Triodos Bank’s Executive Board provides a perspective on the wider world it operates in, its impact and activity in 2017 and its prospects for the future.
Triodos Bank and its investment funds, offered via Triodos Investment Management, finance and co-finance enterprises that augment the use of renewable resources in particular and supports projects that reduce the demand for energy and promote energy efficiency.
By the end of 2017, Triodos Bank and its climate and energy investment funds were financing 472 projects in the energy sector: including Triodos Bank’s first grid connection project, 37 energy efficiency projects, 25 renewable power projects under construction and another 410 sustainable power projects (2016: 381) with a total generating capacity of 3,100 MW (2016: 2,400 MW), producing the equivalent of the electricity needs of 1.4 million European households (2016: 1.2 million). Together these projects contributed to the avoidance of over 2.4 million tonnes of CO2 emissions (2016: 1.7 million tonnes).
So for each Triodos Bank customer, we financed the electricity needs of 2.2 homes.
These projects include about 200 windpower projects, 200 solar photovoltaic projects, and 36 hydro projects. The rest include biomass, heat and cold storage and a diverse range of energy efficiency initiatives.
Our vision and activities
Percentage of our loans and funds investments to the renewable energy sector
Loans and investments by subsector
Our vision on renewable energy
Triodos Bank considers energy to be a basic human need and therefore something that we need to ensure is being generated and used on a sustainable basis for future generations.
Why how we generate our energy matters
The increasing global demand for energy, concerns over energy security and the impact of global climate change have become ever-more urgent issues.
We see the potential for renewable energy technologies and energy efficiency measures to create a more resilient, decentralised and sustainable energy system that’s equipped to deal with these challenges in the future.
European governments are supporting moves in this direction under the EU’s “20-20-20” framework calling for 20% of energy to come from renewable sources, 20% more energy efficiency and 20% less greenhouse gas emissions by the year 2020. Worldwide agreement, was reached in 2015 at the Paris Climate Conference, requiring developed and developing countries alike to limit their emissions to relatively safe levels, of 2C, with an aspiration of 1.5C.
Triodos Bank plays an important role in this effort to increase the impact of renewable energy and energy efficiency projects, within this wider context.
By focusing our attention on the deployment of mature technologies such as wind energy and solar power, we are able to make a meaningful contribution to the necessary transition to our energy system.
Having financed renewable energy projects for over 25 years, we have built a wealth of experience and expertise that is valued by the renewable energy developers and operators who we work with.
We also extend impact by working with more diverse ownership structures such as community renewable energy schemes and financing energy efficiency infrastructure within the built environment.
All of the energy projects that we finance contribute to our vision of a sustainable energy system.
Whether through the installation of new renewable energy generation capacity (from wind, solar or hydro energy) or energy savings and efficiency measures, all of our projects make a meaningful contribution to a more resilient, sustainable and cleaner energy system.
In addition, we take steps beyond are direct work as a bank, to support the transition to a low carbon economy. Since the Paris climate conference in 2015 that has meant working with the Dutch Platform for Carbon Accounting Financials (PCAF) to develop an open source methodology for financial institutions to account for their carbon footprint. We plan to start implementing this new methodology internationally in 2018. The group is also exploring how to link this footprint to science-based climate targets.
What challenge was the inspiration for your project?
The inspiration for Awel Co-op’s wind farm was the lack of funding for local community projects. We noticed that many crucial local regeneration schemes were continually having to apply for grant funding, putting them on an insecure financial footing. So we wanted to create an income-generating project through the windfarm that could provide a sustainable income stream for these community projects.
We chose a wind project because we also wanted to address the challenges of climate change and transitioning to a low carbon economy. The area immediately surrounding the wind farm has historically been a coal mining community and, with the reduction of mining activity in the area, we hit hard times. As a result, people have embraced both the idea of the wind farm as a community-owned asset for community benefit, but also moving away from a local economy based on fossil fuels to one dependent on sustainable energy.
What was your innovation that addresses this problem?
Because the local community has a low average income, it was a challenge to bring in the money needed to do all the feasibility, planning and building work—all the work that was required before the turbines started generating electricity. As a response to this, we chose to structure the project as a co-operative to ensure that everyone had a sense of ownership. Building a few wind turbines is a lot of hard work, but I wouldn’t exactly call it innovative. Our innovation was using the excitement of the wind farm construction period and co-op ownership of the project to generate publicity and gain local interest.
