Green bank ready to pump £500m into renewables

THE Green Investment Bank is expected to unveil a new fund this week that could give it access to as much as £500 million to help kickstart more renewables projects.

Shaun Kingsbury: £20bn of proposals in the pipeline. Picture: Contributed

The fund, to be announced on Tuesday alongside its first full-year results, will be backed by British and overseas investors and will give the bank greater scope for supporting growth in the sector.

Sources in the industry have told Scotland on Sunday that the new facility is neither a loan nor equity but will enlarge the balance sheet of the bank which was set up 18 months ago with bases in Edinburgh and London.

Until now, the taxpayer-funded bank has provided support on a project by project basis from an initial funding pot of £3 billion which was raised by a further £800m this time last year.

Chief executive Shaun Kingsbury has been keen to bring in private capital which would help him leverage up to £60bn for cash-hungry renewables developments.

The bank will report a loss for the year in line with expectations, given that almost all of its portfolio of 28 projects are at the pre-profit stage of development. However, its purpose is to provide seed funding that the private sector finds difficult to raise and the bank will say this week that it fully expects to earn a return as developments move into operational mode. So far, it has helped fund windfarms and other clean energy projects and says developers have raised £3 from private sector sources for every £1 provided by the bank.

It has also invested alongside other institutions including Deutsche Bank, Goldman Sachs and JP Morgan. The bank put £241m into a windfarm at Westermost Rough off the coast of Yorkshire and spent £220m to acquire a 10 per cent stake in Gwynt y Mor, the biggest offshore field under construction in Europe.

It is thought the bank’s new fund has been a result of discussions between Kingsbury and Business Secretary Vince Cable aimed at significantly expanding the capital base and at the same time reducing the bank’s dependency on the taxpayer. The bank was set up in November 2012 as a profit making institution to accelerate the UK’s transition to a greener economy, and to create what the government described as “an enduring institution, operating independently of government.”

Kingsbury said recently that he had proposals in the pipeline that could help unleash £20bn of investment. He said that it proved demand was there that would support thousands of jobs.

The Edinburgh headquarters recently moved from the Gyle to the city council-owned Atria development next door to the Edinburgh International Conference Centre. Edinburgh was chosen ahead of 31 other locations for the co-located bank. The other headquarters is in London and this has raised some questions about the bank’s future should Scotland vote for independence.

As he is running a government-owned body Kingsbury is not likely to make any comment on the issue this week.