funding community projects at scale Will Dawson, Principal Sustainability Advisor, Forum for the Future

Overview Who are Forum? Our approach to energy Our energy work Community energy funding at scale Local authority funding at scale Sources of funding Energy Services Frontline Take homes

Forum for the Future Forum for the Future is a non-profit organisation working globally with business, communities and government to create a sustainable future. We aim to transform the critical systems that we all depend on, such as food, energy and finance, to make them fit for the challenges of the 21 st century. We have 15 years’ experience inspiring new thinking, building creative partnerships and developing practical innovations to change our world.

UK Investment required by 2020 From: Transform UK: Mobilising Investment for a clean energy future

JT Group Chi Group

Some of our energy projects at the Forum Gatecrashing the energy sector

Climate finance initiative SEEDA - Low Carbon West Oxford -Ovesco -Eastleigh Borough Council West Sussex -Low carbon building refurbs -Schools -Own estate -Behaviour change

Feed-in tariff financing in action Low Carbon West Oxford Local share issue £1 million raised for renewables 500kW renewables capacity VFM: c.12x C reduction from PV 90 out of 1600 households Scaling up to city then county

Case study: Birmingham Energy Savers funded by Birmingham Council, energy suppliers and commercial banks, initially £100 million 15,000 houses first, disadvantaged areas Renewables and energy efficiency Refinance: £2 billion for the next 200,000 homes 500 new jobs per 10,000 homes refurbished Part of ‘60% by 2026’ City target

Community Energy Co: Renewables and retrofits Households Businesses Organisations Community benefit projects Low carbon communities model Key Flow of money Support provision and information Energy and retrofit InvestorsCommunity Fund Projects at least £1 billion to unlock to next 5 years

If the returns are there, why’s the big money hiding? 1.Most projects are too small to get the banks out of bed 2.Pension funds don’t understand the opportunity – flight to known risks 3.Each project on its own is too risky

Steps to scaling up community energy StepExamples 1. Create aggregation fundsFSE Community Generation Fund 2. Use local authority borrowing powerBirmingham Energy Savers 3. Guarantee fund for project lossesRadian/GESB Revolving Retrofit Guarantee Fund trial 4. Unlock new investorsEnergy4all, OVESCo share issues; UK Carbon Reporting Framework; FSE 5. Support and information provision to the whole system to grow project sizes Elements: Local Unitied, LDA, Radian, Community Central, Energyshare / British Gas, Forum for the Future, Transition, FoE 6. Higher FiTs and RHIs for community projects We and others are working on it! 7. Standardisation of project documentation to reduce due diligence costs and hassle We are looking at this with a number of financing institutions

Sources of capital funding Established Banks Local authority Local people Corporates (e.g. British Gas and energyshare.com) Possible in the future Regional revolving funds, e.g. Finance South East Community Generation Fund Green Investment Bank

Energy services Problem: risks and rewards divide interests of energy suppliers, engineers and users Current Solution: energy performance contract / service company NHS Trust and Honeywell

London’s RE:FIT leadership -Framework Agreement to carry out works in the UK public sector -Buyer guidance and toolkits -42 buildings so far – Fire, Police and TfL: -£7m investment, -£1m p.a. savings, 7-year payback -28% energy saving average -58 buildings in Tranche 2 -£70m London Green Fund for financing -~ 3,000 buildings (40% of estate) in Tranche 3

Sources of capital investment Established Capital reserves Public Works Loan Board Banks Regional Growth Fund European Regional Growth fund London Green Fund Possible in the future Regional revolving funds, e.g. Finance South East Community Generation Fund Local investors Green Investment Bank

Energy Services Frontline 1.Carbon: At least 35% savings 2.Frontline: reallocate savings to services 3.Whole community: involving building users, sharing savings with community 4.Scaling up: pilots to mainstream, e.g. role of Green Investment Bank, HM Treasury accountancy rules

Recap of financing models covered Aggregation via intermediate funds: small is beautiful and together can be large Community share issues: achieve much more with community ownership Local authority borrowing : for communities and for own estate Service contracts: pure pay out of savings Wholesale refinance: role for Green Investment Bank Risk pooling: e.g. Finance South East Self financing: from own balance sheets

Forum projects and publications