Joule Assets Inc. plans to raise 100 million pounds ($150 million) by the end of the year to invest in U.K. companies that help businesses and homeowners curb energy waste and cut bills.
The company is raising an initial 5 million pounds for its so-called SmartCity Enterprise Investment Scheme portfolio and will channel this into four or five businesses, Joule Assets Europe Chairman Jessica Stromback said in an interview in London. EIS funds are backed by the U.K. government and offer tax breaks to investors in “higher-risk” companies.
There are “pockets of value” within the U.K. energy market that haven’t yet been exploited, she said. There is a push to save power, to use clean sources of supply and an awareness that efficiency measures can cut bills, Stromback said. The nation’s market is open, where both businesses and customers can directly benefit from savings, which is “unique” among European countries.
Homes and businesses are installing energy-efficiency measures that include low-energy lighting and insulation to reduce bills by avoiding waste and boosting productivity. The International Energy Agency in October said investments in efficiency are overtaking wind and solar spending, reaching at least $310 billion a year.
Joule is working with Quantum Origination Ltd., which provides advice to businesses, to find companies that help customers optimize energy use across a city’s infrastructure. That includes lighting, buildings, renewable energy and transport.
“Our proposition is unique because we will provide equity finance for companies through the EIS that they can use to fund commercialization and growth, and through Joule we’ll then also provide debt that they can invest directly in projects,” Stromback said. “We’re targeting electricity sales companies that create an ecosystem for customers, providing advice and information technology systems allowing them to optimize their use of renewable energies and energy efficiency.”
The fund is currently looking at businesses that help towns install efficient lighting, operations that help industrial complexes to optimize their consumption through measures such as efficient refrigeration, and companies that help cut bills for low-income housing. It’s targeting returns of at least 30 percent, Stromback said.
Venture-capital investment in smart technologies such as intelligent power grids and energy efficiency reached $392 million in the first quarter, 32 percent more than the previous three months, Mercom Capital Group LLC said in a report Wednesday.
Joule plans to use the fund as leverage to start a similar Europe-wide vehicle that will also be about 100 million pounds in size. It wants to start the fund next year, Stromback said.