A £100m-plus fund to invest in renewable energy projects in Wales is among a set of new ideas for boosting investment in green energy that are being set out today by the Welsh Government.
The Welsh Government is considering committing £25m into a dedicated fund with the aim of then attracting private sector investors to also come in to take the funding pot to around £100m.
It would then invest, including through equity or debt, in renewable projects with commercial potential.
The fund would look for those receiving finance to invest themselves, so boosting overall investment levels.
The fund would work to investment criteria set by the Welsh Government, which would cover such matters as the nature of the investments (including technology and geography), acceptable returns, carbon savings and other factors.
The Welsh Government would not hold a majority or controlling interest or intervene in investment decisions, which would be determined by the fund managers.
The proposal comes in a consultation document being launched today by Natural Resources Minister Carl Sargeant.
Mr Sargeant said: “The ability to attract investment is central to the delivery of green growth. There are practical challenges in delivering green investment in Wales. Information gaps, access to expertise, project management skills and access to finance are all issues that limit development.
“That is why I am looking to develop further proposals to supplement our existing programmes that remove these barriers, and to deliver a step-change in green investment in Wales.”
The consultation, titled Green Growth Wales – Options for Investment Support, focuses on how the Welsh Government can encourage growth in resource efficiency projects, renewable energy and energy from waste infrastructure.
The document says the leveraged investment vehicle would have a primary focus on local authorities, higher education, further education and schools as well as the private sector.
By taking a ‘first loss’ position the Welsh Government could secure competitive low interest rates from strategic investors, allowing the fund to offer below market interest loans or equity rates.
State aid would need to be considered at project level if the fund were offering below market rate products, though many investments would be covered by general exemptions in relation to energy efficiency, renewables and waste projects, the document says.
The consultation document does look at other options for financial intervention to boost green investment, including repayable direct grants and loans, direct investment from commercial market on a project by project basis, and using an existing investment vehicle.
But it says that repayable grants and loans are unlikely to be sufficient to “meet the scale of opportunity” because of the potential scale of demand, public funding pressures and the need to continue grant funding to organisations unable to access loan funding.
Direct investment from commercial markets, it says, is “business as usual” adding it “would be unlikely to create a step change in availability or cost of funding for green growth in Wales.”
Finally, it argues that using an existing investment vehicle may be “impractical”, because it would be “dependent on finding a vehicle that had similar aims and investment criteria to our own, with fund managers who would be willing to create a Welsh sub-fund.”
The Welsh Government is also publishing today a Low Carbon Energy Survey which shows that the total capacity for low carbon energy in Wales has grown by more than 70% to 2,770 megawatts since 2012.t
Low carbon electricity generation potential has also increased substantially since 2012, up by 54% to 8.92 terawatt hours, equivalent to 57% of Wales’s national electricity consumption. Renewable electricity generated is equivalent to around 38% of Wales’ annual consumption.
The survey also found that there are 51,303 low carbon energy projects around Wales.
Heat generation has also increased, largely due to a surge in biomass energy projects, and now provides the equivalent of 3.1% of gas consumption.
Low carbon heat capacity has also begun to grow significantly, more than tripling its 2012 capacity to 255 megawatts in 2014.