FINERGREEN: Making Renewable Transactions Happen

A fundamental transition, away from economies run on carbon-based fuel, towards renewable, sustainable, long-term solutions is needed globally, and this news is not new. In the early twentieth century, academics were aware of, and reporting, the impact of burning fossil fuels, like coal, and the subsequent release of carbon dioxide. It’s a problem that has never really seen any prospect of real change as oil and gas added to coal to leave an entire industry, and entire planet, relying on non-renewables. But, in the past two decades progress has been stepped up, with technology and appetite for change accelerating. Solar, wind, hydro, wave, biogas, hydrogen – all have received major attention in an attempt to halt global heating and improve long-term prospects for the climate.

However, it is at the very heart of the system where progress has been notable. For any project to succeed, there must be money to inject. Investors must be able to realise returns, and there must be a business case for cash to flow into new ideas. For too long this was not the situation. Solar and wind power was extremely expensive and unreliable, biogas and hydro plants were very technical and required years of preparation. Today, the scenario is different.

Couple a burgeoning demand from the public for governments and big businesses to change their ways, and a drive from those with money to ensure their assets are managed with ESG principles, now renewables are the attractive option. And considering the reinvention and transformation of Orsted (formerly DONG Energy), which has proven that renewable energy can be profitable, a new path is being sought.

Helping, financially, for people to step in the right direction is boutique financial advisory Finergreen. Headquartered in Paris, but with a global footprint, this specialist renewable energy finance business is focussed on mergers and acquisitions, project funding and strategic advisory.

Founded by Damien Ricordeau in 2013, this exciting business has grown significantly from a single employee business with big aspirations, becoming home to 60 highly skilled industry experts across 10 locations, boasting €2.5 billion of transactions representing 10 GW of assets.

“Last year, we were ranked number two in the world in terms of the number of transactions completed in renewable energy space with 26 transactions, just behind a major long-established global player who made 30. This year, we will make more than 30 transactions and typically we are busy with major renewable projects,” Ricordeau tells Energy Focus.

 GROWING PRESENCE

 Ambitious and searching for growth opportunities, mainly in emerging markets, Finergreen opened four new offices over the past two years – quite the feat considering market conditions, heavily hampered by the Covid-19 pandemic.

 The strategic openings are designed to give the company full coverage of chosen markets, and allow decision making to take place close to clients.

“I created the business in France by bringing in interns who had just finished university,” says Ricordeau. “It was a new market and we learned together. I employed them as soon as I had the money to do so. I then began opening offices so that we could grow. The first two were in Abidjan and then Singapore. They were created by two ex-classmates of mine from Dauphine Université, Jean-Jacques Ngono and Rohan Singh.

“In 2020 and 2021, we opened four offices; one in Madrid to cover southern Europe, and one in Budapest to cover eastern Europe. In Madrid, we now have 10 people, in Budapest we have five people and we are continuing to grow and expand our regional presence. This year, we opened in Cape Town to cover southern Africa and give us good coverage across all of Africa, and we opened in Mexico to cover south and central America, with another office dedicated to Brazil.”

While others were taking time to rethink strategy and investigate outcomes of the pandemic, Finergreen was on the front foot – opening in new regions, finding new opportunities, and making new things happen. This aspiring company was prepared for the challenges that came, and was a first mover in its service line.

“Globally, banks and investors have been slower to make decisions,” admits Ricordeau. “Instead of making deals in six months, the process is now taking nine months. Firstly, we have an increase in the duration of the deal and, secondly, in some regions, mainly emerging countries, we may face difficulties. For example, in Mexico, because of Covid, there is a change of flow and they have stopped renewable investment. From one day to the next, all the projects in the country were stopped. For us, with an office in Mexico, we had to refocus on South America and work on deals in Colombia and Chile. We had to switch the business and focus on these countries where there were fewer issues. I think we managed it well but, typically, there were some difficulties from the Covid impact.”

In Mexico, the State owns the thermal plants and saw a decline in revenue as renewable projects delivered electricity at a more competitive rate. With renewable power served first, the State purse was weakened. So, quickly, renewable investment was cancelled and the grid, and the consumer, was forced back to the thermal plants, ensuring cashflow for the State and less money for private developers and owners, but ultimately costing and polluting more.

Nevertheless, Finergreen’s new offices have opened with aplomb and are ramping up pipelines and activity. For Ricordeau, the key is being brave and patient.

“It is not easy but we are doing well,” he smiles. “Opening an office takes two or three years before you have something profitable. In the first year, you are finding clients and then executing the mission. When you have executed, you are eventually paid. You must have patience and perseverance to make these things happen. Typically, in emerging countries, things are a little slower and you must have courage. When it’s done, and you have your place, you have a strong position in the market.”

In terms of location for the next round of expansion, Finergreen is targeting emerging markets. For Ricordeau, less competition, larger opportunities, and the ability to truly make a difference is attractive. Impact, risk, and return are all appealing, and in regions across Africa, the opportunities are vast for socio-economic development. According to the International Energy Agency (IEA), the transition is already underway in emerging markets, with several multi billion dollar deals beginning to flow in the post-pandemic era. Finergreen is in Africa, and talks the local language.

“We set up there, firstly, as it makes sense. In Africa, half of the population don’t have access to electricity and the idea is to help those countries access electricity through renewable energy. That is why we set up our first foreign office in Africa in 2016. Secondly, in the West, there is a lot of competition and emerging countries have more need so it makes sense for us to find an angle in the market and develop ourselves without too much competition.

