UK's GIB buys stake in Rhyl Flats

The UK’s Green Investment Bank (GIB) has chosen RWE’s 90MW Rhyl Flats project for its first direct equity investment in the country’s offshore wind programme, as it looks to help developers recycle their capital into new projects.

The GIB will sink £57.5m ($87.3m) into a 24.95% stake in the Round 1 Rhyl Flats, operational since 2009 off the north coast of Wales.

Greencoat UK Wind, an investment fund which announced today it has raised £260m in an oversubscribed flotation on the London Stock Exchange, will buy another 24.95% in Rhyl Flats, leaving RWE Innogy with a controlling 50.1% stake in the project, which it will continue to operate.

Separately, Greencoat bought a 41% stake in RWE’s 60MW onshore Little Cheyne Court wind farm in southern Kent, commissioned in 2008 using Nordex 2.3MW turbines.

All told, the transactions leave RWE with £165.2m in new capital, which it says it will plough back into renewables. The money from GIB will specifically be re-invested in the UK.

After formally opening its doors late last year, the GIB's first transaction in the offshore wind sector came earlier this year, when it joined a club of banks to provide senior debt as the investor OPW refinanced its minority stake in the Walney offshore wind farm. But Rhyl Flats marks the GIB's first equity investment in the sector.

“Rhyl Flats was an ideal investment for us as it helps to develop the market for buying and selling operating offshore wind assets, allowing the release of capital back to the original developers, which will be investing in new renewable projects in the UK,” says GIB chief executive Shaun Kingsbury.

Kingsbury adds that the investment will deliver a “commercial return” to the Edinburgh-based GIB – one of its mandates.

Kingsbury was brought on last year from Hudson Clean Energy Partners to help get the GIB running and make it relevant to the UK’s clean-energy ambitions.

The GIB has £3bn to spend over an initial three-year period, with 80% of the money to be invested in offshore wind, waste-to-energy and energy efficiency. From 2015, it may have full borrowing powers – something many in the renewables sector thought it should have been given from its inception.

The bank has disappointed many in the offshore wind sector by indicating that it is unlikely to invest in projects during the riskier construction phase, a tactic which many industry sources believe would make the biggest difference.

However, its limited war chest and lack of borrowing power would have severely crimped its impact as a construction-stage investor.