Billion pound boost for wind farm sector

A £1.4billion loan fund to develop onshore wind farms in the UK and boost the country's renewable energy supply has been announced.

The European Investment Bank (EIB) is putting up £700 million of the loan package, which will be match funded by three banks – the Royal Bank of Scotland, Lloyds Banking Group and BNP Paribas Fortis.

British chancellor, Alistair Darling, said: “We welcome the EIB’s commitment to provide this vital funding for renewable projects across the UK.

“The money that is being made available will help continue the essential work of building the UK’s capacity in renewable energy.”

The fund announced last Tuesday (November 10) is available for small and medium-sized onshore wind projects costing between £20 and £100 million. Construction on these could begin over the next three years.

Ed Miliband, energy and climate change secretary, said: “The UK now has 4GW of wind capacity and the pace of installation is picking up.

“But we still need a 6-fold increase in renewables by 2020 to hit our renewables target. That target is vital if we are to be on course to cutting emissions by 80 per cent by 2050.

“So we need to pull out the stops, including making sure the capital is there to build the wind farms in the first place. This partnership of the EIB with RBS, BNP Paribas Fortis and Lloyds Banking group will address that problem.”

The funding for an area of the renewable energy market, which has struggled for finance during the recession, has been welcomed.

Dozens of projects have stalled, unable to raise the necessary cash, but the government now says a “significant number” of projects will benefit from the cheaper loan funding.

Mary McCaffery, chief executive of trade group the British Wind Energy Association, said: “Wind energy has never been a risky investment. In fact, wind farms in the UK have never defaulted on their loans.

“However, the recent turbulence in the financial markets has affected availability of loan finance for smaller and medium-sized projects.”

She added: “The initiative launched today should go a long way towards addressing one side of the delivery problem.”

Simon Brooks, EIB’s European vice-president responsible for the United Kingdom, said: “We are sure that targeted support, following UK and European Union policy combating climate change, will facilitate rapid and sustained investment in the industry and promote continued transformation to a low-carbon economy.”

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