Establishing a Smart Local Energy Fund

The Assignment

Ambition North Wales (“ANW”) is a public-private partnership focused on fostering economic growth and job creation in the North Wales region. The partnership covers the six local authority areas of North Wales comprising the councils of Gwynedd, Anglesey, Conwy, Denbighshire, Wrexham and Flintshire. The partnership also included Bangor University, Wrexham University, Coleg Cambria and Grŵp Llandrillo Menai. 

The partnership secured a final Growth Deal for funding in 2020, which is a collaborative effort between the UK government, the Welsh government, and local authorities in the North Wales region. The approach is to build on the region’s strengths to boost productivity and assist in tackling long-term challenges and economic barriers to promote growth in a scalable, inclusive, and sustainable way, in line with the Wellbeing of Future Generations (Wales) Act 2015.

The Growth Deal also seeks to promote the development of clean energy infrastructure and initiatives, such as wind, solar, and hydroelectric power. This will help to reduce the region’s reliance on fossil fuels and lower its carbon footprint, as well as create new job opportunities to take advantage of a rapidly changing global economy. As part of growth deal funding, ANW sought to establish a £25m Smart Local Energy investment fund to support the growth of the clean energy sector in the region.

The Role

31ten worked closely with ANW on their initiative to establish a Smart Local Energy investment fund, across three broad phases of work:

Initially, 31ten were commissioned to support the development of an HMT ‘5 case’ outline business case (“OBC”), along with an Investment Strategy and a Fund Management Plan, to outline how the fund will be operationalised and managed. Responding to their market analysis and Economic Strategy, we supported ANW in defining a set of objectives and principles for the Fund through a series of workshops. We used this same approach to also determine the range of options to be considered, the decision-making criteria to be used to evaluate them, and the critical success factors that were to form part of the consideration. This was complemented by bespoke financial modelling to demonstrate the affordability of the fund.

Additionally, we designed a Fund Management Plan to provide a guide to operationalising and managing the investment fund, while also ensuring that the fund would realise its intended benefits and attract investors interested in the green energy sector in the region.

Off the back of the Fund Management Plan, we were re-engaged by ANW to conduct market engagement to test and refine the investment strategy with potential fund advisors, as well as procurement support to ensure an appropriate partner could be sought. As part of this work, a scope of services for a Fund Advisor was also developed by 31ten.

Finally, following this second phase of work, we were appointed to refresh the economic appraisal and financial modelling, in order to produce a final business case: a prerequisite for fund launch and release of funds. This analysis was used to inform the expected commercial returns from the fund, as well re-testing that the proposed split across funding pots delivered value for money in respect of the fund’s objectives.

Alongside the OBC and Fund Management Plan we prepared a draft Investment Strategy setting out the key criteria and priorities for investment as a key document as part of investment decision making.

Key Outcomes

31ten has supported ANW in successfully establishing the Smart Local Energy Fund via the Business Case process and approval of release of Growth Deal funding. In addition, we worked with ANW to develop market-informed investment strategy and commercial procurement advice, resulting in the successful appointment of a fund advisor for each of the two funding pots: voluntary sector fund and private sector fund.

We are now providing support to ANW acting as a Commercial Advisor during the mobilisation of the fund.