GIB announces £60m for 2.4GW of community renewables
The Government's Green Investment Bank (GIB) has announced a new £60m investment to fund up to 30 community-scale renewable projects across the UK.
The new finance, announced by Business Secretary Vince Cable on Tuesday, will be the largest single source of equity funding available for UK community-scale projects. Money will go towards towards run-of-river hydro-power, onshore wind on brownfield sites and biogas projects including anaerobic digestion and landfill gas.
Cable said: “Renewable energy is the future, and we must continue to use all of the new and established technologies at our disposal to power our homes and businesses in a way that doesn’t damage the environment. Hydro power has a vital role to play in this.”
In the pipeline
The GIB will be investing £50m through Albion Community Power (ACP) – a power generation company – in partnership with Strathclyde Pension Fund (SPF), which will provide the other £10m. The finance will provide equity funding of between £1m and £10m to up to 30 new renewables projects; generating around 24,000MW of energy.
ACP will be investing the capital on behalf of the GIB and SPF and is hoping to increase the fund to £100m by attracting additional co-investors. It has already identified a substantial project pipeline in partnership with project developers such as Infinite Renewables, based in Wales, and Green Highland Renewables (GHR), based in Scotland.
GIB chair Lord Smith of Kelvin said: “The UK is in the process of transforming how it generates its power. In future, we will see less reliance on a small number of large power stations and more focus on a network of smaller, locally generated, renewable sources of power. Hydro is one example of how we can do this and we are delighted to play our part in helping this market grow, bringing investment to rural communities along the way.”
An £8.5m, 2MW run-of-river hydro-power project is the first investment in hydropower from GIB and SPF and will be developed by GHR on the River Allt Coire Chaorach near Crianlarich in Scotland. The hydro-project will use the natural river flow to generate 8GWh of renewable energy a year.
GHR chief executive Richard Round said: “The sub-2 MW hydro power industry is extremely active in Scotland at present and the new funds available from ACP will play an important role in helping developers secure the finance required to build schemes.
“The involvement of GIB is extremely welcome and underlines the potential for well-constructed hydro projects to deliver stable returns to investors.”
The capacity exists for an additional 800MW of new hydro-power projects in the UK – enough to power over 500,000 homes with renewable energy. Fulfilling this capacity would see an investment of over £3bn in remote rural communities.
£5bn, 2 years
The GIB recently announced a £200m lending programme for community-scale renewable energy projects in the UK in November 2014 in partnership with global investment firm KKR and specialist investment manager Temporis Capital LLP. In May 2014, the GIB gained approval from the European Commission to incorporate community-scale renewables into its investment directive in response to a funding gap in the market.
The £5bn investment in 37 UK green energy projects in the first two years of the GIB has aided the uptake in renewables, with £3 being invested by private firms for every £1 by the GIB.
This is the second funding announcement by the GIB this month – Business Minister Matthew Hancock recently unveiled details of a £50m investment into a new fund, Recycling and Waste LP (RAW), targeting small-scale recycling and waste management projects across the country.
Funding sustainability at Sustainability Live 2015
The Green Investment Bank’s head of sustainable finance Gavin Templeton will feature among an expert panel discussing funding sustainability at our brand new high-level Conference at Sustainability Live 2015 in April. The panel will explore how to get access to funding and the types of funding available – public and private.