The European Investment Bank (EIB) and Ireland Strategic Investment Fund (ISIF) are among backers of a fund that is seen as closing the gap between energy efficiency funding needs in the EU and institutional investor requirements.
Solas Sustainable Energy Fund ICAV (SSEF) has reached a first close with €140m.
The fund is seeking to raise €300m and will provide debt financing to energy service companies to carry out energy efficiency and small renewable energy projects, mainly in the EU.
The EIB committed €30m to SSEF as a cornerstone investor, backed by the European Fund for Strategic Investments (EFSI), the main pillar of the Investment Plan for Europe.
ISIF has committed €20m to the fund, an investment it says supports the objectives of the Irish Climate Action Plan to reduce emissions from different infrastructure and make Irish homes and businesses more energy-efficient.
“This investment is a further demonstration of ISIF’s commitment to supporting climate action projects as we work towards our aim of investing €1bn in climate action over a 5-year period,” said Paul Saunders, head of climate at ISIF.
“Our investment in the Solas fund will help address the gap between Ireland’s energy efficiency funding needs and the requirements of institutional investors. We are pleased to play a leadership role in promoting additional capital and innovative financing solutions that will increase the take-up of energy-efficient technology in Irish homes and businesses.”
SSEF also signed an agreement with the Private Finance for Energy Efficiency (PF4EE) support scheme, a joint initiative launched by the European Commission via the LIFE programme and the EIB. One of the goals of PF4EE is to encourage private institutional investors such as insurers and pension funds to invest in European energy efficiency infrastructure, particularly in the small and medium-sized sector.
“The Solas Sustainable Energy Fund will combine the financial support from EFSI and PF4EE to mobilise affordable private financing for investments in the energy performance of buildings, including onsite renewable energy production,” said European Commissioner for Energy, Kadri Simson.
“The PF4EE guarantee will set the gold standard for equity investment fund initiatives and engage institutional investors in green assets. This will bring us one step closer to achieving the EU’s Green Deal ambition of becoming climate neutral by 2050.”
SSEF will be advised by Solas Capital, a specialist investment adviser in the energy efficiency sector.
An initial investment will be made into a project portfolio of energy efficiency measures in buildings.
“We are committed to helping our project partners to scale their energy efficiency business models through funding provided by institutional investors which are increasingly committed to aligning their investments with environmental and social goals,” said Sebastian Carneiro, co-founder and managing partner of Solas Capital.
“Each project funded by SSEF will reduce CO2 emissions and create local high-quality jobs across the EU.”
The European Commission noted that the fund is classified as Article 9, “the highest classification under the European Union’s new Sustainable Finance Disclosure Regulation”.
Last week INREV said EU regulators had warned the real estate fund management industry against using the SFDR as a fund labelling system.
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