the green investment bank, rob cormie, group operations director, gib (20.01.14)
DESCRIPTION
Part of our Business and Climate Change Series, this presentation explored how the Green Investment Bank has delivered on its objectives and its plans for future development.The GIB, the first of its kind in the world, was formed as a public company in May 2012, and became fully operational in October 2012 when it was granted State Aid approval by the European Commission to make investments on commercial terms. Its remit is to co- invest in UK projects which are both green and commercial alongside private sector finance. Since its creation the GIB has co-invested over 600m on a range of projects totalling 2.3billion. Its mandate from Government is to deploy at least 80% of its capital in offshore wind; waste recycling and energy from waste energy efficiency, including support for the Government's Green Deal. It measures its green impact in terms of reducing greenhouse gas emissions; increasing natural resource efficiency; protecting the natural environment; enhancing biodiversity and promoting environmental sustainability.TRANSCRIPT
UK Green Investment Bank plc
January 2014
Rob Cormie – Group Operations Director
2
ONE YEAR OLD
Mobilising private sector investment in the UK’s green economy.
We are up and running and investing
Our business model is working
But we are facing some restrictions
We want to do more
Our context Up and running Model is working Restrictions Next steps
3
OUR STARTING POINT
Notes: 1) vs 1990 levels; 2) from 3% in 2010; 3) vs 1995 levels; 4) Source: Vivid Economics. Estimates of required green investment in the UK varies between £220bn and £500bn depending on sources
Our statutory commitments … … demand unprecedented investment
Our context Up and running Model is working Restrictions Next steps
4
INVESTMENT SO FAR
Historic and projected investment run-rate is consistently half the required amount
Our context Up and running Model is working Restrictions Next steps
5
Global Renewable Energy Investment by Region, £bn
• Global investment in clean energy reduced for second year in a row• This decline is steepest in Europe (c.40%), while investment in Asia continued to
increase
2013 GLOBAL CLEAN ENERGY INVESTMENT DOWN 12%
Source: BNEF
$24bn $35bn $45bn$70bn $82bn $84bn
$115bn $127bn$109bn
$68bn$13bn$23bn
$42bn
$58bn$63bn $50bn
$68bn
$88bn
$71bn
$66bn
$18bn
$22bn
$29bn
$39bn
$49bn $62bn
$78bn
$103bn
$109bn
$121bn
46%
45%
44%
17%
0.6%
34%
21%-9%
-12%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
EMEA AMER ASOC
6
INSTITUTIONAL INVESTORS ARE INCREASINGLY ACTIVE
Source: BearingPoint Institute, BNEF, FT, Prequin
Current Medium-term Targets0
20
40
60
80
100
10-49.9%
5-9.9%
1-4.9%
Less than 1%
6%
69%
19%
6%Agree Strongly
Agree
Disagree
No opinion
BearingPoint Institute SurveyInstitutional Investors and Infrastructure (Europe)
Prequin Research on Insurers Capital Allocation Targets
In the next 3-5 years a significant number of insurers and pension funs will develop their own internal infrastructure teams to manage
investment?
Infrastructure investment allocation by insurance companies, proportion of investors (%)
• Institutional investment in renewable energy has more than doubled between 2007-13, with listed funds being the preferred route to the market for pension funds and insurers
• Insurers and pension funds are building infrastructure teams and increasing allocation to the sector – for example: Axa recently announced that is aiming to invest €10bn (c.
£8.5bn) in infra debt Allianz GI raised a £1bn fund for UK Infra in 2013 Legal & General announced an aim to commit up to £15bn in
the sector Pension Denmark are actively involved in European infra
market and closed renewable energy deals in the UK Blackrock is growing its EU Infra Debt team
Institutional Investors Commitment to European Renewable Energy Projects ($m)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2007 2008 2009 2010 2011 2012 2013
PE/infrastructure fund
Quoted fund
Bond
Direct
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2007 2008 2009 2010 2011 2012 2013
PE/infrastructure fund
Quoted fund
Bond
Direct
7
OUR JOB
Our vision: green and profitable Our task: crowding-in capital
Our context Up and running Model is working Restrictions Next steps
8
OUR FOCUS
Our proposition
• We have £3.8bn of capital to invest, provided by the UK Government
• We expect to commit this capital by March 2016• We have the ability to structure products across the
capital structure, from senior debt to equity• We deal on commercial terms; GIB does not provide
grants, ‘soft capital’, regional assistance or development capital
• Investment must be additional. Our involvement must be necessary for the project to go ahead. We aim to crowd-in other private sector capital
9
WE’RE UP AND RUNNING
Our context Up and running Model is working Restrictions Next steps
10
WE ARE INVESTING
Closed the funding gap for a new high-technology waste plant
that had been stuck for 4 years
Financed NI’s largest waste wood power plant
Invested in 30% of the UK’s operating OSW capacity
First ever minority refinancingof an OSW project
Backed a large scale NHS energy efficiency project
(will save the Trust £20m)
When built, our investments will produced enough renewable
electricity to meet energy needs of 2.7 million homes
Financed the UK’s first large scale coal to biomass
conversion
Over £750m committed
Delivered the UK’s first listed renewable energy infrastructure fund
We have backed 25 projects We have invested in all our main sectors and in each part of
the UK
When built, our investments will cut CO2 emissions equivalent
to taking 1.4 million cars off the road
Our context Up and running Model is working Restrictions Next steps
11
AN EXAMPLE - TOMATIN
12
INVESTING IN OFFSHORE WIND
13
WE ARE MAKING AN IMPACT
Up and running Model is working Restrictions Next steps
2012/13 2013/14 so far
Our context Up and running Model is working Restrictions Next steps
43%market share
48%market share
14
BUT WE ARE FACING SOME RESTRICTIONS
Policy uncertainty:
Financial volatility:
State aid:
Our context Up and running Model is working Restrictions Next steps
15Notes: 1) vs 1990 levels; 2) from 3% in 2010; 3) vs 1995 levels; 4) Source: Vivid Economics. Estimates of required green investment in the UK varies between £220bn and £500bn depending on sources
WE WANT TO DO MORE
Our context Up and running Model is working Next StepsRestrictions
16
WHERE WE BEGIN AND END
Operating on fully commercial terms is the only way to achieve
scalable, long-term green impact.
Our context Up and running Model is working Next StepsRestrictions
17
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