GIB delivers boost to Scottish district heating scheme as it goes up for sale
The Green Investment Bank (GIB) has announced plans to upgrade a district heating scheme in the north of Scotland, providing a major renewables boost to the region of Caithness.
The GIB has teamed up with Equitix to commit £9.8m to acquire Wick-based Ignis Biomass, owner and operator of a 3.5MW combined heat and power plant (CHP) and associated district heating scheme. The deal will see the infrastructure upgraded and expanded, with the aim of connecting an additional 150 new customers to the network by March 2017.
The network currently provides heat and power to the Pulteney Distillery, and heat to local customers including a hospital. The intention is to roll out four new smaller-scale, standalone CHP systems for major heat users across the area, typically in the care home sector, for whom connection to the existing network is not viable.
Expansion of the project is expected to reduce greenhouse gas emissions by an additional 3,000 tonnes of CO2 per year. Equitix fund Energy Savings Investments, in which GIB is a cornerstone investor, has committed £4.8m to the project. An additional £5m of private capital has been mobilised from the Equitix Energy Efficiency Fund.
The news coincided with the launch of the GIB privatisation process – the Government confirmed this week that it had put the bank up for sale, which could potentially see it wholly transferred to private ownership.
Announcing the launch, GIB’s independent chair, Lord Smith of Kelvin, said that attracting new investors was vital if the bank is to deliver on its plans to double the size of its business and expand into new areas of the UK green economy.
GIB chief executive Shaun Kingsbury called it “an exciting investment opportunity”, claiming it would provide investors with predictable returns and significant growth opportunities. “The business is perfectly placed to play a leading role as the world moves decisively towards an unprecedented programme of green infrastructure investment,” Kingsbury said.
According to a report in The Guardian, Kingsbury said he had already received expressions of interest from private equity investors, sovereign wealth funds and large foreign investment banks. The sale of the bank expected to bring in more than £4bn for the Treasury when complete.
However, the bank’s move towards privatisation has been dogged by controversy – fears have been raised that selling off the bank will strip it of any legal requirement to back exclusively low-carbon initiatives, leaving it free to potentially invest in projects such as fracking.
The Aldersgate Group has urged the bank to maintain its focus on supporting innovation, arguing that this is key to delivering long-term value. “What has made the GIB unique to date has been its ability to be a step ahead of the market by supporting projects that weren’t getting sufficient support from mainstream private investors such as complex energy efficiency projects and offshore wind farms using new technologies,” said the group’s executive director Nick Molho.
“This focus on projects that are both green and novel has allowed the GIB to help tackle important market failures in the area of green infrastructure.”