Banking on green business22 April 2013
Described as the first of its kind in the world, the UK Green Investment Bank is now open for business and ready to spearhead green economic growth. But even though the UK is considered to be a world leader in marine energy development, the bank has failed to target this as one of its priority sectors.
Described as a genuine world first and a ground-breaking institution, the UK Green Investment Bank (GIB) was formed as a public company in May 2012. With £3B of funding from the UK government, this 'for profit' bank has undertaken the mission to accelerate the UK's transition to a more green economy; creating an enduring institution to operate independently of the government.
GIB became fully operational in October 2012 when it was granted State Aid approval by the European Commission to make investments on commercial terms. This approval covers a number of green sectors which have been chosen by the UK government as priority sectors, to which at least 80% of the bank's capital must be directed. These sectors include offshore wind, waste and non-domestic energy efficiency. Other permitted sectors include marine energy.
Headquartered in Edinburgh in Scotland, the bank will mobilise additional private capital to make a significant contribution to the development of a green economy. As Secretary of State for Scotland Michael Moore said: 'The UK Green Investment Bank is now ready to have a real and positive impact on investment in our green and renewables sectors that will take them into new areas and opportunities. We have the best of both worlds: headquarters in Edinburgh, at the centre of Scotland's thriving businesses and asset management, coupled with a team based in London, the world's leading financial centre.
"The next step is to put that expertise into action and mobilise the additional investment we need to take the UK towards a greener economy. This is the first bank of its kind in the world," he added, "and this government has delivered it for Scotland and the rest of the UK."
GIB Chairman Lord Smith believes that the bank also has the potential to be a game-changing component of the UK's low carbon economy, and a profitable centre of excellence in specialist and renewable investment.
The Green Investment Bank underpins the government's commitment to setting the UK firmly on course towards a green and growing economy. It claims that such transition presents significant growth opportunities for UK-based businesses but requires unprecedented investment in key green sectors. GIB is said to be uniquely placed to readdress past market failures affecting green infrastructure projects which have led to significant under-investment in the key areas required to deliver this transition. It is also anticipated that GIB will complement other green policies to help accelerate additional capital in green infrastructure.
Speaking on 28 November 2012 when GIB was declared officially open for business, the Business Secretary Vince Cable said: 'The bank will place the green economy at the heart of our recovery and position the UK in the forefront of the drive to develop clean energy.' He predicted that it would encourage private and public investment of £15B in low-carbon initiatives by 2015.
'The Green Investment Bank will help attract the capital required to allow the green economy to blossom, encouraging investors to market and kick-starting low carbon projects. In combination with our energy market reforms, there will be lasting economic benefits as a result, with new expertise and jobs created, that will give the UK a competitive edge,' Energy Secretary Edward Davey stated.
RenewableUK is the trade and professional body which represents the wind, wave and tidal enrgy industries. Its Deputy Chief Executive Maf Smith said that the opening of GIB comes at a crucial time for the renewables sector. 'Today's unequivocal assurances on investment, from some of the biggest hitters in the government cabinet, provide further tangible proof that the renewables sector is regarded by those at the heart of policy-making as one of the main engines for growth,' he said. 'We trust that a similar message will be forthcoming in the Energy Bill so that we can deliver more than 88,000 jobs in the wind, wave and tidal sectors alone by 2021.'
On the same day that the GIB was open for business, Siemens reported that its 1.2MW SeaGen tidal device in Strangford Lough, Northern Ireland, had achieved three power generation milestones. RenewableUK cited this as evidence of the importance of the marine energy sector.
Since its installation in 2008, Siemen's tidal current turbine device has fed more than 6GWh of power into the grid - a record for a free stream tidal energy system. The leap from 5-6GWh only took 68 days, which is described the narrowest time frame for the generation of a single gigawatt hour since the turbine started operation. During a strong spring tide on 14th October, SeaGen achieved its highest level of power generation in a single day at 22.52MWh.
Despite such success within this sector, representatives from RenewableUK were unable to hide their disappointment that marine energy was not selected as a priority sector for GIB. Even though the UK is considered to be a world leader in developing wave and tidal energy projects, Maf was incredulous that the Green Investment Bank has still not identified marine energy as a priority sector. 'RenewableUK will continue to urge the GIB to find a way to support the development of marine energy,' he said, 'as more than 12,000 people are expected to be employed in wave and tidal energy by the dawn of the next decade.'