The UK government’s Green Investment Bank (GIB) has revealed plans to support onshore wind power projects that have been affected by the Co-operative Bank’s withdrawal from the sector.
The GIB was launched in late 2012 with the aim of driving investment in low-carbon projects, and since then, its efforts have largely focused on offshore wind developments, energy efficiency initiatives and the waste and bio energy sectors.
EU state aid rules have so far not allowed the bank to lending to sectors such as onshore wind as they are older, and should in theory not need as much support.
However, the troubled Co-operative Bank had been one of the biggest lenders to the UK’s onshore, community wind industry before it was forced to cease lending to new business customers, when a £1.5 billion shortfall in its balance sheet was uncovered in May.
To fill the gap left by the Co-op, the GIB has revealed that it will ask the EU for state aid approval to expand its remit.
“We believe there is a market failure, therefore it’s an area that needs capital and it’s an area we should be allowed to invest in”, GIB chief executive Shaun Kingsbury told the Financial Times.
If the EU approves, the GIB expects to initially lend up to £100m to small onshore wind and hydropower schemes, but that figure is expected to rise.
In a strategy aimed at boosting community renewable energy projects, published in January, the government revealed that it was already in talks with the European commission over the possibility of including all community schemes within its remit.
The strategy paper suggested that investment in the relatively small sector could rise from about £17m today to between £320m to £1.5 billion by 2020, meaning community schemes could play a vital role in the UK’s future energy mix.