eeef closed its first community based transaction in the UK in cooperation with Ore Valley Housing Association and the Renewable Energy Investment Fund
The European Energy Efficiency Fund (eeef) launched its cooperation with Ore Valley Housing Association (OVHA) in 2012, with OVHA becoming one of the first Technical Assistance (TA) beneficiaries under the eeef European Commission TA facility. Since deploying TA funds, eeef has worked closely with OVHA by providing guidance to support the project development to realize investments. eeef supported OVHA in the development of a new project scope for on-shore wind turbines and the replacement of over 200 outdated gas boilers in residential buildings owned by OVHA in Fife Council Area in Scotland. This transaction demonstrates eeef’s capabilities in assisting communities to address the technical and financial barriers, which public entities often face when planning climate change related projects.
This project has three financing parties, Cardenden Heat and Power (CHAP), a subsidiary of OVHA, the Renewable Energy Investment Fund (REIF) delivered by Scottish Investment Bank and eeef. eeef is providing a senior debt loan facility to CHAP and REIF is providing the junior debt loan facility for the project. The total project value is £4.6m. Additionally, OVHA/CHAP has provided equity into the project and covered project development costs prior to financial close.
The on-shore wind turbines planned will be located at sites within Fife and are being provided by the market leaders such as Enercon. Operation is scheduled to commence by March 2017 and the project will benefit from a guaranteed feed in tariff for 20 years from the Office of Gas and Electricity Markets (Ofgem) as well as from selling renewable power through to the national grid. Overall, the project’s target is to achieve cumulative annual savings of 99% for primary energy and 96% for CO2e compared to baseline.
The wind project will contribute to OVHA’s Community Investment Plan. The plan outlines local initiatives that can benefit from the income generated from the project and these will be agreed in consultation with the local community. This is a further demonstration of how this type of project supports community groups to maximise the benefits from commercial renewable developments.
Andrew Saunders, CEO of OVHA who leads the project development believes that this project is a good example of a collaborative and innovative approach to address both fuel poverty and make an active contribution to increase the share of renewable energy in the overall electricity mix in Scotland. Minister for Business, Innovation and Energy Paul Wheelhouse said: “This £4.6 million project will enable the development, construction and operation of onshore wind turbines in East Fife. It is an excellent example of joint working between community organisations in the local area, including the local housing association, as well as eeef managed by Germany’s Deutsche Bank, and the Scottish Government, which will provide up to a million through our Renewable Energy Investment Fund. The Scottish Government strongly supports development of renewable energy and provisional energy statistics show that renewable energy sources accounted for over 56.7% of gross electricity consumption in Scotland in 2015, with onshore wind being a key driver for the growth in both our renewable electricity supply and in the delivery of our vision for a greener Scotland. I am delighted this project further contributes to that vision and I am also pleased to see it delivering boiler replacements for 200 local households.”
Kerry Sharp, Head of the Scottish Investment Bank stated that this project helps the further development of renewable energy projects in Scotland and is a good example for future projects and can create and sustain valuable jobs in the region. According to Matthias Benz, Investment Manager of eeef, eeef sees its role in supporting small communities and public entities such as housing associations to deliver projects from the development phase to final implementation in the energy efficiency and renewable energy sectors.
Ore Valley Housing Association
Ore Valley Housing Association is a Scottish Housing Association, a registered social landlord with charitable status operating in Central Fife. As well as providing good quality affordable housing for rent Ore Valley has embraced its role as a wider community organisation and has created a group structure through which to deliver business diversification for community benefit. The group now includes Cardenden Heat and Power Ltd., Ore Valley Energy Ltd and Ore Valley Heating Ltd. which have facilitated these energy projects with the support of both European Energy Efficiency Fund and the Renewable Energy Investment Fund.
European Energy Efficiency Fund (EEEF)
The European Energy Efficiency Fund (EEEF) S.A., SICAV-SIF is a “société d’investissement à capital variable” governed by Luxembourg law and was initiated by the European Commission in cooperation with the European Investment Bank. The initial capitalisation provided by the European Commission was increased with contributions from the sponsors European Investment Bank, Cassa Depositi e Prestiti as well as the Investment manager Deutsche Bank. This project will be the first that eeef implements in the UK, demonstrating the Fund’s ability to offer financing structures suited for project needs and being a driver for new financing solutions for renewable energy and energy efficiency in Europe.
Scottish Investment Bank
The Scottish Investment Bank (SIB) is the investment arm of Scotland’s main economic development agency, Scottish Enterprise, operating Scotland-wide in partnership with Highlands and Islands Enterprise. It manages a suite of co- investment funds including the Scottish Co-investment Fund and the Scottish Venture Fund, which are partly funded by the European Regional Development Fund (ERDF), Renewable Energy Investment Fund and the Scottish Recycling Fund. SIB is the cornerstone investor in the privately-managed Scottish Loan Fund, managed by Maven Capital Partners and an investor in Epidarex Capital’s life sciences fund. Our investment funds support Scotland’s SME funding market to ensure businesses with growth and export potential have adequate access to growth capital. We also provide a team of Financial Readiness specialists to help companies prepare for new investment and access appropriate finance.
Renewable Energy Investment Fund
The Renewable Energy Investment Fund (REIF) was launched in October 2012 and is delivered by the Scottish Investment Bank, the investment arm of Scottish Enterprise – on behalf of the Scottish Government and its Enterprise Agencies.
Its aim is to promote the use of energy from specific renewable sources and drive further investment into key areas of Scotland’s renewables industry. With £103 million of funding available to provide commercially priced loans, equity investments and guarantees, REIF invests in projects that support the