UK Green Investment Bank and Offshore Renewable Energy Catapult announce collaboration agreement

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:

• standardisation of due diligence scopes for equity and debt investment
• assessment and solutions for technical challenges on offshore structures
• development of enabling technology standards, such as LiDAR
• operations and maintenance certification development
• industry accepted benchmarking/ stage-gating parameters for performance of both marine projects and technologies to enable investment/ financing
• 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.

"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."

Anna Soubry
Business Minister

"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."

Shaun Kingsbury
Green Investment Bank CEO

"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."

Andrew Jamieson
ORE Catapult CEO

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%.