And now there are three... listed ‘energy efficiency’ funds
And now there are three...
listed ‘energy efficiency’ funds
The IPO of Aquila Energy Efficiency Trust plc, which raised £100m last week, marks the third energy efficiency fund listed on the London Stock Exchange; the others being SDCL Energy Efficiency Income Trust and the Triple Point Energy Efficiency Infrastructure Company.
The arrival of Aquila’s fund is another sign that energy efficiency is finally becoming a recognised asset class amongst institutional investors, something that has to happen if we are to scale up investment to the levels we need to achieve climate goals. It is also a sign of the changing nature of the definition of energy efficiency.
The portfolios of these funds show some ‘real energy efficiency’ i.e. end-user demand reduction, notably LED lighting portfolios, but they also include distributed or embedded generation assets, both solar and CHP. This is not a criticism. The shift towards a decarbonised, decentralised and digitised energy system means an increased focus on the demand side of energy, rather than just on the supply side and the meaning of the term ‘energy efficiency’ is shifting to incorporate all demand-side assets, rather than just referring to energy-saving projects.
The term is being used to cover the whole range of technologies and business models, including: demand response, distributed generation, behind-the-meter energy storage, virtual power plants, micro-grids, building-to-grid, industry-to-grid, vehicle-to-grid, as well as local generation and utilisation of heat in efficient and flexible systems.
The emergence of these listed funds, which sit alongside a growing number of private and private-public funds around the world reflect the shift of investment occurring in the energy transition, from highly centralised infrastructure to highly decentralised infrastructure, and passive consumers becoming prosumers.
The amount of capital being allocated to energy efficiency is increasing. We need the capital to be there, but the capital needs good projects to invest in and the real shortage in this domain is not capital but rather a lack of well developed bankable projects. We need to build capacity in project development skills in both clients and the supply chain. A new business model aimed at addressing these problems, ESCO-in-a-box®, has been developed by EnergyPro Ltd, which is led by Cameron Barney Partner Steve Fawkes. It is now operational in the UK and Kenya and looks set to expand to new markets, working alongside dedicated funds.
If you want to find out more about how ESCO-in-a-box® is helping to develop and implement financeable energy efficiency projects, or if you want to understand and invest in any aspect of this emerging market.
