It’s taken only 7 months for UKIIF to launch the first of two funds, the Hermes Environmental Innovation Fund, which has already raised £125m and will continue to seek further funding from investors.

The Environmental Innovation Fund, managed by Hermes Private Equity, will now start investing in low carbon and clean technology funds and co-investing in companies, providing much needed venture capital to help these innovative businesses grow. The Hermes Fund will focus on investment opportunities aimed at increasing the efficient use of resources (both renewable and non renewable) at all stages of production and consumption.

Over the past decade, the UK has emerged as a European frontrunner in alternative energy investment and is well positioned to further develop a sustainable market competitive globally.  The Hermes Fund will look to benefit from this attractive market framework and expects to commit its capital over the next 2-3 years.

The Prime Minister, Gordon Brown MP, said

“The UK has a wealth of innovators and entrepreneurs seeking to create the businesses of tomorrow – businesses that will make the UK a world-leader in low carbon innovation and industry, and help to tackle some of the biggest challenges we face around energy and climate change. This fund will provide substantial investment where it is needed and deliver strong returns for investors.”

Science & Innovation Minister, Lord Drayson said:

“Investment has flowed into the UKIIF at extraordinary speed. It’s already one of the largest European funds for investing in high-tech firms. But what’s more important is rapidly channelling that capital into Britain’s burgeoning green tech sector. After a tough spell, things are looking up for our entrepreneurs and innovators.”

Energy and Climate Change Minister David Kidney MP said:

“Cleaning up our energy supplies and improving energy efficiency will give the UK the opportunity to develop the low carbon industries of the future.  This new fund will help the UK to build on existing strengths in the sector and enable British companies to demonstrate and commercialise these technologies.”

Hermes Private Equity CEO Susan Flynn commented:

“Increased awareness of environmental issues and policies to tackle climate change presents a real opportunity for investors and the innovative companies we will invest in. At this stage in the economic cycle there are many forward-looking companies who may not have funding available to them. The Hermes Private Equity Environmental Innovation Fund (HPEEIF) will ensure that those seeking finance for promising new environmental ventures will have access to a source of funding.

We have already identified a number of attractive investment opportunities and anticipate that HEIF will begin to deploy capital shortly.”

The UK Innovation Investment fund was announced last June by the Prime Minister as part of the Government’s strategy for Building Britain’s Future. Hermes Private Equity and the European Investment Fund were confirmed as fund of fund managers for two separate funds of funds. Backed by £150m investment by the Department for Business, Innovation and Skills, the Department of Energy and Climate Change and the Department of Health, it has already attracted private investment to more than match this amount with the total first closing of £325m.

The UK Innovation Investment Fund will drive economic growth and create highly skilled jobs by investing in businesses where there are significant growth opportunities. Independent research^* estimates that the global market for low carbon and environmental goods and services (LCEGS) was already worth £3 trillion in 2007/08 and could grow to an estimated £4.3 trillion by 2015.

According to figures from the Carbon Trust, the UK is now the sixth largest low carbon and environmental economy in the world with 3.5% of global market share. This brings annual economic benefits and investment to Britain of £6-8 billion.

The UKIIF will target small growing businesses, start ups and spin outs including pre-profit and pre-revenue stages of development.

Evidence shows that venture capital-backed companies significantly out perform other companies in terms of their ability to create wealth and generate the spill-over benefits including export performance and the creation of high skilled jobs vital to the economy.^**

^* Source – Innovas 2009.

^** Source – British Venture Capital Association DATA 2008 – the economic impact of private equity and VC in the UK.

Department for Business, Innovation & Skills

The Department for Business, Innovation and Skills (BIS) is building a dynamic and competitive UK economy by: creating the conditions for business success; promoting innovation, enterprise and science; and giving everyone the skills and opportunities to succeed. To achieve this it will foster world-class universities and promote an open global economy. BIS – Investing in our future.

“DOE is committed to advancing clean energy technology development and deployment globally,” said Secretary Chu.  “The Low-Carbon Communities of the Americas initiative offers an opportunity for the Department to work closely with our neighbors to reduce energy use, increase energy security, and promote a low-carbon future across the Western Hemisphere.”

Through the LCCA program, DOE invited countries to submit proposals for collaboration in areas including renewable energy development and building and industrial energy efficiency.  DOE’s National Renewable Energy Laboratory (NREL), along with other National Laboratories, will provide technical assistance to countries receiving support under the initiative.

Later this year, Secretary Chu will host his counterparts from North and South America at the Energy Ministerial of the Americas to continue developing and expanding joint clean energy and climate efforts.  The Energy Ministerial will be held from April 15-16 in Washington, D.C.

DOE and NREL have selected the following three projects under the LCCA:

Energy Efficiency Center in Costa Rica

The government of Costa Rica, along with the Natural Resources Defense Council (NRDC), will create an Energy Efficiency Center in Costa Rica that will train and certify professionals in energy efficient technology and auditing procedures, and help expand the technical knowledge base and capabilities of countries across Central America.  Once established, the Center will partner with leading energy efficiency organizations to conduct its own research on efficiency programs and energy savings in tropical areas.  The results of this research would benefit the Central American and Caribbean region as a whole, as well as provide important information for other nations with similar climates. The project will bring together DOE, Costa Rica’s electricity and telecommunications group ICE, the NRDC, and the University of Costa Rica to create the program and training materials, train the Center’s future instructors, and run two initial energy efficiency auditor training courses.

At an event earlier this week in San José, Costa Rica, Costa Rican President Oscar Arias Sánchez joined with DOE officials and representatives of Costa Rica’s Ministry of Energy and Environment, ICE, NRDC and the University of Costa Rica to launch the Center.

Building Low-Carbon Communities in the Caribbean

This proposal from the Organization of American States (OAS) and several Caribbean governments will enable participating countries to expand the development and use of renewable energy and energy efficiency systems, helping to increase the sustainability of their energy supplies while reducing carbon emissions.  The project will target local training and technical programs on how to conduct energy efficiency audits and retrofits.  There will also be a focus on strengthening communities’ capacity to review and evaluate resource assessments related to indigenous renewable natural resources. This project will engage St. Lucia, Dominica, Grenada, St. Kitts & Nevis, The Bahamas, Antigua & Barbuda, and St. Vincent & the Grenadines.

Dominica Wind Project

This project proposed by Dominica aims to prove the viability of smaller, distributed wind generation as an alternative to traditional, megawatt-class, utility-scale turbines. Efforts will take into consideration available technologies, economics, and constructability to identify and model appropriate turbine technologies under 250 kilowatts.  The Dominica Wind Project will also model commercialization strategies and the impact on the electrical grid of small distributed wind generation, assess the impact on energy costs for consumers, purchase and install initial pilot turbines, and implement a public information campaign to expand the use of renewable energy.