Example Private market investments
When any electricity generating asset wants to connect to the grid, the project developer needs an interconnection agreement from the utility/grid operator. It can take the utility quite a bit of work to determine if there are grid upgrades needed, and how the asset will affect the overall grid and supply. In order to ensure that the developer is serious about the request, the utility requires a deposit, relative to how large the project is. For smaller scale projects, the developer typically uses their own balance sheet. For very large assets, commercial banks will fund this. For medium size projects, commercial bank overhead doesn’t make sense, but the developer can’t afford it on their own. That is where they need to find investors to fund it. If they can’t find enough investors, the project can’t happen. And it is very low risk, because it is just a cash deposit, on the balance sheet of the utility, which gets returned if the project doesn’t happen.
Investing locally
Some of the most sustainable apartment buildings in the world are being built right now, right here in Wisconsin. They have embodied carbon levels at least 40% lower than average, and operational carbon emissions more than 50% lower than comparable new construction, and even better when compared to existing buildings. By utilizing wood in place of concrete and steel, they replace many of the “hard to abate” materials with a carbon sync (over 70% of concrete/steel replaced). By using large scale heat pumps and internal heat exchangers as well as industrial waste heat during the winter, energy use is cut dramatically. Additionally, private market real estate has been a good risk diversifier in portfolios because of low correlation to public equities. Investing in the debt side offers even more risk protection for risk averse investors who still want to drive impact.
To date, Future First clients have invested a portion of their portfolios in impactful climate solutions, totaling over $1.6 million.
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