A capital idea
The most significant undertaking will be financing the program. We expect that third-party investors will be eager to supply the necessary capital. Annual net investment will average $90M over the period from 2019 to 2031, with a peak of $308M in 2026. Cumulative net investment will peak at $1.3B by 2031, and will decline after that as annual savings and revenues exceed investments.
The key challenges in mobilizing investment on this scale will be:
- Establishing relationships with institutional investors that consider projects on this financial scale
- Partnering with an investment manager with enough experience and brand/reputation to manage an investment portfolio this big
- Building sufficient capacity to implement this scale and number of projects
Regarding item #1, some possible partners include pension plans, life insurance companies, and credit unions. Regarding item #2, there are both for-profit and not-for-profit organizations that have the capabilities we will need. We have not approached any of these organizations yet.
Regarding item #3, the ability to execute a project will vary from one action to the next. In some cases there may be enough talent in the local area. In others, local organizations may not have enough capacity to start, but by participating in the program these organizations may be able to grow their businesses significantly over time. In still others, we may have to contract with providers outside of Guelph and the nearby area.
We expect that availability of investment capital will not be a barrier. There is plenty of pent-up demand for investment opportunities like this; for example, the 2014 Eglinton Light Rail Transit $500M green bond issue was five times oversubscribed, and demand for green bonds has only increased since then.
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