United Kingdom: Up to £1.4 billion in new loans for onshore wind farms

Three UK-based banks will start offering new loans to eligible onshore wind farms today. Wind farm developers and the banks will have an opportunity to start brokering the deals at a forum in the city hosted by Ed Miliband and Chancellor Alistair Darling.

The scheme - supported by HMTreasury and Department of Energy and Climate Change  - could enable around £1.4bn of onshore wind projects to move to construction over the next 3 years.

The European Investment Bank (EIB) will provide up to £700 million of the new finance, with the remainder matched by RBS, Lloyds Banking Group and BNP Paribas Fortis.

The loans will be available to eligible onshore wind projects with a total project cost of between £20m and £100m.

Chancellor Alistair Darling said:

“We welcome the EIB’s commitment to provide this vital funding for renewable projects across the UK. The money that is being made available will help continue the essential work of building the UK’s capacity in renewable energy."

”As the Government continues to push for a global agreement on climate change at Copenhagen it is even more important that we live up to our responsibilities and make progress in reducing this country's dependence on carbon."

"This Government is determined to provide all the support that is needed to secure a greener future."

Energy and Climate Change Secretary Ed Miliband said:

“The UK now has 4GW of wind capacity. And the pace of installation is picking up. It took us 14 years to build the first gigawatt, and just one year to build the last. But we still need a 6-fold increase in renewables by 2020 to hit our renewables target. That target is vital if we are to be on course to cutting emissions by 80% by 2050."

“So we need to pull out the stops including making sure the capital is there to build the wind farms in the first place. This partnership of the EIB with RBS, BNP Paribas Fortis and Lloyds Banking group will address that problem.”

Simon Brooks, EIB’s European Vice-President responsible for the United Kingdom said:

"The EIB's contribution to transforming wind energy generation in the United Kingdom is a core element of our support for renewable energy technology across Europe. We are sure that targeted support, following UK and European Union policy combating climate change, will facilitate rapid and sustained investment in the industry and promote continued transformation to a low-carbon economy."

Notes to editors:

1. The event takes place today at Ironmonger’s Hall, Shaftesbury place, Barbican, London.
2. 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 £1.4 billion of consented small and medium-sized UK renewables projects to deployment.”
3. DECC and HM Treasury strongly welcome the EIB’s intermediated lending scheme in the UK, targeting the deployment of small and medium sized onshore wind. This segment of the renewables market has struggled to access project finance in recent months as a result of tighter risk management resulting in liquidity shortage. 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.
4. 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’s eligibility criteria and Bank’s standard internal requirements and credit assessment.
5. Loans are available for eligible projects from today now the banks have agreed funding arrangements with the EIB which is making up to £700m of its own funds available to match the banks’ lending. The EIB will provide up to 50% of the eligible project cost,  in support of the equity investment  and with the participating banks lending the remaining debt.  This could enable around £1.4bn of onshore wind projects to move to construction over the next 3 years.
6. 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.
7. 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.
8. The Department of Energy and Climate Change is central to the UK Government’s leadership on climate change.  We are pushing hard for an ambitious global deal in Copenhagen in December to avert the most dangerous impacts.  Through our UK Low Carbon Transition Plan we are giving householders and businesses the incentives and advice they need to cut their emissions, we are enabling the energy sector’s shift to the trinity of renewables, new nuclear and clean coal, and we are stepping up the fight against fuel poverty.