At the time of announcing its performance for the financial year, the UK Green Investment Bank also announced plans to raise £1 billion for a new fund to “acquire equity stakes in operational offshore wind projects in the UK.” The move is expected to boost the offshore wind sector’s rapid growth.
The Green Investment Bank (GIB) has already invested in 5 large offshore wind farms since its inception in November of 2012, including the majestic London Array — the largest offshore wind farm in the world. The group have already committed £668 million to 18 green energy projects over the past financial year, more than doubling the number of projects it backed in its first year, making them the most active investor in the UK’s green industry economy.
“GIB’s plans for a dedicated offshore wind fund are a real boost for our industrial strategy in a sector where we have a strong competitive advantage compared to other countries,” said Vince Cable, the British Business Secretary. “There are great opportunities for British companies and the industry has the potential to create 30,000 jobs for the UK.”
As the GIB make note in their press release (PDF), if the UK offshore wind industry is to continue growing, long-term investors are needed to allow developers the opportunity to refinance part of their investments in operating assets to reinvest in new developments.
Equity investments in operational wind farms can offer a compelling opportunity for investors seeking long-term, inflation-linked returns. These attributes can be well matched to the needs of long-term infrastructure investors such as sovereign wealth funds and pension funds.
“Our role goes well beyond that of a traditional investor,” said Shaun Kingsbury, chief executive of the GIB. “We are providing a positive demonstration effect by successfully committing capital to profitable, green infrastructure investments. We are making a difference across the UK by taking on the tough projects, de-risking new technologies and lowering the cost of capital for our sectors.
“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 £1billion fund for operating offshore wind assets.”
The move has also been greeted with enthusiasm from others in the renewable industry.
“The GIB’s offshore wind fund will provide a significant boost to the UK’s offshore wind industry, at a time when it’s expanding by leaps and bounds,” said RenewableUK’s Director of External Affairs, Jennifer Webber.
“It will create a virtuous cycle by encouraging more private investors to come forward – this will in turn enable offshore wind farm developers to invest in further projects. More than 13,000 people are already employed full time in the UK’s world-leading offshore wind industry – and that’s set to grow to 45,000 jobs by 2023. The establishment of this fund by the GIB helps to secure those jobs for the future.”
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