U.K. Green Investment Bank to Back Offshore Wind

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) -- The agenda for the U.K.'s Green Investment Bank (GIB) has been announced with offshore wind power at the top of its list of investment priorities.

The GIB, which will fund renewable energy projects and be headquartered in Edinburgh, Scotland, will be capitalised with €3.7 billion ($4.8 billion) to start with. Its role will be to finance renewable energy projects at a 'near commercial' stage of development. Lord Smith of Kelvin, chairman of the GIB, has presented his first briefing on the bank's goals and highlighted its five key investment areas. These are offshore wind, energy efficiency through the government's Green Deal loan mechanism, energy from waste, commercial and industrial waste recycling and non-domestic energy efficiency.

While offshore wind may be the big winner, other energy sectors including carbon capture and storage (CCS) and wave/tidal power were branded as too risky to receive investments from the GIB.

"Wave and tidal technology and carbon capture and storage are quite far away from becoming commercially viable," Smith explained. "That is real venture capital stuff. That would be a step too far for us."

The GIB will make approximately 20 investments ranging in value from €62.5 million ($78 million) to €125 million ($156 million) in what it hopes will be profitable green energy projects that will yield a return of 3.5% or more.

The GIB will be based in Edinburgh, Scotland, where a large amount of offshore wind energy projects are already in the pipeline.

Smith said: "A lot of renewable infrastructure will be here in Scotland. We have black gold now in a different form. A lot of the actual build will be based here."

Looking to the future financing of the GIB, Smith wants it to become self-sustaining.

"My dream for this thing is when we get to 2015-16, we will have the possibility to raise outside capital. It will be wonderful if we have an enduring institution and divorce ourselves from government entirely. But if also at that time I can turn around and say lots of other institutions are in this area big time, competing with us directly, we will have created an industry out of this and I will feel the job has been very well done."

The GIB forms part of the government's wide-ranging Electricity Market Reform (EMR) imitative, which will begin later this year. For additional information see May 14, 2012, article - No Delays for U.K. Electricity Market Reforms.

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