Bring new sources of finance into

UK green economy – the role of the

GIB

February 2015

Edward Crosthwaite Eyre

Green Investment Bank

2

AGENDA

1.

2.

INTRODUCTION TO GIB

THE ROLE OF GIB

3. FUTURE OF GIB

3

£3.8bn Capital to invest

in green projects

WHO WE ARE

70 Specialist investors

and technical experts

Chaired by Lord Smith

Independent Board

100% Owned by the

UK Government

Mobilise

private sector

investment

Accelerate the

UK’s transition to

a green economy

4

OUR JOB

Our vision: green and profitable Our task: crowding-in capital

Our markets:

Offshore

Wind

Waste &

Bioenergy

Energy

Efficiency

Community

Scale

Renewables

5

We have invested in every

part of the UK, in all of our

sectors and using all our

financial products

WE ARE INVESTING

Our investments will save 1.3

million tonnes of waste from

landfill

We have backed 5 local

authority, 3 commercial and 2

anaerobic digestion waste

projects

We have backed large and

small projects; from a

CapEx of £2m

to £1bn

We are building a market in

energy efficiency, including

streetlight conversion and 4

NHS projects

Our investments will produce

enough renewable electricity

to meet energy needs of 3

million homes

We’ve invested £623m

in 5 offshore wind

projects, including

construction equity

We have set up 5 funds,

with £250m, to back

small projects

Our investments will cut CO2

emissions equivalent to

taking 1.6 million

cars off the road

We have committed £1.4bn of capital to 34 projects, mobilising a total of

£4.9bn

6

OVER 70 OTHERS HAVE INVESTED WITH US

7

AGENDA

1.

2.

INTRODUCTION TO GIB

THE ROLE OF GIB

3. FUTURE OF GIB

8

DUAL ROLE OF GIB

Source: BNEF, IJ, GIB

GIB’s role is two fold – to provide liquidity but also to develop the market

through leadership

Liquidity

• Capital supply changes with economic

conditions and market sentiment

• RE project pipeline uneven

• Buffering this volatility

Leadership

• Financing new technologies

• Breaking down information barriers for

investors

• Creating new products and markets

……or help lead the market Follow the market……..

9

LIQUIDITY…….STABILISING INVESTMENT FLOWS

Source: BNEF, IJ, GIB

EIB’s UK Funds Allocation

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012

Other

T&D

Renewables

Total:

7% 12%

28%

11%

£2.5bn £4.3bn £4.2bn £4.3bn

2%

£2.9bn

Impact of GIB on UK renewables market

In a historically volatile market, GIB and other similar organisations have

played a role stabilising investment flows by providing liquidity

EU R

E In

vest

men

t U

K R

E In

vest

men

t

-64%

-11%

-30%

w/o

GIB

with

GIB

2011-2013

$0bn

$20bn

$40bn

$60bn

$80bn

$100bn

$120bn

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

£0bn

£2bn

£4bn

£6bn

£8bn

£10bn

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

GIB

Other

10

LEADERSHIP… IN FINANCING NEW TECHNOLOGIES

GIB has developed the in-house capability to enable it to understand new

technologies and risks

Birmingham Bio Power

• First of a kind gasification technology

in UK

• £12 m commitment from GIB across

debt & equity

• Total investment £47.8m

Westermost Rough

• First commercial deployment of the

Siemens’ 6MW turbine

• £241m equity commitment into the

construction phase

• Total investment £888m

11

LEADERSHIP… IN BREAKING DOWN

INFORMATION BARRIERS

GIB is actively engaged in breaking down information barriers for

investors in relation to specific opportunities in the UK Green Economy

12

LEADERSHIP…IN CREATING NEW PRODUCTS AND

MARKETS

GIB has innovated with the development of its first Green Loan for Local

Authorities to fund LED lighting schemes out of energy savings

• Low fixed rate

• Designed for Public Sector EE projects

• Up to 20 years term

• Repayments made from savings

What is a Green loan?

£300m spent on street

lighting in UK each year

£200m of annual savings

with switch to LEDs

10 year payback on

investment

£9m pathfinder green loan

with Glasgow LA

Green loan launch &

market report

Standardisation & rollout

with a pipeline of 60 LAs

Market opportunity Product development

13

LEADERSHIP…IN CREATING NEW PRODUCTS AND

MARKETS

Greencoat Capital was the first successful listing of its type in the UK, GIB

supported BIS in its cornerstone investment

£210m

Private

sector capital

£50m (BIS)

£260m

Successful fund listing Capital Raised

Greencoat £260m

Bluefield Solar £130m

TRIG £300m

Foresight £150m

Infinis £234m

Greencoat 2 £83m

John Laing Renewables £160m

NextEnergy £85.6

TOTAL £1.4bn

14

GIB’s investment strategy in offshore wind has looked to resolve capital

constraints across the project lifecycle

Helped develop a secondary

market in operational assets

Deployed £623m alongside

1.1bn of private capital

Allowed £1.72bn of capital to

be recycled into construction

1st project financing of a

minority stake in operation

Increased confidence given

operational experience

Has technical expertise to

understand construction risk

£241m construction equity for

Westermost Rough

1st project financing of a

minority stake in construction

1st - Operational assets 2nd - Construction risk

Raising a £1bn Offshore Wind

Fund

Platform for investors unable /

unwilling to invest directly

Greater liquidity in 2°market

giving developers confidence

Build confidence paving way

for future construction funds

3rd - Increasing liquidity

LEADERSHIP…IN CREATING NEW PRODUCTS AND

MARKETS

15

AGENDA

1.

2.

INTRODUCTION TO GIB

THE ROLE OF GIB

3. FUTURE OF GIB

16

Equity

Debt

Fund

WE ARE INVESTING PROFITABLY

Our portfolio is young and weighted towards

equity and construction investments

Current portfolio will generate £35m-£40m of

income and costs stabilised at under £25m

Our investments provide returns on average of

c.9%

Operation

Construction

17

OUR PLANS FOR THE FUTURE

Keep investing and

innovating

12/13 13/14 14/15 Hydro Electric

GIB is building on its mandate by moving into new sectors of the UK Green

Economy, starting with Community Scale Renewables

Small scale onshore wind

Small scale hydro

18

TOWARDS A MIXED ECONOMY OF FUNDING

0

2

4

6

8

10Private Capital

Time Step 1 Step 2 Step 3

• 100% HMG owned

• 100% HMG financed

Ownership

Financing

• 100% HMG owned

• Mixed finance

• Mixed equity

• Mixed finance

GIB aims to maximise its impact by exploring options to diversify its

funding sources

19

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