Signing of Equity and Facility Agreements of £300m Solar Project
March 2011
Eaga has today announced the signing of equity and debt financing documentation for its Solar Project, agreeing funding of £300m to install Solar Photovoltaic (“PV”) panels on the roofs of residential dwellings in the UK
This groundbreaking new funding model is the first and largest private finance structure of its kind and opens the way for similar future projects, for which there is considerable scope given the scale of UK Government’s targets for the installation of domestic renewable energy systems.
Leveraging private sector investment to deliver public sector policy in this way is a key cornerstone of the Government’s policy agenda over the next decade, with initiatives such as Green Deal likely to be dependent on similar arrangements. In announcing this market-leading initiative today, Eaga has shown that it is well positioned to take advantage of these future opportunities
Funding consists of equity totalling £75m, which will be invested in the newly created Special Purpose Vehicle company by:
• Eaga (£15 million)
• HSBC Environmental Infrastructure Fund (£30m)
• Barclays European Infrastructure Funds (£30m each)
Debt financing of £225m will be provided by a syndicate of five banks:
• HSBC
• Lloyds
• NAB
• Santander
• RBS
Eaga has received advice from J.P. Morgan Cazenove, Noble Grossart, Brewin Dolphin and DLA Piper in executing the transaction.
How it will work:
The project uses an innovative structure, which enables private finance to deliver public policy
By working in partnership with social housing providers, the model allows the householder to benefit from the free electricity generated by the solar energy, while Eaga and its equity partners receive the income from the feed-in-tariff (FIT)
Focusing the partnerships on social housing providers will mean that many of the beneficiaries will be householders on lower incomes, who typically struggle with higher energy costs. The social element of the initiative is an important element that sets it apart in the eyes of Government
Eaga will install the PV systems and also provide aftercare services
An average system on a single property can help households to cut energy bills, typically by around a third, and annual carbon emissions by up to a tonne.
It is expected that this project will install PV systems in over 30,000 homes.
Eaga has already installed in excess of 1,000 solar PV systems to date, and it is intended that these will be transferred to the SPV in due course
Eaga has also agreed contracts, or is in advanced negotiations, with 11 social housing providers
Carillion, who have made a recommended offer for Eaga, are highly supportive of the Solar Project and have supported and endorsed its signing
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Notes to Editors
1. Eaga is a green energy services and outsourcing company and a leader in the provision of outsourced services, products and solutions that address the environmental and social objectives of Government and the private sector. Eaga’s key market drivers are centred on climate change and social inclusion.
2. Eaga is the UK’s leading residential energy efficiency provider. Working in partnership with central and local Government, utility companies and other commercial organisations, Eaga operates across the UK and in the republic of Ireland, India and Canada, employing around 4,000 people.
3. Eaga was established in 1990 as a private limited company to lead Government-funded efforts to improve the living conditions of vulnerable people living in cold, damp and energy inefficient homes across England. In 2007, floated on the London Stock Exchange and became a plc.