WIREDGOV

Extra Finance To Start Flowing For Wind Power

News Release issued by the COI News Distribution Service on 27 July 2009

Three UK-based banks start work today with the European Investment Bank (EIB) on a programme to lend up to £1 billion to onshore wind farms over the next 3 years.

- Up to £1 billion of loans for onshore wind farms
- Up to £10 million of Government grants for offshore wind technology development

Three UK-based banks start work today with the European Investment Bank (EIB) on a programme to lend up to £1 billion to onshore wind farms over the next 3 years.

The cash, part of the additional £4 billion of EIB lending to support UK energy projects announced in the Budget, will help get building started for onshore wind projects which have been hit by the credit crunch, particularly small and mid-sized wind farms.

The banks – RBS, Lloyds and BNP Paribas Fortis – have been teamed up with the EIB by the Department of Energy and Climate Change (DECC) and HM Treasury, following the announcement in April’s Budget Statement that the Government wanted to get more EIB lending to UK renewables.

Firms can also apply for DECC cash from today to develop offshore wind technology. There will be up to £10 million in grants, part of the £120 million announced in the renewable energy strategy last week to support offshore wind. This is the second round of cash for development of offshore wind technology.

DECC is also confirming today that, subject to agreement on suitable grant offer conditions, it also intends to make an award under the first round of this programme for Vestas Technology UK Ltd’s research and development centre on the Isle of Wight. This proposed award – more than £6 million - would include over £3m of funding from the South East England Development Agency (SEEDA). We expect to make other announcements on awards under this first round of funding shortly.

Energy and Climate Change Secretary Ed Miliband said:

“Earlier this month we laid out a transition plan to a low carbon economy that included a massive expansion of green wind energy. The resources we are announcing back up our plans with clear actions to ensure we deliver.

“The European Investment Bank funds will help the building start on consented wind farms that could provide 1 gigawatt of electricity, enough to power more than half a million homes.

“The money for the development of offshore wind manufacturing will help us generate green jobs on top of our success as the leading country in the world for the generation of offshore wind.

"Alongside these proposals, we are reforming planning laws, finding new ways of working with local communities and are determined to persuade people that we need a significant increase in onshore wind as part of the UK's future energy mix.

“That is essential for the generation of renewable energy and for Britain to have an industrial future in the production of onshore wind."

Ian Pearson MP, Economic Secretary to the Treasury said:

“The £4bn of lending to the energy sector that we announced in the Budget is just part of the £10bn of lending that we hope to see coming into the UK economy from the EIB this year, nearly three times last year's total. I am pleased at the success we are having working in partnership with EIB to provide financing to this and other important sectors.”

EIB Vice President Simon Brooks said:

“The development of the UK’s wind energy capacity will support the European Union’s and national targets for renewable energy generation. As well as helping to reduce greenhouse gasses it will strengthen the security of energy supplies. This initiative underlines the EIB’s long involvement, as the EU’s financing arm, in the UK’s energy sector and reinforces efforts to reduce the impact of climate change”.

Notes to Editors

1. As part of a wider package supporting investment and the low carbon sector, Budget 2009 said that “UK renewable and energy projects stand to benefit from up to £4 billion of new capital from the European Investment Bank (EIB) through direct lending to energy projects and intermediated lending to banks. The Government is bringing together the EIB, banks and developers to ensure this new framework lending and other products deliver rapid and sustained investment for UK renewable energy. The Government believes that this initiative can bring forward £1 billion of consented small and medium-sized UK renewables projects to deployment.”

2. DECC and HM Treasury strongly welcome the EIB’s intention to launch an intermediated lending scheme in the UK, targeting the deployment of small and medium sized renewables, particularly onshore wind. This segment of the renewables market has struggled to access project finance as a result of the credit crunch. Improved liquidity in the project finance market should help developers bring forward otherwise economically viable projects which are at risk in the current economic conditions.

3. Loans will be available for eligible projects in the Autumn once the banks have agreed funding arrangements with the EIB which is planning to make up to £600m of its own funds available to match the banks’ lending. The EIB will match up to 50% of the project debt with the participating banks, potentially allowing for up to £1 billion of loans.

4. The EIB will provide funding to banks for loans to eligible projects. The eligibility criteria are designed to ensure that the projects have an acceptable environmental impact and are located in commercially viable locations in terms of wind resource.

5. Following discussions with the developer community, it is clear that there are a significant number of projects that would stand to benefit from the cheaper funding that this scheme would release, subject to the projects meeting the EIB and Banks eligibility criteria.

6. The European Investment Bank (EIB) is the European Union’s long-term financing institution which supports projects promoting European Union objectives, in particular small and medium-sized enterprises (SMEs), energy and mitigation of climate change, and investment in the poorer, ‘convergence’ regions. In the last five years, 2004 to 2008, the EIB lent over £13 billion for projects in the UK, including over £3 billion in 2008 for investment to help regional development, protect the environment, promote clean and secure energy sources, improve education facilities, promote the development of national and regional transport, and support the activities of small and medium sized enterprises.

7. The first £10 million call under the Low Carbon Energy Demonstration (LCED) capital grants scheme was launched on 28 May 2009. It was designed to address a critical barrier facing the deployment of renewable offshore wind generation in the UK, namely the growth in demand for renewables generation beyond the capacity of the supply chain to deliver. It is specifically aimed at bringing forward the demonstration of new components or technology to support the earlier deployment of large-scale multi-MW wind turbines to enable their deployment within 2020 timescales. It also aims to provide a learning experience which can improve confidence and help reduce future costs; and underpin development of the industry by stimulating the UK supply chain.

8. SEEDA Media Relations Manager: JessicaStewart@seeda.co.uk 01483 501307

Contacts:

Department of Energy and Climate Change
nds.decc@coi.gsi.gov.uk

Nick Turton
Phone: 0300 068 5224
nick.turton@decc.gsi.gov.uk