Energy investment for future generations

The renewable energy sector has huge potential – and Bank of Ireland is committed to understanding and supporting businesses looking to improve their green credentials

THE GOVERNMENT has set an ambitious target of generating 40 per cent of the nation’s energy needs from renewable sources by 2020. This will not only make a major contribution to the reduction of our national carbon footprint but also represents significant employment creation potential.

And there is plenty of scope for growth in the coming years with Ireland currently having enough installed renewable generation to meet approximately 14 per cent of electricity demand, according to Eirgrid.

“The potential of the renewables sector is enormous and Bank of Ireland wants to support that,” says Andrew Cullen, head of renewables finance with the bank. “If you look at the wind energy sector alone there are huge opportunities. At the moment we have more than 140 wind farms in Ireland and the vast majority of equipment and technology used in them is imported either from Germany or Denmark. There are huge opportunities for Irish manufacturing firms, particularly in light of the fact that the sector will keep growing up to 2020.”

Bank of Ireland has a strong track record in support for this sector and it launched its €100 million Renewable Energy Fund to support the financing of Irish-located renewable energy projects at the beginning of 2009. This was the first in a series of bank initiatives totalling €200 million that support environmentally friendly projects.

“We have dedicated project finance lending teams in the business banking and corporate banking divisions,” says Cullen. “Both teams have extensive experience in the debt funding of renewable energy projects, both in Ireland and internationally, and have assembled a renewable energy portfolio of scale including waste management, water and wind farm projects.”

According to Cullen, the scope of the renewables sector is broad. “There are a number of different areas,” he says. “At one end there might be companies just starting out in the manufacture of products in the area and they might be looking for working capital and other facilities to get them going. Then you have established companies looking to expand into the renewables area and after that you have renewable energy projects like wind farms and so on. Bank of Ireland is involved in supporting all of these areas and we have identified the renewables sector as a key sector for economic growth.”

The experience and knowledge Bank of Ireland has built up over the years is very important in terms of the support on offer. “One of the issues in the past was that banks possibly didn’t understand the businesses they were talking to,” says Cullen. “This is certainly not the case any more and we have developed a pool of expertise in recent years. We now have a portfolio of 18 separate onshore wind farm projects in Ireland with a total capacity of 170MW and we are just putting the finishing touches to the financing of another €20 million project at the moment.”

He believes the economic potential of the sector is of equal importance to its prospective environmental contribution in the current circumstances. “We now have almost 150 onshore wind farms in Ireland and the employment they created during construction alone would have been quite substantial,” he says. “But the sector’s potential extends far beyond that. There are significant opportunities for import substitution in areas such as turbine manufacture and so on. We want to assist people in starting and growing businesses in all areas of the sector – not just in the generating industry.”

Minister for Communications, Energy and Natural Resources, Eamon Ryan, agrees. Speaking at the Bank of Ireland National Enterprise Week business networking event in the House of Lords last Friday, Ryan highlighted the sector’s potential. “Energy represents a very significant import substitution opportunity for the Irish economy,” he said. “At present we import €6 billion worth of fossil fuels each year and by achieving our 40 per cent target we will make a significant contribution to the economy. There is also an opportunity for the country not just to provide power for our own use but to export it as well.”

In the generating sector, Bank of Ireland’s main focus in Ireland has been on onshore wind farms. “This is the area where there has been most demand in Ireland to date and we have built up a lot of experience in it. We understand the business model and we know what’s happening in the industry generally. Demand for offshore generating capacity will increase in the future and we will be there to support that too.”

Bank of Ireland is also interested in new and emerging renewables technologies. “Wind is by no means the only renewable energy generating technology in which we are interested,” says Cullen. “Ireland has great resources in terms of wave and tidal energy but these are still at a developmental and pre-commercial stage. As soon as they reach a commercial stage we will be there offering support and funding. Also, our corporate banking division is very active in the international renewables sector and has a strong presence in the offshore wind sector.”

Outside of the generating sector Bank of Ireland supports SMEs and entrepreneurs looking to make environmental improvements to their business, expand an existing green business or to add green products or services to an established range regardless of what area that may be in.

“Our €100 million Green Business Loan fund offers attractive rates of interest and flexible repayment terms to businesses who meet the required criteria,” Cullen explains. “A Green Business Loan can provide a business with the finance it needs to fund green projects that will help the environment and improve the bottom line at the same time. It could be improvements to the office itself by installing a solar energy system, fitting high performance windows or installing a renewable heat system. Or indeed the business could be launching or extending a green product range.”

According to Cullen companies looking for finance through the Green Business Loan fund should approach the business adviser in their local branch in the normal way. “They will be in the best position to judge the business plan of the company and if they need additional assistance in evaluating the proposition they are able to call us in the renewables team for assistance.”

He also says loan finance isn’t always the best option. “We fully appreciate that early stage business often requires equity finance rather than credit. We fully appreciate this and that is why we have established the €26 million Bank of Ireland Seed and Early Stage Equity Fund which has a particular focus on green enterprise.”

Loan and equity finance are not Bank of Ireland’s only activities in the green economy. “Our Global Markets division has a lot of expertise in emissions trading,” says Cullen. “Larger firms who might be interested in taking part in the EU emissions trading system should contact us. This is another example of our commitment to green enterprise and the green economy.

“We have built up a body of knowledge and developed a well of expertise . . . that gives us the insights necessary to properly understand and support the businesses that come to us.”

For more information on the events being held during Bank of Ireland’s National Enterprise Week, see allaboutbusiness.ie or contact your local branch