The UK Green Investment Bank plc (GIB) and the Offshore Renewable Energy (ORE) Catapult have today announced a three year agreement to work together to drive investment into offshore renewable energy through greater understanding and management of the associated risks, reducing the cost of energy from offshore renewables.
The Memorandum of Understanding sets out how the two organisations will bring their areas of expertise to bear on lowering the levelised cost of energy (LCOE).
It identifies six areas on which they will initially work together, each aimed at addressing specific perceived risks in investment in offshore renewable projects:
1. Standardisation of due diligence scopes for equity and debt investment
2. Assessment and solutions for technical challenges on offshore structures
3. Development of enabling technology standards, such as LiDAR
4. Operations and maintenance certification development
5. Industry accepted benchmarking/ stage-gating parameters for performance of both marine projects and technologies to enable investment/ financing
6. Financial modelling best practice for offshore renewables projects
Each organisation will also benefit from direct access to the technical expertise of the other, avoiding the costs of developing non-core internal capability.
Business Minister Anna Soubry said:
This collaboration is a very positive step for our offshore wind industry – helping to increase business productivity, encourage green innovation and stimulate long-term growth.
Green Investment Bank CEO Shaun Kingsbury said:
Our respective organisations support the offshore wind industry’s moves to reduce risks and cut costs. We believe that allying our financial expertise with ORE Catapult’s technical know-how will help achieve that aim.
ORE Catapult CEO Andrew Jamieson said:
Joined up thinking between finance and technology is a major enabler of offshore renewable energy deployment. ORE Catapult and GIB together will ensure an industry better informed as to what’s investable and markets better able to assess and manage investments through understanding of technology.
The capital intensity of offshore renewables makes the cost of capital a key driver of the cost of such energy. The Crown
Estates’ Offshore Wind Cost Reduction Pathways Study, published in June 2012, estimates that a drop of one percentage point in the Weighted Average Cost of Capital (WACC) is equivalent to a reduction in the Levelised Cost of Energy (LCOE)
of around 6%.
Notes to editors
About the UK Green Investment Bank
UK Green Investment Bank plc (GIB) was launched in November 2012. With £3.8bn of funding from the UK Government it is the first bank of its kind in the world. It is a “for profit” bank, whose mission is to accelerate the UK’s transition to a greener economy, and to create an enduring institution, operating independently of Government.
GIB is wholly owned by HM Government. The Company is not authorised or regulated by the Financial Conduct Authority or the Prudential Regulation Authority. A wholly owned subsidiary UK Green Investment Bank Financial Services Limited is authorised and regulated by the Financial Conduct Authority.
About ORE Catapult
ORE Catapult was established in 2013 by the UK Government and is one of seven such Catapults set up by Innovate UK in high growth industries. It is the UK’s flagship technology innovation and research centre for offshore wind, wave and tidal energy and delivers prioritised research underpinned by world-class test and demonstration facilities, collaborating with industry, academia and Government to reduce the cost of offshore renewable energy and create UK economic benefit.