Brokering begins on new onshore wind loan fund
Elaine Brass
13th November 2009
Three banks began brokering deals through a new £1.4 billion loan fund this week, which has been set up to help onshore wind farm developers struggling to get their projects up and running.
The brokering between RBS, Lloyds Banking Group and BNP Paribas Fortis and wind developers took place at a city forum event hosted by Ed Miliband, Energy and Climate Change Secretary and the Chancellor of Exchequer, Alistair Darling, on Tuesday (November 10).
The funding which is being made available through match-financing between the European Investment Bank (EIB) and the three banks has been set up to enable consented, small and medium-sized onshore wind farms move towards construction over the next three years.
Onshore wind farms on this scale – with total project costs of between £20 million and £100 million – have struggled in recent months to access project finance, as a result of tighter risk management which has created a liquidity shortage. The EIB says there are a significant number of onshore projects that will benefit from these preferable lending rates.
However, already concerns are being voiced by funding analysts and legal professionals that the loan funding does not go far enough.
Michelle Thomas, partner and head of the Clean Energy and Sustainability Group at international law firm Eversheds, said: “This funding was announced a while back and comes at quite a critical time in the market. Debt finance is still scarce and expensive and the development of a number of wind farms has been delayed and in many cases stalled […] Additional financing for smaller scale onshore wind projects is significantly welcome news, however £1.4 billion will not go very far and the UK still has significant targets to reach.”
But Energy Secretary Ed Miliband said the banking partnership would address the problem: “We need to pull out the stops including making sure the capital is there to build the wind farms in the first place. This partnership of the EIB with RBS, BNP Paribas Fortis and Lloyds Banking group will address that problem,” he said.
Chancellor Alastair Darling added: “This Government is determined to provide all the support that is needed to secure a greener future."
A spokesman for the Department of Energy and Climate Change, said no deals were sealed at this week’s forum event, describing it as “an introductory exercise for things to start happening”.