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Solutions throughout the project value chain

A vital part of the solution to climate change is to convert the world’s economies to low-carbon technologies, either through alternative energy or more efficient energy conversion. Renewable energy and technologies to enhance energy efficiency can be both a contribution to the mitigation of GHG emissions and a business opportunity for project developers and investors.

The outlook for the renewable energy / energy efficiency markets is promising, with both ambitious targets for renewable energy generation in many regions and countries and substantial amounts of the most recent bail out plans in industrial economies devoted to so called green investments. Attractive investment opportunities will be available in both industrialized and emerging/transition economies.

Mobilising private capital for low carbon projects requires the promise of risk-adjusted returns from such investments comparable with those achieved for more traditional energy alternatives. First Climate takes a holistic risk assessment approach and is able to assess projects’ market, technology, sponsor, performance and policy risks. First Climate is able to match the resulting risk reward profiles of individual projects or portfolios with the most efficient sources of finance to ensure long term project sustainability. In doing so First Climate takes into account all future project-related revenues and, critically, is able to monetise carbon assets over the long term. We provide access to financing throughout the development process, from seed finance, venture capital, and private equity through to mezzanine and debt finance.

Overcoming barriers to finance: Local capital

Access to local capital markets is key to ensuring the most cost-efficient financial structures are offered to project sponsors. While emerging financial markets often have substantial amounts of capital locked in their financial institutions (commercial banks, pension funds, insurance companies, etc.), perceived high risks prevent project sponsors from tapping this potential. To overcome these market failures, First Climate, together with public and private parties, is designing a guarantee vehicle that would underwrite project risks and thereby contribute to unlocking local capital, particularly with a view to aggregating pension fund resources, allowing for greater financial source diversification.

Post 2012 assets

Uncertainty over the level of international emission reduction efforts after 2012 is making it difficult for environmentally worthwhile projects to fully monetise their emission reductions achieved after 2012. The Post 2012 Carbon Credit Fund exclusively purchases carbon credits generated in the post-Kyoto period, potentially up to 2020. First Climate is therefore uniquely able to provide attractive valuations for post-2012 carbon assets with no counterparty risk as this Fund is capitalised by AAA rated institutions, such as the European Investment Bank (EIB). The regulatory risk associated with the post-2012 uncertainty is borne by the fund’s limited partners. This allows project developers to reduce equity requirements, improve project liquidity ratios and enhance their ability to access debt markets while improving overall return profiles.

Value creation

First Climate’s objectives are strategically aligned with sponsor objectives, as we seek to achieve participation in the project upside whenever possible.

Jointly with partner institutions and investors, First Climate is developing a number of vehicles that will allow First Climate to leverage its skills and asset base in order to capture value throughout the clean tech value chain and in strategically important market segments.