A government-funded £3 billion fund aimed at kick-starting investment in the green economy has opened its doors and backed two businesses.
Having been formed as public company in May 2012, the UK Green Investment Bank (GIB) is now set to begin investing its £3 billion cash pile.
The fund was first announced as part of the 2011 Budget by chancellor George Osborne and has been launched in Edinburgh, where it is set to be based, by business secretary Vince Cable.
Its first investment sees it inject £8 million into a project in the North East of England which will generates energy from waste. Fund manager Greensphere Capital, which is chaired by turnaround investor Jon Moulton, has led the deal and committed a further £8 million
When fully constructed and operational, the six anaerobic digestion plants of Greenlight AD Power will deliver a combined capacity in excess of 30 MW hours of electricity to the national grid diverting 550,000 tonnes of waste a year otherwise destined for landfill.
Under the framework of the UK GIB fund, the £8 million investment is matched by £8 million of private sector funding.
Back in April, Moulton’s newly-formed Greensphere Capital announced that it would be leading a new £80 million investment fund aimed at promoting green infrastructure alongside Foresight Group.
Sectors identified as targets include waste recycling and reprocessing facilities, pre-treatment projects and energy-from-waste projects.
The second investment made by UK GIB involves a retrofit of Kingspan’s UK industrial facilities with systems and services which will reduce its energy consumption by some 15 per cent. The £5 million allocation, through Sustainable Development Capital, is the first project supported in UK GIB’s £100 million non-domestic energy efficiency investment programme.
Cable says, ‘Three billion pounds of government money will leverage private sector capital to fund projects in priority sectors from offshore wind to waste and non domestic energy efficiency, helping to deliver our commitment to create jobs and growth right across the UK.
‘Having the headquarters in Edinburgh is a powerful vote of confidence in the Union, and a testimony to our commitment to helping Scotland lead the green revolution.’
In the period before state aid approval for UK GIB, investments were made on commercial terms by the Department for Business Innovation & Skill’s UK Green Investments team (UKGI).
To date, UKGI has committed £180 million to specialist fund managers to co-invest equity in smaller waste infrastructure, energy from waste, and non-domestic energy efficiency projects. Assets built up by UKGI have transferred to the UK GIB.
UK GIB chair Lord Smith adds, ‘Over the coming months and years, I am confident that our excellent team will put its many years of expertise to work on building the foundations of that sustainable economy, and facilitating the important investments that will ensure its long-term good health.’