & Main Differences 

• The process is broadly similar whether NSIP or not: 

• However, some crucial differences to note: 

52 

Strategy 

Preapplication 

Consultation 

NSIP 

• Consultation is mandatory, structured & can be 

basis for refusal to accept application 

• Decision making lies with Secretary of State 

once IPC formally abolished 

• Approval takes form of Development Consent 

Order which combines all necessary approvals 

including CPO 

• National Policy Statements are primary basis 

for decisions 

• Limited scope for post-approval amendments 

Preparation 

& 

Submission 

Determination Post-Decision 

NOT NSIP 

• Consulation highly recommended - not as 

structured – but becoming increasingly crucial 

• Local Planning Authority makes decision – 

Secretary of State can call-in 

• Numerous consents required – Planning 

Permission, Listed Building Consent, Grid 

Connection, Highways, CPO etc. 

• National & Local Planning Policy Framework 

applies 



Risks & Benefits 

• A necessity for NSIPs 

• Localism Act now makes mandatory for major 

planning applications 

• Secure buy-in – from communities & stakeholders 

• Reduce risk of objections 

• Prepare > Talk > Listen > Show > Tell 

• Leads to…positive outcomes? 

53 



NSIP Process – A Formalised Route Map 

54 


Environmental Impact Assessment 

Some of the Key Issues 

• Ecology and hydrogeology • Visual and Landscape 

• Air quality e.g. dust, 

emissions 

• Transport & Traffic 

• Noise and Vibrations 

Environmental 

Impact 

Assessment 

(EIA) 

• Agriculture 

• Socio-economic 

benefits e.g. 

employment 

• Interactions 

• Archaeology • Alternatives 

Failure to address these means real local opposition 


Grid Connection 

Powering Your Project 

• Additional Consent may be required 

• Can include within the Development Consent Order 

for the project 

• CPO & EIA issues apply 

• But sometimes are themselves NSIPs 

• Timing & approach – 2 separate applications? 

56 


57 

Financial incentives 


Mechanisms to incentivise renewable energy investment 

A number of mechanisms to stimulate different areas of investment 

58 

Renewable Heat 

Incentive 

EU Energy 

Efficiency CRC 

scheme 

Feed in Tariffs 

Electricity Market 

Reform 

Green Investment 

Bank 

Renewable 

Obligation 

Certificates 

Green deal finance 


confidential

Green Deal Finance 

Emerging Operating Model 

59 

Providers 

Energy Companies Finance Vehicle 

Potential GD Providers 

• Receivables 

management 

/ 

• Warehousing 

Agents 

• Treasury 

Birmingham & West 

Deal 

Midlands 

Green 

Newcastle & Eastern 

Shires 

Potential 

Other Energy Suppliers Others? 

Others 

Green Deal Charging Database 

Assessment / Installation 

Local Authorities 

Sub - contractors? 

/ materials 

Autumn Statement: Green Deal – allocating additional £200 million of additional one-off capital 

resource in its initial phase over 2012-13 and 2013-14, to encourage early take up 


Green Investment Bank update 

• Background – Perceived “market failure” constraining flow of capital to renewables sector 

60 

� Funding gap 

� Regulatory, political risk 

� Confidence/risk in unproven technologies 

� Ability to pool small projects to make them attractive to institutional investors 

• Part of the proposed solution is to set up the Green Investment bank 

� Improved risk/return profiles - Risk mitigation products 

� Innovative finance mechanisms – Upfront refinancing commitment guaranteeing exit for long term debt finance 

� Inadequate debt and equity funding – Additional capital on market terms 

• £3bn initial capitalisation: £1bn in April 2012; remaining £2bn from asset sales over time 

• Investment aims: 

return 

Green impact 

• UK Green Investments (“UKGI”): ahead of obtaining State Aid approval for the Green Investment Bank, 

Government will invest as UKGI in green infrastructure projects. Non-domestic energy efficiency will be one of the 

priority sectors for UKGI, which will make available up to £100 million in the next financial year for commercial and 

industrial energy efficiency projects 


confidential

Deloitte speakers 

Jenn Hazlehurst 

Head of NW Energy and Resources 

jhazlehurst@deloitte.co.uk 

Tel: 0161 455 6206 

Michele Steel 

Drivers Jonas Deloitte 

misteel@djdeloitte.co.uk 

Tel: 0161 455 6531 

61 


confidential

This document is confidential and prepared solely for your 

information. Therefore you should not, without our prior 

written consent, refer to or use our name or this document 

for any other purpose, disclose them or refer to them in 

any prospectus or other document, or make them 

available or communicate them to any other party. No 

other party is entitled to rely on our document for any 

purpose whatsoever and thus we accept no liability to any 

other party who is shown or gains access to this 

document. 

