The Green Investment Bank has announced a £2million investment to help SMEs make improvements in energy efficiency.
The investment – £1m of which comes from private equity firm SI Capital – will go towards ReEnergise Finance’s Smart Energy Finance vehicle which aims to provide loans to small businesses seeking funding for energy saving projects.
ReEnergise Finance specialises in energy efficiency and the renewables market and looks to provide funding solutions for UK-based SMEs which have struggled to find finance or advice for their efficiency projects.
It is expected to fund up to 20 projects with the intention of building up a portfolio of £10million of assets. The projects funded will range from £25,000 to £400,000 and are likely to include biomass boilers, low energy lighting and combined heat and power.
“The investment will help small businesses across the country to save money,” said GIB chief executive Shaun Kingsbury.
“Energy is a significant cost for any company and putting in place energy efficiency measures will have a real impact on these organisations’ bottom line. The funding model means they won’t need to find the capital upfront and can pay for the capital costs from the savings they make on energy bills.”
The announcement was made following the release of the Edinburgh-based GIB’s annual results. The organisation committed £668million to 18 new green projects in 2013-14, taking its total capital commitments to £1.3billion.
The GIB made a pre-tax loss for the year of £5.74million but the majority of its investments (88%) are still under construction, such as its £220million investment for a 10% stake in the 1,700GW Gwynt y Môr offshore wind farm.
The GIB has also just announced its intentions to raise a £1billion fund that would buy equity stakes in UK wind farms.
The bank estimates in the long-term they are on track to deliver an 8% annual return to investors. Its annual report also stated the projects funded have the capacity to power three milllion homes and reduce UK CO2 emissions by 3.5 million tonnes per year.
“This is a welcome investment that helps small businesses and shows that going green isn’t just about building offshore wind farms or new energy plants,” said Michael Fallon, minister of state for Business and Energy. “Any good business should want to become more efficient and saving on energy costs makes good business sense.”