Overview of Iona Capital and the Funding of Development Presentation to the Northern Powerhouse Energy Conference 6 December 2017 Delivering enhanced risk/return in smart energy and resource efficiency

Agenda Introduction to Iona Capital Market trends and opportunities A quick historical analogy Funding in the energy sector

Introduction to Iona Capital A specialist UK Institutional Fund Manager based in London with c. £300m assets under management Investing money for UK Local Government Pension schemes since 2012 Sector Focus: Renewable and Waste Infrastructure, Energy and Resource Efficiency Strong and differentiated team combining private equity, sectoral and operational expertise

Investment History 2011 2017 2017 LP1: Fully invested in 13 projects LP NW: Regional fund 50% invested in 4 projects LP 3: First Close of £90m ex £250m target SERE Fund: In fundraising 2011 2017 2017

Iona Bioenergy Portfolio Over £160m invested in 21 Projects Total installed renewable energy capacity: 65 MWe 6 Project Developers 7 Technology Providers

Yesterday – centralised power Future – clean, local power Market trends and opportunities 1 Shift to renewable energy is accelerating … with increasing levels of distributed energy allied with smart technologies. Indeed, what actually is Infrastructure investment in a Distributed Energy World? Yesterday – centralised power Future – clean, local power

Market trends and opportunities 2 Growth of electric and autonomous vehicles – and the shared economy

Market trends and opportunities 3 Disruption and adoption trends driven by new technologies & reducing cost curves Cost reduction of new energy technologies Source: US Department of Energy – Revolution Now – September 2016 Update. Normalised US$ costs Notes: Land based wind costs derived from levelized cost of energy from representative wind sites. Distributed PV is average residential installed. Utility-Scale PV is median installed cost. Modeled battery costs are at high-volume production of battery systems, derived from DOE/UIS Advanced Battery Consortium PHEV Battery development projects. LED bulbs are for A-type bulbs from reference.

A quick historical analogy – ‘Railway Mania’ The rapid investment into railways in the 1840s-1850s demonstrates the importance of driving novel infrastructure to drive regional growth … but shows it is not without risk …. Index of UK Railway share prices* 1840 1852 * Source: Collective hallucinations and inefficient markets: The British Railway Mania of the 1840s by Andrew Odlyzko

Funding research & development … and infrastructure Investments in the energy space can command varying returns depending on the revenue and asset risk profile and their evolution over time 5% IRR Indicative Revenue Quality 10% IRR Traditional Infrastructure 25% IRR 15% IRR ? ? Operational Projects 35% IRR Pre-construction projects Technology/asset application Counterparty quality Contractual quality ? ? Growth capital VC/ ANgel Asset Quality Quality/portability of asset Diversification/Ability to insure/wrap Suitability for refinance

Funding in the energy sector Significant opportunities exist for energy investors in new technologies and ‘quasi- infrastructure’ projects However markets, technologies and service models are evolving fast and, hence, create risk Investors need to be innovative in targetting attractive opportunities and structuring funding Iona is well positioned to build on its specialist and innovative foundations in this rapidly developing market