Meridiam continues to innovate in the clean energy space

The fund manager used crowdfunding for an industrial-scale clean energy project in France, while in the US it partnered with Engie to help the University of Iowa transition to a zero-carbon footprint under a 50-year utilities concession.

Meridiam has raised €3.5 million through crowdfunding, winning community buy-in for an industrial-scale clean energy project it is developing in France.

The project, FICA HPCI, is an industrial complex combining the production of HPCI black pellets, a new generation biofuel that will replace coal for heating, and a biomass cogeneration plant that will produce both electricity (90GWh per year) and thermal energy (130GWh per year).

“Crowdfunding is a way for us to have local citizens participate, support and commit alongside us to an energy transition project,” a spokesman for the Paris-based firm told Infrastructure Investor.

Support for the €100 million project, which Meridiam began developing in April, was strong, leading the firm to raise its initial crowdfunding target of €2.5 million.

More than 2,200 people participated in the fundraise, investing an average of €1,600 each, Meridiam said in a statement.

Asked whether the crowdfunding was donation- or equity-based, Meridiam’s spokesman said that it is structured as a loan. “It bears interest paid annually by the project company to subscribers of the crowdfunding. At the end of the three-year period, the project company repays the full nominal amount lent by subscribers,” he explained.

The project company is FICA HPCI, in which Meridiam holds an 80.5 percent stake. Other partners in the company are Caisse des Dépôts et Consignations’ Banque de Territoires with a 14.5 percent stake and biomass producer Européenne de Biomasse with 5 percent.

This is the second time Meridiam has used the crowdfunding financing model for a project following Agrimaine, a 3.6MW biogas unit also in France, for which it raised €1 million in 2018.

The firm might use crowdfunding again “as it is a way to reinforce [commitment to] ESG matters and actions at [the firm] level”, Meridiam’s spokesman said, adding that the firm does not need crowdfunding to reach financial close on its projects.

University of Iowa’s energy transition

The announcement of the successful crowdfunding came a few days after Meridiam announced another deal in the clean energy sector. Last week, the fund manager secured a 50-year concession agreement with the University of Iowa, in a 50-50 partnership with French power utility Engie.

Under the agreement, valued at around $1 billion, Meridiam and Engie will help the university transition toward a zero-carbon footprint.

“The university is essentially delegating to us all their energy services for the next 50 years,” Meridiam founder and chief executive Thierry Déau told Infrastructure Investor. This means “greening and making more sustainable and resilient the way their electricity and their power is provided”.

It also involves managing water and storm sewer services.

Defined goals include making energy production on campus coal-free by 1 January 2025, if not sooner, and finding ways to reduce energy usage and increase energy efficiency.

Meridiam and Engie will each invest €250 million in equity, while the remaining cost will be funded through debt, Déau said. Meridiam is funding its portion of the equity investment through its third North America fund, a vehicle it closed on $1.2 billion in October 2017.

Asked whether investment in the university’s utility systems, which Engie will operate and maintain, will stop once the transition away from coal is complete, Déau replied no.

“You have to keep investing throughout the 50 years to replace, to maintain, to continue to grow capacity if necessary. We’re actually being remunerated based on an agreed capex plan,” he said.

“We have to provide the right service to the university for the next 50 years, which means … we will constantly be making investments.”

Additional reporting by Zak Bentley.