ESVM Ltd. facilitates climate business investment

© Energy Strategic Value Management, climate business investment
© Energy Strategic Value Management

Energy Strategic Value Management Ltd. delivers private equity investment in renewable and low-carbon climate mitigation technologies, projects and infrastructure

Energy Strategic Value Management Limited (ESVM) is a new financing and advisory business to ‘engage the private sector’ in ‘climate-smart’ ways. Founded by experienced energy market and climate business investment professionals, ESVM seeks to identify transformative energy technologies, clever low-carbon energy projects, and poorly performing or otherwise dislocated energy assets. Through enhanced and innovative management and financial structuring, the ESVM team can create significant value from these opportunities for a wide range of public and private sector stakeholders, and for the community at large. Comprising engineering, commercial, financial and legal expertise, ESVM’s management enjoys wide relationships among government entities (including public sector policymakers and regulators), investors, financiers, utilities and contractors, alongside both project and technology developers.

In a recent report titled ‘Creating Markets for Climate Business’ the International Finance Corporation (IFC) highlights that if the commitments of the Paris Agreement are to be realised there will be over $23 trillion (~€20tr) in potential investment opportunities in 21 large emerging markets between now and 2030. Add to that the innovation and investment required in the OECD over the same period, and the estimates of global investment required for building infrastructure and meeting climate targets add up to a staggering $6 trillion per year. The IFC states that ‘engaging the private sector in climate-smart investments will be essential’.

The IFC report clearly points out that the world’s energy, economic and environmental future will only be secured through a sustainability transformation based on governments and public authorities at all levels working together with the private sector in a more collaborative and strategic approach to the planning, design, financing and development of new markets and new types of infrastructure. In order to deliver successful outcomes for its clients ESVM is therefore active at the interface between energy system policy, regulatory development and technology innovation.

Climate business investment and ‘push-pull’ policies

Developed country governments have typically used a combination of ‘innovation-push’ and ‘market-pull’ policies to encourage private sector investment in new technologies and climate mitigation solutions. However, this use of a conventional economic approach to dealing with climate change is clearly inadequate and too slow, a fact highlighted by Bill Gates and the Breakthrough Energy Coalition with the Mission Innovation initiative. The governments of developing countries have the additional difficult task of crafting policies that create local markets for climate business against the background of reducing poverty, providing access to cheap energy and building their economies.

The construction and operation of infrastructure for the public good, such as water, roads, rail, and waste disposal, has traditionally been the remit of the public sector, and has happened ahead of what we can describe as ‘commercial’ market demand. Public sector participation in this type of infrastructure is inevitable because of long lead times for planning, design, financing and construction. In the case of climate-related projects and infrastructure for which there is insufficient market pull or high-risk private sector business cases, the short time in which CO2 emissions must be reduced means that typical innovation and commercialisation cycles have to be replaced with a process of designed delivery.

Innovation

Technology innovation is also risky and climate policies generally have been malleable at best. As a consequence, large amounts of private capital are still not being deployed at scale on effective climate-related projects. Leveraging its understanding of policy and regulation, ESVM collaborates with project developers and private equity sources to facilitate climate business investment in energy assets, technologies, and businesses at any level of maturity. Our key capability is to bridge the interface between policy formulation and regulators, and the needs of financiers, developers and contractors. Our goal is to make difficult or risky projects and infrastructure investable irrespective of scale through business model, finance, policy and market innovation. We work across all climate business investment sectors and geographies.

Consistent with the IFC, our view is that country decarbonisation roadmaps need to include national, and possibly supra-national, infrastructure plans that provide a strategic vision and delivery framework that creates the right conditions for individual projects within a system context. In order to attract private sector capital, national plans should include a clear infrastructure project portfolio spanning at least a decade. This will increase the market attractiveness of project opportunities and allow investors to see the benefit of building their capabilities and expertise within a country or region.

The roadmaps and delivery plans must of course be underpinned by a supportive policy and regulatory environment that allows new commercial business models to develop which match the individual profiles and needs of different regions. The key to attracting capital will be optimising risk allocation, sharing and mitigation between the public and private sector while ensuring transparent governance and regulatory procedures. This will give investors the confidence they can achieve an appropriate risk-reward balance while at the same time deliver best value for money for the public.

The ESVM model

ESVM’s operational model is to utilise the team’s extensive relationships to bring together high-quality management expertise alongside appropriate and climate business investment capital providers, technologies and public-sector organisations, with a view to creating financially and environmentally sustainable businesses that offer investors attractive long-term returns. ESVM intends to be authorised and regulated by the United Kingdom Financial Conduct Authority (FCA) for financial advisory, and in due course, investment management and principal finance business. Currently, ESVM is co-located with an FCA regulated entity and one of the ESVM directors is FCA registered through that entity.

ESVM has a portfolio of activities across a number of energy supply and demand sub-sectors, and already enjoys in principle commitments from a leading infrastructure fund and multilateral lending agency to progress such opportunities to commercial, financial and investment reality. Some of our immediate markets and opportunities include:

  • Energy from waste and disruptive biofuels;
  • Low power loss transmission cables for onshore and offshore applications;
  • The turnaround of distressed (i.e. poorly performing or over leveraged) solar power plants, with priority regions in Italy, Spain and southern Europe;
  • Wind and solar renewable energy projects in Eastern Europe;
  • Carbon Capture, Utilisation and Storage;
  • Low- or zero-carbon hydrogen production, distribution and utilisation technologies;
  • Micro-grids with energy storage and efficiency technologies;
  • Sub-Saharan Africa power generation projects (in particular, solar together with gas fired plants);
  • Applications of blockchain technology in conjunction with distributed micro-grids;
  • Low emission service vessels for offshore operations; and
  • A selection of energy projects across the MENA and central Asian regions.

Energy Strategic Value Management is ready to facilitate climate business investment in mitigation technologies, projects and infrastructure

From start-ups to mature funds, our objective is to mobilise private equity for the benefit of sustaining society on a planet needing help.

Special Report Author Details
Author: Dr Ward Goldthorpe, Director
Organisation: Energy Strategic Value Management
Telephone: +44 20 7484 0901
Email: w.goldthorpe@energysvm.com
Email: energy@energysvm.com
Website: Visit Website
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