Expertise in renewables advisory: an export opportunity?
8 September 2020: The UK is fast becoming a centre of expertise for advisory on renewables projects, at home and overseas. How might this contribute to the global recovery?
It is reasonable to assume there can only be a green recovery if there is the expertise in place to coordinate the myriad parties needed to help make that step change. These parties, in the case of a renewables project, comprise engineers, energy and technology experts, construction companies, investors and bankers amongst others, all bound by a common purpose and informed by expert advisory.
Neil Rutledge is a Chartered Accountant and Director of Amberside Advisors. He is clear about the value that the UK’s burgeoning advisory expertise around renewables and infrastructure can bring to projects internationally. With a couple of decades under his belt as an advisor to investors, developers and public bodies on infrastructure projects and, prior to that, a partner at Grant Thornton where he led the infrastructure financial modelling team, Rutledge is well-placed to give an authoritative insight into this fast-growing sector.
Experience and expertise in renewables
Amberside Advisors is an independent financial advisory practice providing financial advice to large-scale low carbon and infrastructure projects. Financial modelling and commercial nous are the firm’s calling cards and during his time at Amberside, Rutledge has delivered advice to funds on European, Middle Eastern and South American public-private partnerships (PPP) and renewables projects.
Rutledge points out these types of projects are long-term, often financed through project finance debt and require deep knowledge of both the technologies and the suitable commercial structures.
While much of his team’s experience has been gained on PPP and project financings of traditional social and economic infrastructure, Rutledge points out: “Investor appetite for projects that meet ESG (environmental, social and governance) standards such as renewables has grown, and we have run towards these.” Much of the work undertaken by the team today revolves around the net zero carbon agenda.
And this type of work has a truly global focus. Rutledge continues: “We have a very international outlook. A good proportion of our projects are European and we work with investors and banks drawn from across Europe, US, Korea and Japan.”
Coherent thinking around challenging questions
Coherent thinking and a relentless commitment to avoid ‘greenwashing’ have helped Amberside win a wide range of international advisory work.
“We have a five-year mandate with the African Development Bank, helping them to implement state-of-the-art loan appraisal tools – the same ones we use in our day-to-day business,” said Rutledge. “We have also delivered associated training to show their team how we go about assessing projects. In terms of a future vision, this is a strong example of the sort of thing that UK professional firms can do well.”
Rutledge is very interested in how UK firms can deliver successful advisory overseas when there is so much culture and history in the mix. “It is so easy to take the wrong project and do it badly,” he points out. “We like getting projects over the line through a deep understanding of all stakeholder viewpoints. We avoid theoretical thinking that does not achieve anything. We apply a very strong filter in this regard when choosing projects.”
The UK as a centre of excellence
Why is the UK fast becoming a centre of excellence for renewables infrastructure project finance and advisory? A key driver is the UK Government’s commitment to renewables and its desire for this particular export success story to be heard. The combined impact of UK expertise in technical, legal, financial, and professional fields has helped to create this export opportunity, but government guidance has enabled the supporting advisory to be both coherent and portable.
Rutledge points to HM Treasury’s recent reworking for overseas governments of its Green Book which delivers guidance on how to appraise and evaluate projects and programmes using its ‘five case model’ which assesses projects from a strategic, economic, commercial, financial and management perspective.
In addition to the Green Book, Rutledge points out that the UK Government’s Infrastructure and Projects Authority has also issued guidance on delivering infrastructure projects which he describes as “grounded”.
Clearly, there is an ongoing commitment from the UK Government to provide useful tools that support project delivery by creating methodologies which are eminently exportable.
Attracting investors with the ‘right’ type of project
So, what drives Amberside and its investors? “Our investors lean towards investing in those projects which are underpinned by a strong policy agenda,” he says.
Rutledge points out that over the last decade, projects have grown larger. Five to 10 years ago, renewables projects like solar were at a scale (5mW) that was attractive to retail investors (individuals) who invested tax-advantaged cash. Equivalent projects today are typically 50mW and only institutional investors – the typical profile of an Amberside investor – have the appetite, although they are more risk-averse and require projects to be professionally developed. “They will look where policy is headed,” he says, “for example, in relation to carbon pricing, subsidies or taxes.”
Waste to fuel projects are a current area of interest for Amberside because of the generous subsidy regime, which is funded by traditional oil and gas suppliers, rather than the taxpayer. Heat networks are another area where the UK Government’s £320m investment programme and the ban on gas for new-build residential from 2025 are driving change.
Looking to the future
At the heart of all of this activity is the need for expertise – in forecasting, modelling and investment management – and for it to be meaningful to an overseas market. The UK, and indeed the profession, has this expertise in spades.
Should governments around the world choose to invest significantly in infrastructure – especially in relation to renewable energy – as a means of clawing back the economy post-COVID-19, Amberside and others experts in this area will be well placed to advise.
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