The UK Green Investment Bank (GIB) has announced that it has raised over £10 billion in green infrastructure investment in the last three years as it prepares to enter the private sector.
The organisation began with £3.8bn in capital from the government and has spent £2.3bn since it was established in 2012. This money has mobilised £10.1bn of investment and has been used to partially fund a wide range of green projects, including a £1.2bn offshore wind farm off the coast of Brighton and the installation of 10,000 LED streetlights in Glasgow. GIB’s most recent investment has been a £47m commitment to Northern Ireland’s largest energy from waste (EfW) plant.
The organisation also claims to have raised the UK’s largest renewable energy fund after its subsidiary, UK Green Investment Bank Financial Services (GIBFS), secured commitments of £818m for its Offshore Wind Fund.
Shaun Kingsbury, chief executive of GIB, said: “GIB was declared open for business three years ago. Since then we have worked with almost 100 co-investors to finance more than £10bn of green infrastructure in the UK. But our contribution goes beyond the projects we have financed: we have shown that green investment is good business.”
Once operational, GIB says its current portfolio of investments will generate an overall return of over 10%.
Niall Stuart, chief executive of Scottish Renewables, said: “In the three short years of Green Investment Bank’s existence it has become an important source of capital to the renewable energy sector and initiatives that have contributed to cutting carbon emissions and driving energy efficiencies in the Scottish economy. From investing in major offshore wind projects to biomass boilers in whisky distilleries and LED street lighting, the GIB has demonstrated its diversity.
“We hope to see this commitment in renewable heat and electricity in Scotland continue as the bank moves into its next important phase.”
Following its success since it was formed, GIB now faces an uncertain future as the government seeks to privatise it. This will require the Bank to be re-classified by the Office of National Statistics as a private company rather than a public sector body. To do this, the government has begun the process of repealing part one of the Enterprise and Regulatory Reform Act 2013 to allow GIB to enter into private ownership.
This move has raised concerns over the future of the bank, as there is no guarantee that a private company will retain GIB’s focus on green investment. However, the government claims this remit is protected by the fact that GIB has been established as a green infrastructure investment company and that is what investors would be buying. In addition, the government says it intends to ask potential investors to confirm their commitment to GIB’s green values and investment principles and to set out how they propose to protect them as part of any sale discussions.
Sajid Javid, secretary of state for business, innovation and skills, said: “As this milestone shows, the Green Investment Bank is going from strength to strength and is having a major impact supporting renewable energy projects across the whole of the UK. Crucially, it has demonstrated that investing in green technology and our future energy security can be a profitable business and I am sure the coming years will see a significant scaling-up of its operations as it moves into private ownership and mobilises private sector capital.”
By David Pratt.
