Green Finance Fund FAQs

The Green Finance Fund can lend to:

• GLA Group
• Local Authorities
• Social Housing Providers
• NHS bodies
• Universities
• Colleges
• Museums accredited through the Arts Council Museum Accreditation Scheme

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. 

Projects must be located within London’s 32 Boroughs or the City of London. 

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

Please get in touch to speak with a member of the team on [email protected]

Eligible capital projects must be deliver benefits in at least one of the following categories:

• energy efficiency
• clean transportation
• renewable energy

Projects must also meet a set of gateway criteria related to carbon savings and climate impacts that are set out in sections below.

Loans must be used for capital expenditure only and projects operational within three years will be prioritised.

We do not lend to projects that involve energy from waste infrastructure, fossil fuel boilers, vehicles powered through fossil fuel combustion and ethanol or brown, black or blue hydrogen.

For further information on the ICMA (International Capital Market Association) Core Indicators see next sections.

The minimum loan size is £1m, however this can consist of aggregated expenditure for smaller projects.

It is expected that loans will be below £75m, however this can be discussed on a project-by-project basis.

Only capital expenditure is eligible.

As the objective is to accelerate London's journey to net zero, finance will be prioritised for projects that are operational within 3 years. In practice, this would likely look like procurement within 6-9 months of finance allocation, with construction beginning within 18-21 months.

Yes, the following activities would render a project ineligible:

• Projects that do environmental harm
• Replacement of fossil fuel boilers
• Waste incineration
• Blue, brown or black hydrogen
• Vehicles powered through fossil fuel combustion and ethanol

Please get in touch as the programme criteria may develop over time.  You can either complete the EOI or email us at [email protected]

You may be eligible for project development support through the Mayor's Low Carbon Accelerators. Please contact the Green Finance team on [email protected]

You can also learn more through the links below:

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.

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
• upgrading 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

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.

The Fund can lend at below the Public Works Loan Board (PWLB) prevailing rate. The rate offered will be project specific and will be decided by the Green Finance Fund's Credit Committee. Where organisations can access PWLB, the GFF offers loans with flexible terms at interest rates of at least 20 basis points below PWLB prevailing certainty rates.

In assessing whether a lower interest rate can be offered to a project, the factors considered will include:

• Annual cost 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.

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

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

The Mayor’s Green Finance Fund 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, providing finance that can be drawn down more flexibly.

Applications that aggregate several smaller project into one  loan can be considered, provided each project meets the eligibility criteria. This lending 'facility' will permit you to draw down finance for project implementation as and when needed, 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 or via [email protected] to discuss this option.

The finance is available for capital expenditure only.

Capital expenditure is generally defined as spending to improve organisational assets. This would include purchasing new assets, such as land and buildings, but also refurbishing and improving existing ones. 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.

Support from the Mayor'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

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

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

The deadline for the first round of expressions of interest is 5 January 2024 (23:59). We will open further rounds, subject to the availability of funds.

We have designed the application process to minimise for applicants the time spent on applying and to make it as streamlined as possible.

Applications are in two stages, starting with an Expression of Interest (EOI), which should take no more than 15 minutes to complete.

We will assess the EOI to ensure your project meets our minimum criteria, after which we’ll arrange a discussion with you to learn more about the project and your financing needs.

If your project is finance-ready, you will be invited to complete a full application.

In some cases you may need to provide additional information and may be asked to complete an amended application form.

If your project is 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.

This will vary depending on your project, but our expected timelines are around two weeks to assess your application against minimum criteria and around 3 months to work with you on the full application and approve a financing agreement. 

For further detail, please take a look at the application timeline on our homepage.

In the first instance, projects that are invited to submit a full application will have met the gateway criteria. We will assess full applications based on their fit with the Mayor’s Environment Strategy, full business case, including technical feasibility, commercial viability, capacity for delivery, risk analysis, and project monitoring and reporting arrangements. 

Finance allocation will be managed by London Treasury Ltd (the GLA's independent investment manager), which will conduct a comprehensive analysis of the financial and environmental case supporting each application. The following steps will apply:

1. potential projects will be screened to ensure compliance with the GFF’s gateway selection criteria. All projects submitted for approval will identify and quantify the expected outputs and outcomes.  
2. suitable projects will be submitted to the GLA’s GFF Steering Committee to confirm they are in line with GLA’s strategic objectives and then projects will go forward for detailed assessment.  
3. Eligible Projects will undergo detailed assessment before being recommended to the GFF Credit Committee.  
4. The GFF Credit Committee is responsible for approving Eligible Projects for financing and subsidy. Decisions to allocate finance will require a consensus decision by the Credit Committee and will be documented and filed. 

If we receive a high number of good quality applications, we will prioritise applications with the fastest delivery and largest expected carbon reduction (i.e. maximising reduction in tonnes per year per £m).

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

Procurement should be launched within 6-9 months from the financing agreement, construction should begin within 18-21 months and should be operational within 3 years.

Yes, subject to the application of relevant procurement rules.

Expected energy savings should be at least 30%.

For energy efficiency projects, our expectations are to improve buildings as follows:

• 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.

The GLA will make it a requirement for project sponsors to provide regular reports on Eligible Project implementation (including application of proceeds) and achievement of impacts. For each Eligible Project we will track 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.

Energy savings (kWh) = (Baseline energy use in kWh per annum) — (Post-installation energy use in kWh per annum)

The fund’s impact will be reported through an annual Allocation and Green Impact Report.