Deloitte LLP is a limited liability partnership registered in 

England and Wales with registered number OC303675 

and its registered office at 2 New Street Square, London 

EC4A 3BZ, United Kingdom. Deloitte LLP is the United 

Kingdom member firm of Deloitte Touche Tohmatsu 

('DTT'), a Swiss Verein, whose member firms are legally 

separate and independent entities. Please see 

www.deloitte.co.uk/about for a detailed description of the 

legal structure of DTT and its member firms. 


confidential

Break

Financing Renewables: 

A Banks perspective 

64

Introducing Commercial Banking 

� HSBC Commercial Banking specialises in services for small and medium-sized enterprises 

around the world 

� We have 2.9 million customers worldwide that include incorporated businesses, trading 

entities, partnerships, sole traders, clubs and associations 

� Commercial Banking has over 8,000 relationship managers and operates in 63 countries and 

territories 

Global Banking and Markets 

Commercial 

Banking 

GB&M 

Corporates 

Small & Medium 

Sized Businesses 

(CMB) 

HNWI 

(PB) 

Mass Affluent 

(PFS) 

Private Banking 

Mass Market 

(PFS) 

Personal 

Financial 

Services 

65

Selected alternative energy experience 

A wide range of 

experience across 

the world 

2010 

Better Place 

Principal Investments led 

$350m round of equity 

financing for Better Place 

and took a 10% stake 

Principal Investor 

Advisory 

Equity 

Capital 

Markets 

Project 

Finance/ 

DCM 

2011 

EUR2.5bn 

Proposed merger of Iberdrola 

with Iberdrola Renovables, its 

listed renewable energy arm 

Advisor 

2011 

EUR150m 

Rights issue to fund 

deployment of Concentrating 

PV solar technology 

Global co-ordinator 

2011 

USD245m 

Advisor to S-Oil’s acquisition 

of 33.4% stake in HK Silicon 

Advisor 

2010 

USD82.8m 

Follow-On Rights issue 

Co-Manager 

2011 

GBP340m 

Structuring and Financing of 

up to100 MW of rooftop solar 

PV modules on social housing 

across UK 

MLA, Swap Provider and 

Market Bank 

2009 

USD3.4bn 

Acquisition of Jiangsu 

Zhongneng Polysilicon 

Technology and USD475m 

share placement 

Advisor and placing agent 

2010 

EUR260m 

Combined Equity and 

convertible bond rights Issue 

Advisor 

Project finance DCM 

2010 

EUR 40m 

Financing of 12.3MW Solar PV 

asset in the Czech Republic 

Structuring Bank, MLA, 

Hedging Bank 

2011 

RMB750m 

First offshore public wind 

energy bond issue in Asia 

Sole Lead Manager 

and Bookrunner 

2009 

EUR2.5bn (project capex) 

Joint venture with Borusan 

Holding to develop power 

generating renewable 

capacities in excess of 2.0 GW 

Advisor 

2010 

Proposed listing of K-Green 

Trust by way of introduction 

Issue manager 

2011 

RMB150m 

Offshore bond to finance a 

China Clean tech project 

Sole Lead Manager and 

Sole Bookrunner 

66

What does ”Bankable” mean? 

bankable [ˈbæŋkəbəl] adj 

1. (Economics, Accounting & Finance / Banking & Finance) appropriate for receipt by 

a bank 

2. dependable or reliable a bankable promise 

3. (Performing Arts) (esp of a star) likely to ensure the financial success of a film 

Source: Collins English Dictionary 

Provides sufficient confidence that enough cash will be 

generated to repay the associated loan with interest 

67

Risk vs Debt – a balancing act 

% of 

Funding 

Debt 

Equity 

Increasing 

cost of 

funding 

Project 

Risk 

68

What key risks need to be managed? 

Construction 

Legal / 

Political 

Financial 

Operational 

Technology 

Execution 

Pre-empt a 

Bank’s 

concerns! 

