Overview of Iona Capital and the Funding of

Overview of Iona Capital and the Funding of Development Presentation to the Northern Powerhouse Energy Conference 6 December 2017 Delivering enhanced risk/return in smart energy and resource efficiency

Agenda 1. Introduction to Iona Capital 2. Market trends and opportunities 3. A quick historical analogy 4. Funding in the energy sector

Introduction to Iona Capital A specialist UK Institutional Fund Manager based in London with c. £ 300 m assets under management Investing money for UK Local Government Pension schemes since 2012 Sector Focus: Renewable and Waste Infrastructure, Energy and Resource Efficiency Strong and differentiated team combining private equity, sectoral and operational expertise

Investment History LP 1: Fully invested in 13 projects 2011 LP 2: Fully invested in 7 projects LP NW: Regional fund 50% invested in 4 projects LP 3: First Close of £ 90 m ex £ 250 m target SERE Fund: In fundraising 2017

Iona Bioenergy Portfolio Over £ 160 m invested in 21 Projects Total installed renewable energy capacity: 65 MWe 6 Project Developers 7 Technology Providers

Market trends and opportunities 1 Shift to renewable energy is accelerating … with increasing levels of distributed energy allied with smart technologies. Indeed, what actually is Infrastructure investment in a Distributed Energy World? Yesterday – centralised power Future – clean, local power 6

Market trends and opportunities 2 Growth of electric and autonomous vehicles – and the shared economy 7

Market trends and opportunities 3 Disruption and adoption trends driven by new technologies & reducing cost curves Cost reduction of new energy technologies Source: US Department of Energy – Revolution Now – September 2016 Update. Normalised US$ costs Notes: Land based wind costs derived from levelized cost of energy from representative wind sites. Distributed PV is average residential installed. Utility-Scale PV is median installed cost. Modeled battery costs are at high-volume production of battery systems, derived from DOE/UIS Advanced Battery Consortium PHEV Battery development projects. LED bulbs are for A-type bulbs from reference. 8

A quick historical analogy – ‘Railway Mania’ The rapid investment into railways in the 1840 s-1850 s demonstrates the importance of driving novel infrastructure to drive regional growth … but shows it is not without risk …. 1840 Index of UK Railway share prices* 1852 * Source: Collective hallucinations and inefficient markets: The British Railway Mania of the 1840 s by Andrew Odlyzko 9

Funding research & development … and infrastructure Investments in the energy space can command varying returns depending on the revenue and asset risk profile and their evolution over time 25% IRR 15% IRR Indicative T Inf raditi ras on tru al ctu re ? ? 35% IRR Op era tio na l. P roj ec ? ction onstru c e r P ts projec ts ? Counterparty quality Contractual quality Technology/asset application 5% IRR 10% IRR Revenue Quality th ow Gr pital ca / VC el g N A Quality/portability of asset Diversification/Ability to insure/wrap Suitability for refinance Asset Quality 10

Funding in the energy sector • Significant opportunities exist for energy investors in new technologies and ‘quasi-infrastructure’ projects • However markets, technologies and service models are evolving fast and, hence, create risk • Investors need to be innovative in targetting attractive opportunities and structuring funding • Iona is well positioned to build on its specialist and innovative foundations in this rapidly developing market 11