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Interview Richard Nourse, managing partner Stephen Lilley, partner I n 2008, Tony Blair had a dream. The then "Utilities can either have says: "Following the financial crisis, what looked like great big, growing, strong, 'they'll prime minister, together with his cabinet, advisers, European colleagues and indeed their own really big balance get us there' utilities, which would be interested in the new technologies, are now shadmany in the energy industry itself, believed sheets … or they need to that by 2020, the UK's energy could be clean. sell assets and recycle the ows of their former selves." the fund was set Lilley explains that when The targets were agreed to much fanfare and up, it created a new business model for the capital" little thought was given to the estimated £110 sector. "[Utilities] can either have their own billion of investment the sector would require really big balance sheets – which they can't really do – or to meet them. It was assumed the cash would flow in they need to sell assets and recycle the capital. If you can from the big utility companies. meet that need, you can provide a product that's a great "I think people were nervous about where the world yielding product for investors, but also serves a purpose." was going but they didn't worry – in the slightest – about Nourse jumps in to highlight the distinction between the capital," recalls Richard Nourse, managing partner the two Greencoat funds. He explains that the business of Greencoat Capital. Then the world changed – and that model of the ESB Novusmodus fund looks at technology. is where organisations and fund managers like Greencot "So, for instance, we think solar is going to be huge for Capital come into play. generation across Europe in the next ten years," he says. Five years on from the crash, and Greencoat is one of "I think it is all to do with cost. It seems one thing we the few businesses that could be said to have benefited have learned since 2008 is that government doesn't have from it. Established in 2009, Greencoat Capital is the sole infinite patience for subsidising large amounts of rather adviser to the €200 million cleantech fund ESB Novusunproductive generation. So £400/MWh for a 4kW roof modus LP, which steps in where traditional funders now in the UK, and £1,000 per tonne of carbon abated – it fear to tread. It invests between €3 million and €20 milis not just bad economics, it's verging on immoral. Just lion in green energy projects – after the proof of concept think what else you could do with £1,000." – with an aim of seeing a return within six years. Nourse continues: "We think wind will be a huge There is a second side to the business, Greencoat UK deliverer as well", receiving a knowing nod from Lilley. Wind, which floated on the London Stock Exchange in "It is an obvious and sensible thing to do and there will March this year for £260 million. It has already invested be plenty more of it." in six onshore windfarms, and the Rhyl Flats offshore Both Nourse and Lilley are what appear to be a rare windfarm, and Utility Week is here today to learn more breed in the energy sector – investors who are happy about its plans. Sat at the table is Nourse and a surprise with government policy and do not believe blame minguest to the interview, business partner Stephen Lilley. isters for the investment slowdown. They praise the relaAs the conversation goes on, it is clear that the two are tive stability of energy policy in the UK, although they something of a double act, bouncing off each other and do raise some concerns about the transition between the even finishing the odd sentence. Renewables Obligation system and the contracts for difThis free thinking and creativity is key to Greencoat, ference (CfD) regime. giving the fund an edge on traditional utilities. Nourse UTILITY WEEK | 11th - 17th October 2013 | 9