Around 6,500 jobs would be created in the small scale renewable energy sector if Green Investment Bank (GIB) gives the appropriate financial backing, according to a new report by The Co-operative Bank and accountancy firm, Grant Thornton UK LLP.
The report, outlined in a letter sent to Business Secretary Vince Cable, today (16 May) demonstrates the economic return on investment that GIB could generate in the period where larger projects remain in planning and development stages. It urges for £200m to be brought forward from GIB’s initial £3bn budget for small-scale renewable schemes instead of concentrating solely on large energy and infrastructure developments.
The report explains that small scale projects tend to have greater impact on UK companies and create relatively more jobs in the UK and help deliver significant growth.
By supporting projects of between 250kw and 5mw in size the GIB could also generate:
- £273.5m annual economic activity
- £56m additional tax revenue per annum
- Leverage £908m of private investment for renewable energy
- 2,940GWh of renewable power per annum
- Generate a return on its investment in order to create a sustainable fund for further investment in green projects
The report concludes that GIB would achieve financial returns and carbon reductions from the sector almost immediately compared to more complex, larger nuclear and off-shore wind projects which have long planning and construction periods.
Nuclear power stations and off-shore turbines also require highly specialised skills that often need to be imported with much of the construction work normally going to very large, often international construction companies. Small-scale renewable energy projects however tend to use regional suppliers and boosts the economic prospects of communities at a local level.
Neville Richardson, Chief Executive at the Bank’s parent company Co-operative Financial Services, said: “We’re concerned that an opportunity to create jobs and boost economies at a local level will be missed if GIB focuses solely on financing large-scale projects such as offshore wind and nuclear. We acknowledge the role of the large scale projects but these will take time.
“There are a significant number of currently available projects that can generate returns for the tax payer even before these larger schemes begin. We need to get on with the delivery and not wait any longer.”
The Co-operative and Grant Thornton are calling on GIB to bring forward a small proportion of its initial capital to leverage significant private funding by making community-scale wind, solar, hydro, anaerobic digestion and biomass projects more attractive to investors.
Large numbers of small-scale projects are undeveloped primarily due to problems accessing capital. Recent analysis* found that an estimated 80 small scale, community based projects could be up and running quickly but are undeveloped due to a lack of capital.
The Bank and Grant Thornton see mezzanine finance provided by the initial GIB investment as a means to leverage significant support from the private sector for small-scale and community schemes.
Scott Barnes, CEO of Grant Thornton UK LLP said: “Without GIB helping to plug this market gap, the potential of small-scale projects will remain unrealised and we will miss out on local growth, private investment and employment creation.
“We must not lose sight of these important local initiatives amongst all the talk of large scale multi billion pound structural changes. Projects at small and community scale deliver other benefits; they can generate higher levels of local acceptance and support and profits can be re-invested to fund local initiatives.
Richardson continued: “As part of the Co-operative Group’s radical new Ethical Operating Plan we’ve increased our lending to the sector and, are supporting, via the Co-operative Enterprise Hub, the development of co-operatives set up to tackle climate change”
The Co-operative Bank specialises in small to medium projects with a capital value of up to £25m. In 2007, it ring-fenced £400m specifically to fund the sector and recently extended its intention to lend £1bn to the sector by 2013 as part of the Co-operative Group’s Ethical Operating Plan.
It has since built considerable expertise in supporting development of renewable technologies such as onshore wind, hydro, biomass and combined heat & power systems.
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*Analysis by Energy4All, a social enterprise that supports community renewables, found that an estimated 80 small scale community based projects remain undeveloped primarily due to problems accessing capital.
About The Co-operative Financial Services
The Co-operative Financial Services (CFS) is part of The Co-operative Group, which is the world’s largest consumer co-operative with around five million members, over £14 billion turnover, and core business interests in financial services, food, travel, pharmacy and funeral care. The Co-operative Group has over 5,000 retail trading outlets.
Following the merger with Britannia Building Society on 1 August 2009 CFS is one of the largest and well diversified mutual businesses operating in both retail and corporate markets.
As part of The Co-operative Group, the new business is characterised by its unique ethical and member reward policies and very high levels of customer advocacy.
The combined CFS business has £70 billion in assets, 12,000 staff and eight million customers. It has over 300 high street branches, 20 corporate banking centres and a major presence in Manchester, London, Leek, Bristol, Plymouth, Skelmersdale and Stockport.
It is the only mutual organisation that enables its members to earn financial rewards for the products they hold, as well as giving them the opportunity to have a say in how the business is run.
Grant Thornton UK LLP is a leading business and financial adviser with offices in 27 locations nationwide. We are a member firm within Grant Thornton International Ltd, one of the world's leading international organisations of independently owned and managed accounting and consulting firms. Clients of member and correspondent firms can access the knowledge and experience of 2,600 partners and 30,000 employees in over 100 countries and consistently receive a distinctive, high quality and personalised service wherever they choose to do business.
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