Green Investment Bank urged to rethink strategy on wave and tidal energy

THE Green Investment Bank (GIB) must rethink its strategy of not investing in early-stage marine renewable energy devices if the industry is to hit government targets, a senior figure in the sector will warn this week.

Maria McCaffery, chief executive of trade body Renewables UK, will use her organisation’s wave and tidal conference in Edinburgh on Thursday to issue the warning to the newly launched bank.

Business Secretary Vince Cable announced last week that the £3 billion GIB would be based in Edinburgh, with a transactions team in London, after a competition among 32 sites to host the government-backed lender.

But McCaffery said the GIB’s decision not to invest in proving if wave and tidal prototypes are viable – and instead only investing in later-stage marine projects – could jeopardise the sector’s ability to hit the UK government’s 2020 renewable energy targets.

Current marine demonstration devices generate a tiny eight megawatts (MW) of power in total, but the coalition wants that figure to rise to 300MW by 2020.

McCaffery warned that more public money is needed to leverage in private sector investment in the sector.

She said the UK government’s Department of Energy & Climate Change (Decc) has set up a £20m low-carbon innovation fund to support prototype devices, while the Scottish Government has pledged £18m to fund the deployment of commercial arrays.

But McCaffery said that total of £38m needed to be stepped up to £120m in order to leverage in private sector investment. She said that every £1 of public money would help to bring in £6 from banks, pension funds, private equity firms and other investors.

In total, she believes £1.5bn is needed for marine devices to hit the 2020 targets, with Decc estimating £200bn needs to be invested to meet its alternative energy ambitions in total.

McCaffery said: “The UK is still a world leader when it comes to wave and tidal power, even with just 8MW. But other countries – like Canada, China, Portugal and the United States – are catching up with us and we need to invest now to make sure the first large-scale devices are built and deployed in the UK.”

The international scale of the industry was illustrated on Friday when the European Marine Energy Centre (EMEC) in Orkney signed a deal with a Japanese renewables body to help build a similar facility to test wave and tidal devices.

A Scottish Government spokeswoman said its support for the sector was closer to £65m than £18m when grants to the EMEC and other funding was taken into account.

She added: “Scotland can lead the world in marine energy and we are already seeing significant investment in the industry benefiting communities.”

A spokeswoman for Decc said: “We have already taken great strides to ensure we stay top of the world leader board through funding for this sector.”