Mayor of London's Green Finance Fund

Which types of projects are eligible?

GFF finance can be used for capital expenditure only. 

Capital expenditure is generally defined as spending to improve organisational assets. Capital expenditure is funded through capital income sources such as capital receipts and borrowing. Organisations need to ensure, and also demonstrate, that they are complying with these rules by making sure that there is a clear separation between capital and revenue in all of its financial activities. 

Where organisations are unsure of how expenditure is classified in their accounts, organisations will need to consult Finance teams (e.g. Local Authority Section 151 Officer) to ensure expenditure is categorised correctly (and it is demonstrable they are complying with the rules) to be eligible for GFF finance.

Eligible capital projects must be in at least one of the following International Capital Markets Association (ICMA) Green Project categories (see section 4.2 for full description):

Category 1 - energy efficiency

Category 2 - clean transportation

Category 3 - renewable energy
 

Projects must also deliver against at least one ICMA Core Indicator (see section 4.2).

Are any projects excluded?

The Green Finance Fund will not lend to projects focussed on fossil fuel boilers; energy from waste infrastructure; brown, black and blue hydrogen; or vehicles powered through fossil fuel combustion and ethanol. 

Our project is net zero focused but does not fit into any of the three asset classes set out. Are we still eligible?

Only projects that deliver clean transportation, energy efficiency and/or renewable energy are currently eligible. However, we are still keen to hear about projects that may fall outside of the existing criteria, as the criteria may evolve in future.

Are there any timescale restrictions?

We will prioritise finance for projects that can evidence that procurement will start within 6-9 months of finance allocation, construction will start within 18-21 months and the project will be operational within 3 years. Where projects are delivered in phases, at least the first phase must be completed within 3 years.

This is to ensure the Mayor’s target of London being net zero by 2030 is met.

I’d like to apply but I’m not sure if my projects meets all your criteria – what should I do?

Please get in touch as the programme criteria may develop over time and we may want to keep in touch.  You can either complete the EOI (during EOI windows) or email us at [email protected]

I’d like to apply but I need further project development support

We may be able to help you through our project development support programmes. Please contact the Green Finance team to discuss further on [email protected]

I'm keen to engage but we don't have sufficient resource to dedicate to this work. Can you support project development/initiation?

Project development support is available through the wide London Climate Finance Facility, including through the Mayor's Low Carbon Accelerators. Please get in touch with us to discuss further at [email protected].

Renewable energy

Description

Financing investments to decarbonise and increase flexibility of the energy system.

Investments will be dedicated to generation, transmission and distribution and storage of energy, from renewable and secondary or waste heat sources [operating at lifecycle emissions of less than 100gCO₂e/kWh].

This category includes schemes that contribute to the decarbonisation and flexibility of the energy system.

Investments will also be available for the utilisation of secondary or waste heat sources, often in conjunction with heat pumps, in district heat networks, system level storage and demand management or flexibility services.

Biomass for combustion is not included.

Core indicators

• Annual greenhouse gas emissions (GHG) reduced and/or avoided in tonnes of CO₂ equivalent.
• Installed renewable energy capacity (MW).
• Annual renewable energy generation in MWh/GWh (electricity) and GJ/TJ (other energy saving).

Other indicators

• Number of heat network supported.
• Installed storage capacity in kW/MW.

Energy efficiency

Description

Financing investments that improve energy efficiency in existing buildings to improve the EPC ratings with the aim of helping London’s buildings get to an average EPC B rating.

Expectations will be to improve buildings:

• by a minimum of one and preferably by two EPC bands
• to uplift the energy efficiency score (or reduce consumption) of a building by at least 30%, or
• to get to a ‘good practice' Energy Utilisation Index (EUI measured in kWh/m2) for the building according to its typology.

This also includes investments that:

• enable monitoring and optimisation of the amount and timing of energy consumption such as smart meters, load control systems, sensors or building information systems
• reduce losses in the delivery of bulk energy services or enhance integration of intermittent renewables such as energy storage, smart grids, demand response
• upgrade street lighting to LED lighting.

Core indicators

• Annual (GHG) emissions reduced/avoided in tonnes of CO₂ equivalent.
• Annual energy savings in MWh/GWh (electricity) and GJ/TJ (other energy savings).

