The UK Green Investment Bank (GIB) and Strathclyde Pension Fund (SPF) have invested £60 million in power generation company Albion Community Power plc (ACP) to fund community-scale renewable energy projects.

While visiting the GIB headquarters in Edinburgh this morning, Business Secretary Vince Cable revealed that the bank has committed to provide ACP with up to £50 million, with SPF investing a further £10 million for the energy projects. ACP has said that it is also working to attract a further £40 million from additional co-investors to take the total sum of investable capital to £100 million.

It is hoped that the new finance project – said to be the ‘largest single source of equity funding available for UK community-scale renewable energy projects’ – will help fund up to 30 projects generating around 24 megawatts of new renewable energy, enough to power 17,500 homes.

The finance will be used to provide equity funding of between £1 million and £10 million for a range of community-scale renewable energy projects, including run-of-river hydropower, small-scale onshore wind (such as those built on industrial estates), and biogas projects including anaerobic digestion (AD) and landfill gas.

‘Institutional demand for community-scale renewable energy is growing’

Speaking from the GIB headquarters, Business Secretary Vince Cable said: “Renewable energy is the future, and we must continue to use all of the new and established technologies at our disposal to power our homes and businesses in a way that doesn’t damage the environment… The Green Investment Bank is at the heart of our industrial strategy, creating sustainable jobs and growth.”

Volker Beckers, Chair of ACP, added: “We are delighted to welcome GIB and Strathclyde as new investors in ACP. It is a clear sign that institutional demand for community-scale renewable energy is growing, and ACP is well placed to benefit from this trend. Having institutional investors will help ACP build many more renewable energy plants in 2015.”

ACP has already reportedly identified a ‘substantial project pipeline’ and will invest the capital on behalf of GIB and SPF. The pipeline will be built in partnership with project developers such as Infinite Renewables, based in Bridgend, Wales, and Green Highland Renewables (GHR), based in Perth, Scotland.

Scottish hydropower project first to receive investment

GHR is developing the first project to be announced from the new investment fund, a two megawatt run-of-river hydro-power project on the River Allt Coire Chaorach near Crianlarich, approximately 10 miles north of Loch Lomond.

By harnessing the river flow through turbine technology, the £8.5-million project will generate eight gigawatt hours of electricity per year, equivalent to the power requirements of about 1,900 homes.

Richard Round, Chief Executive Officer of Green Highland Renewables, welcomed the investment, stating: “The sub-two megawatt hydropower industry is extremely active in Scotland at present and the new funds available from ACP will play an important role in helping developers secure the finance required to build schemes.

“The involvement of GIB is extremely welcome and underlines the potential for well-constructed hydro projects to deliver stable returns to investors.”

Lord Smith of Kelvin, Chair of UK GIB, commented: “The UK is in the process of transforming how it generates its power. In future we will see less reliance on a small number of large power stations and more focus on a network of smaller, locally generated, renewable sources of power. Hydro is one example of how we can do this and we are delighted to play our part in helping this market grow, bringing investment to rural communities along the way.”

Councillor Paul Rooney, Chair of Strathclyde Pension Fund, added: “There are many great opportunities to generate sustainable, renewable energy at a community level, including here in the West of Scotland – but it can be difficult for even the best-structured projects to access good long-term finance.

“I’m pleased that Strathclyde Pension Fund will be providing funding to innovative projects that might otherwise have been frozen out of the market – and that the investment made by our members in their own future will support the future of our communities, through improved infrastructure and jobs.”

Find out more about Albion Community Power plc.