Green Investment Bank awards funding for biomass boiler project
The U.K. Green Investment Bank will provide £18 million ($27.42 million) of funding towards a new energy innovation center for Cambridge University Hospitals NHS Foundation Trust (Trust), in what will be its first investment in the NHS. GIB's participation mobilizes a further £18m of private capital into the project.
The funds provided for the energy center are part of a commitment of £50m to the Aviva Investors REaLM Energy Centres Fund (Fund), a fund specializing in investment in non-domestic UK energy centers. This fund forms part of GIB's allocation of funding into one of its priority sectors, non- domestic energy efficiency.
The investment in the Trust will finance one of the largest projects of this type in the UK and is designed to deliver substantial financial and carbon emissions savings for the Trust. The total investment required for the project is approximately £36m and is being made in partnership with the Aviva Investors REaLM Infrastructure Fund, which is providing the balance of the investment.
The new energy innovation center will house a combined heat and power unit, biomass boiler, efficient dual fuel boilers and heat recovery from medical incineration. It will provide heat and power to the Trust including the Addenbrooke's and Rosie Hospitals. As an alternative to sourcing power from the National Grid, the Trust will benefit from the energy center’s materially lower energy costs and carbon emissions, with savings of over £20 million in energy costs over the 25 year operational term of the project and expected CO2 savings in excess of 25,000 metric tons per annum. The project is subject to final planning approval.
MITIE, the FTSE 250 strategic outsourcing company, has today been awarded the contract to develop the energy center and then operate it throughout the 25 year term.
UK Green Investment Bank Chairman, Lord Smith of Kelvin said "Non-domestic energy efficiency is a priority sector for the Green Investment Bank and this deal is an early demonstration of our strategy to partner with co-investors and deliver a commercial return to the bank, whilst reducing carbon emissions in the UK.
"We are delighted to be working with Aviva Investors, Cambridge University Hospitals NHS Foundation Trust and MITIE on this project."
Business Secretary, Vince Cable said: "The UK Green Investment Bank's £50 million commitment to the new Aviva Investors REaLM Energy Centres Fund will help to deliver much needed energy and financial savings for NHS hospitals.
"The nondomestic energy sector has been identified as a strategic priority for the GIB. The size of the NHS estate means there will be huge opportunities to invest further in building energy centres like the one planned for Cambridge University Hospitals NHS Foundation Trust."
Ian Berry, fund manager, Infrastructure & Renewable Energy at Aviva Investors, said, "The development of UK energy centres is a very exciting new area for long-term investors such as pension funds. They can achieve stable, diversified and relatively low risk income streams, while also helping to fund important infrastructure projects that deliver long term savings and sustainability benefits to their clients.
"We are delighted to be involved in this development, working with Cambridge University Hospitals NHS Foundation Trust, the UK Green Investment Bank and MITIE to fund, build and operate what is expected to be one of the largest NHS energy centre projects of its kind."