Other Indicators

• Percentage reduction in building/portfolio energy demand compared to pre-intervention baseline.
• Pre- and post- intervention Energy Utilisation Index (EUI) for building/portfolio in kWh/m2.
   

Clean transportation

Description

Financing investments in low-carbon transport projects, such as:

• operations that reduce emissions (both GHG and pollutants) of vehicles or the transport system (for example ultra-low emission zones)
• zero direct emission vehicles (including public transport and electric vehicles) and associated infrastructure (example electric vehicle charging points)
• infrastructure to support expansion of active travel modes and options, specifically walking and cycling infrastructure.

Core indicators

• Annual (GHG) emissions reduced/avoided in tonnes of CO₂ equivalent.
• Reduction of air pollutants such as particulate matter (PM), sulphur oxides (SOx), nitrogen oxides (NOx), carbon monoxide (CO), and non-methane volatile organic compounds (NMVOCs).

Other indicators

• Number of charging points installed.
• Number and size of upgrades to the electricity network to support charging infrastructure.
• Km of paths for walking.
• Km of paths for cycling.

Why should we consider applying for a loan when there are central government grants available? 

The scale of London’s net zero ambitions cannot be met through grant funding alone. Instead, the Green Finance Fund aims to accelerate London's journey towards net zero by providing low cost, flexible finance. The fund can lend at interest rates below PWLB prevailing rates and the process gives reassurance to your decision-makers that borrowing is prudently repayable. 

The Mayor also recognises that applying for grant funding can be highly competitive and resource-intensive for applicants. The Green Finance Fund aims to provide a proportionate and flexible approach to finance that reflects resource demands on applicants. 

How does the offer compare to other lenders in this space?  

The Fund offers loans with flexible terms at interest rates agreed on a project-by-project basis, at or below Public Works Loan Board (PWLB) prevailing rates. For organisations with access to PWLB, the GFF offers loans with flexible terms at interest rates of at least 20 basis points below PWLB prevailing certainty rates. 

It is able to provide smaller loans than comparable lenders (starting at £1m) and will consider loan arrangements that bring a number of smaller projects together to meet the minimum loan requirement.  

The GLA does not, however, position itself as a competitor to other investors due to the scale of finance needed to deliver net zero and is happy to invest alongside other private or public sector funds and financers.

What do you mean by lending “facility” – what information would be needed, and how would this operate in practice? 

Applications that aggregate several smaller projects into one loan agreement can be considered (provided each project meets wider eligibility criteria). This lending “facility” will permit you to draw down finance for project implementation as and when you need, providing a more flexible arrangement than other lenders might consider. The information needed will likely be project specific, so please get in touch via the EOI form (during EOI windows) or via [email protected] to discuss a lending facility arrangement. 

What will be the interest rate and how is this decided?

The Fund offers loans with flexible terms at interest rates agreed on a project-by-project basis, at or below Public Works Loan Board (PWLB) prevailing rates. For organisations with access to PWLB, the GFF offers loans with flexible terms at interest rates of at least 20 basis points below PWLB prevailing certainty rates. 

The Green Finance Credit Committee is able to agree further interest rate subsidy.  In assessing whether a lower interest rate can be offered to a project, the factors considered will include: 

• Annual costs savings, and/or other revenues generated because of the decarbonisation measures, that are less than the annual interest/ principal repayments to the fund; 
• Investment costs per tonne of CO₂ saved below £3,500; 

• Additionality, i.e. evidence that the project would not go ahead, would be delayed, or would achieve a lower impact without subsidy. 

Can joint ventures apply for finance?

The fund does not provide loans to special purpose vehicles or joint ventures unless there are exceptional arrangements in place to meet the criteria for credit.

Please complete the EOI form (during EOI windows) or contact the team at [email protected].  

Can we use the loan in part/in full for resource spending?

The finance is available for capital expenditure only. 

Capital expenditure is generally defined as spending to improve organisational assets. Capital expenditure is funded through capital income sources such as capital receipts and borrowing. Organisations need to ensure, and also demonstrate, that they are complying with these rules by making sure that there is a clear separation between capital and revenue in all of its financial activities. 

Where organisations are unsure of how expenditure is classified in their accounts, organisations will need to consult Finance teams (e.g. Local Authority Section 151 Officer) to ensure expenditure is categorised correctly (and it is demonstrable they are complying with the rules) to be eligible for GFF finance.