What impact has Triodos Bank had on your business?
The reality is that the wind farm wouldn’t be there without Triodos Bank. It’s a £8.25m project, and the Triodos loan is £5.25m, so it’s an essential part of the scheme. But more than that, the fact that we had Triodos Bank funding gave people confidence in the project. Because we had been thoroughly looked at by an independent set of eyes, more people have been willing to buy into our share offer, which has now raised £2.5m.
In addition to the financial support, we received incredible amounts of advice over the years as we developed the project. Triodos gave us suggestions on how to go about planning and executing the plan to achieve the best outcomes and gave us insight into the types of things that would need to be in place to secure funding. More recently, Triodos has helped with local public relations and publicity, and I’ve had lots of positive feedback from people who have seen the Changemakers film Triodos produced featuring Awel Co-op.
What impact has your business had on the sector you work in?
It’s a relatively small project in the renewables sector as a whole, but we’ve had a significant impact on the scale of community projects in Wales. It is the largest community scheme in Wales by far and has raised a lot of interest regarding the size of our share offer and the amount of Triodos Bank funding that we’ve secured. I think it’s opened up people’s eyes to the potential of community renewables. We’re even talking to a lot of assembly members in the Welsh government who are looking at what we’ve done and wanting to see it replicated. Earlier this year, I was awarded the MBE in the New Year’s honours list, and that is because of the impact that the project has had and the broader impact on community energy in Wales. This all is indirectly leading to changes in policy to support community energy and encourage shared ownership between communities and commercial developers.
What impact has your business had on the community?
One of our goals is to get more of the local community involved and give them a stake in the project. To do this, we’re donating a total of £100,000 shares to local schools and community organisations which will provide them with a sustainable income stream. We’ve given shares to some school classes already, and have invited them up to the wind farm for a tour. This has been a fantastic way to engage the community. As soon as the children realise that they own the turbines, it inspires them.
How does Triodos Bank share your vision?
There is a mural in the lobby of the Triodos office in Bristol that indicates we can use the resources available to us—whether our project or money in general—to “meet present-day needs without compromising those of future generations.” That’s precisely what we’re about. It also is reminiscent of the Future Generations Act in Wales, which was one of the first independent pieces of legislation from the Welsh Government. The mutual commitment to sustainable development is at the core of our relationship with Triodos and what gives us the confidence to move with the bank in partnership towards the future.
Our calculations only measure projects with a direct relationship to our finance or investment activities. Given that we are often the principle funder of a project we include 100% of the impact when we co-finance a project. If it is not possible to record 100% of the energy produced by the facilities we finance or invest in, we use estimates based on wind and solar indexes, if applicable, and exclude projects that are still under construction.
We have participated, since the Paris climate summit in 2015, in the Platform Carbon Accounting Financials (PCAF) which has stipulated a new framework methodology to account for the carbon footprint of loans and investments and we plan to start implementing this attribution approach during 2018. This will give stakeholders a clearer picture of the climate impact that results from our finance.
The calculation of CO2 emission avoidance is made using conversion rates (gram CO2 per kWh energy produced) received from Ecofys, an international energy and climate consultancy bureau. The conversion rates describe, per country, the grams of CO2 avoided when comparing sustainable energy with the mix of all non-sustainable power plants.
To date we have reported the avoided emissions of a total project. In technical jargon, we take a contribution rather than an attribution approach. With multiple loans and investments, and different types of renewable energy technologies and geographies, a contribution approach has been both practical and, we believe, reasonable. As part of an effort to continually improve our impact reporting we intend to include an attribution analysis in the future. This means that we will calculate the avoided emissions as they relate to the proportion of our finance in a project. It’s important to note that an attribution approach leads to lower carbon emission figures than compared to a contribution approach. That is because a contribution approach accounts for all of the emissions from a project rather than a proportion of them.
To calculate the average energy use in kWh per household in the countries where we are active, we use the energy efficiency indicators published by the World Energy Council (WEC), which were updated in May 2016.
The ‘Impact per customer’ calculations used throughout the annual report are based on a total of 681,000 customers at the end of 2017.