The Edinburgh-based UK Green Investment Bank has teamed up with leading global investment firm KKR, and specialist investment manager Temporis Capital to roll-out a new £200m lending programme for community-scale renewable energy projects across the UK.
Sources close to Temporis expect the first project to benefit from the new lending facility will be in Scotland and for the loan agreement to be signed shortly.
This is the first time that the bank has supported the community-scale renewables sector and also the first investment of KKR in the UK renewable energy sector – both potentially highly significant moves in their own right and also for the ‘invest-ability’ signal which it makes about the sector.
Green Investment Bank (GIB) and KKR will each provide up to £100 million to the lending programme, which will be managed by Temporis Capital.
Earlier this year, GIB gained approval from the European Commission to expand its investment mandate to include community-scale renewables, mainly small-scale hydro-electric and onshore wind projects, in response to a funding gap in the market.
Shaun Kingsbury, Chief Executive, UK Green Investment Bank, explained: “Many well-structured community-scale projects have not been able to get off the ground because of a lack of long-term finance in the market.
“These small-scale projects can make a meaningful contribution to the UK’s green economy and I am pleased that we, along with our partners KKR and Temporis Capital, will be able to provide this funding to projects which might otherwise have been locked out of the market.
“I’m particularly pleased to see new lenders, like KKR, coming to invest in the UK renewable energy market.”
KKR, which is making the investment primarily from its balance sheet, has invested in renewable energy across the world, including the US, Mexico, Australia, France, Italy, Spain, Portugal, and South Africa. This announcement marks KKR’s first investment in the UK renewable energy sector.
Nat Zilkha, co-Head of Credit for KKR, said: “We are excited to partner with Temporis and the Green Investment Bank to launch this lending platform for community-scale projects.
“The investment builds on our view that renewable power is a critical part of the energy mix and that non-bank lending can provide capital to projects with clear tangible benefits for local communities. We look forward to providing more financing to companies and infrastructure projects in the UK.”
KKR has made several investments in wind energy, including through partnerships with Sorgenia, one of the largest Italian energy companies, for the production of wind energy in France, and a spokeswoman added:
“KKR is an active investor across the entire energy spectrum, and this investment allows KKR to enhance its portfolio by investing in the diverse and growing renewable energy market.
“We believe renewable energy is one of the most attractive and promising areas in infrastructure, with strong market dynamics and potential for growth.”
David Watson, Chief Executive, Temporis Capital, added: “This programme represents an important milestone for the UK as we launch the first non-bank lending platform dedicated exclusively to the renewable energy sector.
“With the support of KKR and GIB, I am confident we will be providing much needed funding to UK community-scale wind and hydro projects.”