The GLA’s Low Carbon Accelerators may be available to support with staff and expertise to finalise your project.

Find out more about Retrofit Accelerator - Workplaces.

Find out more about Local Energy Accelerator.

Please contact us at [email protected] to discuss your project development needs.

Is matched funding required to access the Green Finance Fund?

No, matched funding is not required. The Green Finance Fund can fund up to 100 per cent of the costs depending on the project and borrower. 

Can the GLA lend alongside other funders or financers?

Yes, we are happy to lend with other funders and financers in either the public or private sector.

When is the deadline for applications?

The deadline for expressions of interest will be published on the Green Finance Fund page and will be in regular windows, subject to available funds

How do I apply?

We aim to make the process as streamlined as possible. The first step will be to submit an EOI (during EOI windows), which should take no more than 15 minutes to complete and will ensure your project meets the gateway criteria. If there is not currently an EOI window live, please contact the team at [email protected]

Only once the team is confident your project is financeable will you be required to complete a full application form. We are aware that many applicants may have previously made applications to the Public Sector Decarbonisation Scheme (PSDS). In this case, we can discuss whether your PSDS application form (and the response) can be used instead of our own full application form. In some cases you may have to provide additional information and will be asked to complete an amended application form.

If your project is eligible but not yet finance-ready we’ll direct you to our project development support funds and keep in touch for when you are ready for finance.

Although there are Fund windows (deadlines for which will be detailed on the Green Finance Fund page), the team is keen to discuss projects as soon as is practicable to inform the development of future funds. Financing decisions will be made on a rolling basis, so prospective applicants are encouraged to apply early to increase their chances of securing finance.  

How will you evaluate projects and assess their suitability for finance?

Finance allocation will be managed by London Treasury Limited (the GLA’s independent investment manager), who will conduct a comprehensive analysis of the financial and environmental case supporting each application.

The Mayor's Green Finance Fund Credit Committee is responsible for approving projects for financing and interest rates.

If the fund is oversubscribed how will you choose what to finance?

In the event of oversubscription, we will  prioritise applications with the fastest delivery and largest expected carbon reduction (i.e. maximising reduction in tonnes per year per £m).

Prospective applicants are encouraged to complete the online EOI soon as possible during EOI windows.

When will we find out if our project has been successful?

Timelines will vary depending on your project, but the expected timelines are:

• two weeks to assess your EOI against the gateway criteria.
• three months to work with you on the full application and approve a financing agreement.

In some instances, this timeline will be condensed, and in others, it may take longer to reach an agreement.

Is there a due diligence fee?

No, there is no due diligence fee. However, for complex projects where extensive external support is required, we may pass on any such costs.

What are the expected delivery timescales?

As the objective is to accelerate London's journey to net zero, finance will be prioritised for projects that are fully operational within three years. In practice, this would likely look like procurement within 6 to 9 months of finance allocation, with construction beginning within 18 – 21 months. 

Are there procurement restrictions – can we find our own contractors? 

Yes, you can use any supplier/contractor, subject to relevant procurement rules.

Our projects are in the very early stages and we are not confident of delivery in three years. What should we do?

The Green Finance Fund aims to accelerate London's journey to net zero and therefore will initially prioritise projects that will be operational within the next three years. The team is however keen to hear about projects that may fall outside of this timeframe, as it seeks to develop a strong pipeline of projects for any future funding rounds. The GLA's project development support may also be applicable to your projects therefore you should still make contact on [email protected]. 

What KPIs will be used to monitor a project during implementation?

Recipients of finance will be required to provide regular reports on project implementation (including application of proceeds) and achievement of impacts. The following will be tracked as a minimum:

• a brief description of the project
• the amount allocated to the project
• the expected impact of the project
• progress on implementation
• tCO2e reduced per annum
• tCO2e reduced during project lifetime
• tCO2e avoided per annum
• tCO2e avoided during project lifetime.

As appropriate, additional indicators may be required.

Some of my questions haven't been answered, who can I contact?

For any other questions, please contact the Green Finance Team on [email protected].

Online information sessions will be available when the application window is open; please check the Green Finance Fund page on the website. for more information and how to book.