69

Revisiting Funding Options 

Option 

Secured / Corporate 

Lending 

Asset Finance 

Project Finance 

Benefits 

• Easy 

• Less expensive to execute 

• Alternative means of 

repayment 

• Off-balance sheet 

• Relatively straight-forward 

• Suits ESCO model 

• Most projects are 

“Projects” 

• Proven funding mechanism 

that suites “Developer” 

model 

Challenges 

• Adequate security 

• Debt capacity 

• Counterparty credit 

• Lack of proven secondary 

markets 

• Asset vs Project 

• Applicability to smaller 

projects 

• Lack of experience 

• Long tenure 

70

HSBC’s Thoughts 

Renewable transport 

18% 

Air-source and Groundsource 

heat pumps (nondomestic) 

8% 

UK Renewable Energy Investment to 

2020 

Others (including hydro, 

geothermal, solar and 

domestic heat) 

6% 

Biomass heat (nondomestic) 

18% 

Marine 

0% 

Source: UK Renewables Roadmap 

Onshore wind 

12% 

Offshore wind 

20% 

Biomass electricity 

18% 

• EMR - ROC vs FiT, CfD 

• Comprehensive FiT review 

• RHI: will it follow FiT? 

• Micro-Project Finance only on a 

portfolio basis 

• Execution risk will revolve around 

procurement strategies 

• Large biomass projects come back 

online 

• Feedstock, feedstock, feedstock 

• Basel III – what does it mean? 

• Innovative structures will continue to 

look to unlock the Institutional 

Investor 

• Key role to be played by Green 

Investment Bank to catalysing 

investment in Offshore Wind and 

other “risky” elements – what and 

when will it actually come into play? 

71

The Future of Bankability 

• Projects become portfolios 

• Political risk rears its head 

• Commissioning date becomes a critical consideration 

• The banks think about securitisation 

72

Thank you 

Alexander Pohl 

HSBC Bank plc 

8 Canada Square, London 

Email: alexanderpohl@hsbc.com 

Tel: +44 (0)20 7991 4513 

Tom Bashford 

HSBC Bank plc 

4 Hardman Square, Manchester 

Email: thomas.bashford@hsbc.com 

Tel: +44 (0)7584 402550 

73

Renewable Energy 

The Finance Challenge 

5th December 2011

� Specialists in developing, managing and operating renewable 

energy projects. 

� Farmgen, Solargen, Windgen, Biogen, Local Green Energy 

� Independent and 100% privately owned 

� Staff and advisors with over 40 years of industry experience 

� 3 offices across the North of England 

5th December 2011

Anaerobic Digestion 

� Natural breakdown of organic materials 

� Converts farm materials such as slurries and crops into biogas 

� Biogas is used to produce heat and electricity in CHP engines 

� Bacterial activity in absence of Oxygen 

� Carbohydrates & Proteins converted into Methane and Carbon Dioxide 

� Nitrogen, Phosphorous and Potassium (N,P,K) remains the same 

� Digestate is spread back onto farmland as excellent fertiliser 

� In Europe, digestate is sold as fertiliser & used as bedding for animals 

5th December 2011

Current & Future AD Projects 

Future Projects 

� Murray House Farm, Cumwhinton 

� Deer Park Farm, Dorset 

� Greengill Foot Farm, Penrith 

� Moss House Farm, St Michaels 

� Rockcliffe, Carlisle 

� Cooper House Farm, Freckleton 

Current Projects 

�Carr Farm, Warton 800kW(Operational) 

� Dryholme Farm, Silloth 1.2MW(Operational) 

�High Head Farm, Ivegill 500kW (In constructio 

5th December 2011

Key Issues in Financing 

� Construction Risk 

� Technology/Operational Risk 

� Feedstock Supply 

5th December 2011

Good News 

� Considerable market interest especially post solar FiT changes and 

over reliance on wind. 

� Fast to market and capable of repeat deals in manageable amounts 

� Fewer planning and connection risks/delays 

� There is money looking for a home 

� 20 year index linked income 

5th December 2011

Supply of Finance 

� High Street banks still writing their policies on AD 

� Project finance want larger scale projects, so we need 

multiple projects 

� Government grants/loans etc, not allowed with FITs 

� Equity funds/VCT/EIS/Pension Fund interested for 

different reasons – long term/short term

5th December 2011

Discussion: 

The appetite of the Banking Sector 

to Invest 

Q&A

Why renewable energy? - Envirolink

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