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Workshop Story Climate KIC

The City Finance Framework developed by BwB provides city officials with a quantitative screening tool to identify promising projects. It calculates a Project Readiness Level (“PRL”) score, using which, users are able to ascertain the “maturity” of any project being evaluated - lower scores primarily reflecting early stage concepts and higher scores reflecting operation ready projects. 

 

The model was applied to three illustrative European city projects: 

 

  1. Zero Carbon Housing Project; 

  2. Sustainable Housing Amongst Home Owners’ Associations (HOAs), and; 

  3. Urban Forestation plan

 

BwB also conducted a workshop with the project teams where they had the opportunity to use the City Finance Framework. The output from the framework was then used to provide tangible recommendations/next steps to individual teams. 

 

Some of the key recommendations for each project are outlined below: 

 

Zero Carbon Housing Project

 

  • Structuring of project to include both debt and equity to improve investor returns and financial efficiency.

  • Focus on bundling research initiatives and cash generative parts of the business in a way that the combined offering is viewed as less risky.

  • Optimize configuration of solar and heating systems to drive down costs.

  • Target long-term debt which does not put immediate pressure on project cash flows (recommended at 18 years). 

 

Sustainable Housing Amongst Home Owners’ Associations (HOAs)

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  • Structuring of project with a view to optimize the HOA target group and minimize risk.

  • Optimization of the execution process as this is likely to be important for investors.

  • Demonstrate scalability of model and its ability to deploy significant amounts of capital. 

  • Scope for replicating HOA model into family houses. 

  • Minimum 3 pilots in different areas to demonstrate execution capability. 

 

Urban Forestation plan

 

  • The project was not viewed as bankable given the lack of a model around which capital can be returned to investors.

  • It was therefore recommended to develop a revenue generation model from erecting the trees. 

 

Another possibility is considering DFI funding which may be more oriented towards development goals rather than seeking financial returns and blending the financing from other more profitable city projects. 

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