UK renewables get in line for GBP 40bn of govt guarantees
Oct 22, 2013 - Several wind, biomass and other green energy schemes made it to the list of energy, road and rail infrastructure projects that are eligible for the UK government’s GBP-40-billion (USD 64.5bn/EUR 47.2bn) guarantee scheme.
Today Her Majesty's Treasury said that 40 projects in total, more than half of which are in the energy sector, have reached the pre-qualification stage. Among the projects are the 100-MW Avonmouth biomass power plant in the port of Bristol proposed by Helius Energy Plc (LSE:HEGY); Mainstream Renewable Power's 450-MW Neart na Gaoithe wind farm off the Scottish coast and Able UK’s Able Marine Energy Park -- a GBP-450-million offshore renewable technologies hub on the South bank of the Humber Estuary in England. Tilbury Green Power’s 60-MW power plant in Essex that will use waste wood as fuel is also in the list along with waste-to-energy projects of Chinook Energy.
After more talks, evaluations and due diligence, some of the shortlisted projects will reach agreements with the UK government to be their guarantor, thus ensuring increased confidence in the projects for private lenders. The government guarantees are for a portion of a project’s capital value.
The UK Guarantee scheme can allocate as much as GBP 40 billion of guarantees and has already extended a GBP-75-million guarantee to UK power producer Drax Group (LON:DRX) for a project to convert to biomass three of the six 600-MW coal-fired power generators at the Drax power station at Derby.
Reaching the pre-qualification means that if developers fail to obtain private financing for their projects, the government is to step in and help. Government guarantees are offered on commercial terms and involve a fee calculated according to the riskiness of the project.