Engineering news
The process of transferring the Green Investment Bank (GIB) into private ownership has begun as the government invites private sector investors to register their interest.
The transaction will involve both the sale of existing shares owned by the government and also the commitment of additional capital for GIB by new investors.
Business secretary Sajid Javid announced the transfer to the private sector. Government has said it will allow the GIB to maximise investment into green energy projects from the private sector that had previously been constrained by rules governing how public bodies can raise capital.
The launch of the sale comes as GIB announced it has supported a new £10 million investment to acquire and expand the renewable energy plant and district heating network in Wick, on the far north coast of Scotland. In the three years since it was launched GIB has committed £2.6bn of capital to almost 70 green infrastructure projects across the UK, covering offshore wind, energy efficiency and waste and bio energy.
Javid said: “The Green Investment Bank is a world first, and it is a sign of its success that the idea is being copied globally. Having proven the business model works, we now want it to make an even greater impact.”
While critics have spoken out against the sale, fearing that it will weaken the GIB’s focus on green technology and projects, the government has stressed that the special share structure protects the bank’s green mission “meaning the Green Investment Bank will continue to do exactly what it says on the tin”. It added that moving GIB into private ownership will give it access to “much more capital than if it remained in government hands, meaning it can increase its investments and have a bigger impact.”
RenewableUK’s director of policy Dr Gordon Edge told PE: “Change can be unsettling, but in this case the sale of the GIB could bring some positive results, freeing the bank up from state aid regulations so that it can invest more widely – in energy storage and local supply chain companies for example. It’s done excellent work so far, especially in securing investment in offshore wind projects, but after the sale it will have greater commercial freedom to cast its net even wider and raise a greater volume of capital."
Edge added that RenewableUK would like to see safeguards that GIB remains "green to its core", but has confidence that retaining that focus will be commercially successful and mean that GIB will not be "tempted to stray far from it".
Lord Smith of Kelvin, independent chair of GIB, said: “Attracting new investors is vital if GIB is to fund its ambitious plans to double the size of its business, expand into new parts of the UK green economy and deliver a growing green impact.
“I am confident that the sale process will provide GIB with good new owners who will support GIB’s continued growth and leadership role in the global green economy long into the future.”
The government is now inviting Expressions of Interest from bidders to be evaluated as part of the first phase of the sale process. This will be followed by a bidding process later this year.
Meanwhile, a House of Commons Energy and Climate Change Select Committee has published a report into “Investor confidence in the UK energy sector”.
The report criticises the succession of policy changes and scheme closures in renewable energy since the General Election, which included cutting support for onshore wind and solar, ending of the “Green Deal” energy efficiency programme and cancelled a long-standing competition to deliver carbon capture and storage.
The Committee heard that the contradictory signals coming from government were causing some investors to put projects on hold, until there was more clarity on energy policy.
Angus MacNeil, chair of the Energy and Climate Change Committee said: “The government must set out a credible, long-term vision for the future of the UK’s energy system. The government will this year have to produce a plan setting out how we will keep on track to reduce our carbon emissions in 2030 and beyond. This is an ideal opportunity to rebuild confidence in the direction of travel for the energy sector in the UK."