“We often visit on the ground and this is why we have local offices. We could work on African projects from the office in Paris but that is not our style. We have local offices in Africa to follow African projects. Each year, we go to each office and visit the sites. In March, I was at the office in Abidjan and we visited a dam. Last year, we had the whole company in France to visit a biogas plant. Before, we visited solar plants in Spain. Our team is well educated with most having degrees across both finance and engineering,” says Ricordeau.

 BOUTIQUE FINANCING

 The current list of projects underway across the Finergreen landscape is matched only by some of its historic achievements. Well-known in the industry as a market expert, with Ricordeau’s previous work at the Edmond de Rothschild asset management group driving a rich heritage, Finergreen is an innovator and is changing the way deals are done.

“We just closed a bridge financing project for hybrid PV-diesel assets in Madagascar,” details Ricordeau, talking of recent initiatives. “This is the first time this has ever happened in that country, and we managed to finance PV assets with diesel plant which reduces pollution thanks to less consumption of diesel and also reduces costs of electricity as we have negotiated with the State of Madagascar for a reduction in the PPA for the sale of electricity. The result is a win-win deal for the State and the private owner. We managed to set up the financing and we already have two PV plants in operation there.

“In Spain,” he adds “with our client, we signed a MOU to produce 3GW of hydrogen by 2025 and we are in charge of the financing for this project. The 3GW is for one client who needs it for its industrial processes.

“In Burundi, we are currently financing a 10MW hydro plant. This plant will add 10% of the capacity of electricity production of the country. Here, less than 15% of the population has access to electricity today. We managed to grow access to electricity through this project and we managed to get proper financing for the project.

“We are doing a major refinancing of the biogas portfolio for TotalEnergies in France.

In Thailand, we finance a portfolio of C&I projects – a lot of rooftop PV plant which we finance through debt funds from Europe,” he says, highlighting the global nature of the business.  

Thankfully, the company can call upon multiple case studies to demonstrate its superiority. This is why Finergreen continues to succeed: It builds trust with clients. This is vital in raising funds, project financing, and completing M&A deals. “Last year, we raised €100 million through global equity for a French company with offices in the USA, Chile, and South Africa. This was a flagship for us.

“We are helping small and mid-sized players who have good ideas and good projects, and when they grow something sufficient, it is sold to the bigger players. On the biogas side, we worked with the leaders of the industry in France, Fonroche Biogaz and Vol-V Biomasse, and they were sold to Total and ENGIE respectively. We are at the beginning of the market for a lot of technologies, helping people to finance projects, and then they grow and we can help as they move into the utilities.”

Today, renewables represent more than one third of the world’s installed capacity but just 26% of electricity produced globally. Within that, hydropower is responsible for almost 16%, with other renewable sources – wind and solar – bringing just 8%. Clearly, in electricity, heating, cooling, and transportation there remains major opportunities.

FUTURE POWER

Finergreen uses a combination of sources when it comes to funding renewable energy projects. The company’s staff is connected, globally, to various funding solutions, and partners with government and central banks to deeply understand the markets in which it operates.

“75% of our clients are private developers so it could be small developers or large utilities. We work on the sponsor side and our network is totally global. On the bank side, we work with commercial banks and development banks for emerging countries; and on the investor side, we work with financial investors, family offices with dedicated funds, and industrial players including independent power producers,” explains Ricordeau.

Going forward, as investment flows more readily into the renewable industry, and banks and other lenders become more confident in returns, the mindset looks set to switch to the ongoing problem in this sector: Storage. As generating capacity is improved, especially in emerging regions, the storage and subsequent distribution of clean power requires investment.

“The problem with renewable energy is the intermittency of production and we need to find a solution for the storage – that is where the new wave of projects will come,” confirms Ricordeau.

“There are two possible solutions, either batteries or hydrogen. It is clear that in the short term, batteries are better. There are a lot of battery projects, and we are working on that. In the long-run, I think hydrogen will be the best solution as there is a capacity of storage of months compared to batteries which give you hours or days. We are working now on hydrogen projects which, in the next ten years, will become extremely important in the energy space.”

For hydrogen to be used in storage a regenerative hydrogen fuel cell (RHFC) system is required. This converts electricity to hydrogen through water electrolysis, effectively stores the hydrogen, and can then supply that hydrogen to a fuel cell to create new electric power. Currently systems provide more energy than regular lithium-ion batteries. Constant innovation is coming through in this area to ensure the solar, wind and wave plants of the future are useful to the grid.

Away from storage, Finergreen is busy with other projects that look at all elements available for the creation of electricity – even those that may have been overlooked of misunderstood in the past; a clear feature of a business that is excited and motivated about development.

“We are supporting a company that is making coal for barbecues and we use the remaining gas to make electricity. This is a new wave of biogas project and you burn the ultimate waste which cannot be used for anything else to make electricity. Secondly, we are working on investment into electromobility where a lot of Capex is going into developing stations for recharging electric vehicles. We are currently financing the first project like that in France at utility scale,” says Ricordeau, talking about the company’s future focus.

Longer term, this efficient and forward-thinking business will further its presence globally, although no decisions have been taken on the next office.

“Cape Town and Sao Paulo have just opened, and we plan to open new offices but we are not sure where just yet. In the short-term, we will close a project by the end of the year in the biogas industry – an industry where we have worked a lot.”

There is also scope for the size of the transaction undertaken by Finergreen to grow too. Thankfully, this is a business that not only sees the financial potential in the move away from fossil fuels, but Finergreen is actively making it happen from within the industry. When money moves, progress can truly be made. 

“We work with large and small. Typically, we work with transactions from €10-200 million. We are not a huge player, but we are not small and that means we are boutique and can work with anyone in any part of the world. Our team speaks 15 languages and we follow our clients everywhere, speak the local language and make sure we can make business transactions happen,” Ricordeau concludes.