The European Investment Bank (EIB), the European Union's financing institution, announces a loan of GBP 100 million (EUR 156 million) to a subsidiary of Scottish and Southern Energy (SSE) for establishing and modernising renewable energy generating facilities in Scotland with a total capacity of 544 MWe.
The project financed involves the construction of seven new wind farms with a capacity of 323 MWe and the refurbishment of 24 hydroelectric power stations dating from the 1930s to the 1970s with a capacity of 221 MWe, at sites located throughout Scotland. The works will be implemented between 2002 and 2006.
EIB Vice-President, Peter Sedgwick said: "EIB financing for this scheme, costed in excess of GBP 350m (approximately EUR 550 million) in all, ties in with its support for objectives subscribed to by the EU and its Member States with regard to sustainable development and the prevention of climate change. The project will allow Scotland's exceptional renewable energy potential to be exploited by developing new production capacity as an alternative to fossil-fuel fired generation; it will also serve to extend by some thirty years the life of existing hydroelectric facilities which, at the same time, will be made 5 to 7% more efficient and brought up to the most advanced environmental standards". Energy production resulting from the project will alone correspond, by 2010, to 5% of the United Kingdom's renewable energy targets and some 50% of those set for Scotland.
EIB assistance, combined with UK Government aid for the emergence of "green projects" (Renewable Obligations Certificates) will moreover boost the confidence of both operators and the market in implementing renewable energy-linked investment; it is for this reason that EIB funding is being made available at an early stage of the project, when all technical aspects have not yet been finalised; the provision of funds, however, will be conditional, as regards the new wind parks, upon the satisfactory conclusion of environmental studies and the introduction of suitable mitigating measures. By helping to safeguard about 200 jobs in a region lagging behind in its development, the project is also eligible for EIB support under the regional development heading.
This latest loan follows on from two EIB operations in favour of the SSE Group, one for GBP 200 million in 1999 for modernisation of Peterhead power station and power distribution in Scotland, the other for GBP 150 million in 1997, for power distribution in England.
SSE Chief Executive, Jim Forbes said: "SSE is the largest generator of renewable energy in the UK with over 50% of the capacity. In order to retain this position, and to assist the UK government meet its targets for the reduction in emissions agreed at Kyoto, we will be investing GBP 450 million in a renewables programme, the majority of which will be spent in the next 5 years. GBP 200 million will be invested in new renewable generation and GBP 250 million will be invested in refurbishing our hydro generation in Scotland which is part of the youngest, most flexible and efficient generation portfolio of the major UK generators. I am delighted to note the EIB's confidence in the SSE Group by making this additional facility".
As part of its support for the international objectives of the EU and its Member States with regard to sustainable development and the prevention of climate change, the EIB has recently stepped up its strategy of financing projects promoting renewable energy. In particular, the EIB has set itself the goal of doubling, over the next five years, its lending for projects of this type. Between 1993 and 2001, the EIB invested over EUR 1.9 billion in the renewable energy sector, assisting 47 major projects (of which 20 outside the EU) and, via its global loans, 159 medium-scale schemes.
In addition to expanding the volume of its loans for renewable energy production, the main thrust of this strategy is towards :
- financing R&D projects connected with the emergence of innovative technology to be deployed in developing renewable energy;
- funding, upstream, industrial equipment intended for renewable energy projects;
- extending to the Accession Countries EIB backing for renewable energy projects;
- ensuring coordination with the Commission to enhance synergies between EU budgetary resources and loan finance for renewable energy-linked projects.
This strategy is being implemented in tandem with the EIB's wish to build up its financing for projects focusing on efficient use of energy. Details of the Bank's redirected policy in favour of renewable energy are available on its website.