Green Investment Bank makes first move into hydro energy
Community power plants get £60 million backing as generation goes local
Business Secretary Vince Cable today unveiled a £60 million fund to back a variety of projects that will signal a shift from reliance on a small number of big power stations to having energy produced in local neighbourhoods.
The first project is a “run-of-river” hydro-power project on the River Allt Coire Chaorach near Crianlarich, 10 miles north of Loch Lomond. The £8.5m plant will generate 8 GWh of electricity per year, enough to supply 1,900 homes.
The UK government-backed Green Investment Bank (GIB) and the Strathclyde Pension Fund (SPF) will provide the funds to Albion Community Power (ACP) to build community-scale renewable energy projects at sites across Britain. This is the first investment in hydro-power from GIB and SPF.
GIB has committed up to £50m with SPF investing a further £10m. ACP is working to attract a further £40m from additional co-investors to take the total sum to £100m. The finance will provide equity funding of between £1m and £10m to each project. Green Highland Renewables, based in Perth, and Infinite Renewables in South Wales, will work in partnership on the projects.
Across the UK capacity exists for an additional 800 MW of new hydro-power projects, enough to power over 500,000 homes with renewable energy. Building this capacity would require £3 billion of investment in remote rural communities. Around 80% of this capacity is in Scotland with the remainder split between England and Wales.
Business Secretary Vince Cable, who visited the GIB headquarters in Edinburgh today, said renewable energy is the future.
“Hydro power has a vital role to play in this. The first project to be funded from a new investment by the Green Investment Bank will use the natural flow of Scotland’s rivers to generate electricity.”
Lord Smith of Kelvin, chairman of the Green Investment Bank, added: “The UK is in the process of transforming how it generates its power. In future we will see less reliance on a small number of large power stations and more focus on a network of smaller, locally generated, renewable sources of power. Hydro is one example of how we can do this and we are delighted to play our part in helping this market grow, bringing investment to rural communities along the way.”
Councillor Paul Rooney, chairman of Strathclyde Pension Fund, said: “There are many great opportunities to generate sustainable, renewable energy at a community level, including here in the West of Scotland – but it can be difficult for even the best-structured projects to access good long-term finance.
“I’m pleased that Strathclyde Pension Fund will be providing funding to innovative projects that might otherwise have been frozen out of the market – and that the investment made by our members in their own future will support the future of our communities, through improved infrastructure and jobs.”
Volker Beckers, chairman of Albion Community Power, said the involvement of GIB and Strathclyde as new investors in ACP is “a clear sign that institutional demand for community-scale renewable energy is growing”.
He added: “Having institutional investors will help ACP build many more renewable energy plants in 2015.”
Richard Round, chief executive of Green Highland Renewables, said: “The sub-2 MW hydro power industry is extremely active in Scotland at present and the new funds available from ACP will play an important role in helping developers secure the finance required to build schemes.
“The involvement of GIB is extremely welcome and underlines the potential for well-constructed hydro projects to deliver stable returns to investors.”