Green investment bank to launch £1bn offshore wind fund
The government's Green Investment Bank (Gib) has announced plans to raise £1bn to encourage new investors to put money into offshore windfarms.
Unveiling its first set of annual results, the bank said it was looking for long-term investors for a fund managed by a subsidiary that would buy equity stakes in windfarms already in operation. Investors are likely to be pension and sovereign wealth funds looking for long-term, stable returns. The fund is a new development for Gib because it raises private money up front for investment in a particular industry instead of investing project by project.
Vince Cable, the business secretary, launched the bank in 2012 to invest in wind, biomass and other green schemes that would otherwise lack funding because they are considered too risky or take too long to repay private investment.
In the year to the end of March, the Edinburgh-based bank pledged £668m to 18 projects, more than double the number it backed in its first five months. Its pre-tax loss for the first full year of operation was £5.75m but it expects to make a profit for the government as investments start to pay off.
Shaun Kingsbury, the bank's chief executive, said: "We want to do more to maximise our green impact. We plan to extend our reach into new markets like community-scale renewables. And we plan to raise new capital for the first time through the creation of a new £1bn fund for operating offshore wind assets."
Last week, Kingsbury said the bank could make a far bigger contribution to the UK's green infrastructure needs if the government allowed it to borrow. It has brought in private-sector money alongside its own funds, but by tapping the capital markets it could raise up to £60bn, Kingsbury said.
The bank will present its results and strategy at meetings on Wednesday in London and on Thursday in Edinburgh . The events, rather like an annual general meeting, will be attended by investors and environmental groups. It will face protests over its funding of biomass and waste-incineration projects. The campaign group Biofuelwatch claims almost £200m of Gib's investments went to these industries and that they damage the environment.
Biomass plants burn wood pellets instead of coal to generate energy. In December 2012 the bank agreed to lend up to £100m to Drax, the power group, to fund conversion of Britain's biggest power station to biomass.
Oliver Munnion, of Biofuelwatch, said: "Gib's first big loan was to the UK's most polluting power station, Drax, and can be directly linked to the destruction of wetland forests in the southern US. It is unacceptable that dirty energy is being financed in the name of reducing carbon emissions."
A Drax spokesman said: "Drax uses the by-products of existing forest industries such as residues, thinnings and other low-value fibre, which often has no other commercial use."