Lloyds to Finance Two U.K. Wind Deals Under $500 Million Program
Lloyds Banking Group Plc (LLOY) expects to close two deals to fund Scottish wind farms this month as the lender bailed out by U.K. taxpayers in 2008 plans to offer 330 million pounds ($500 million) for renewables projects this year.
The state-backed company is among five banks lending money to Fred Olsen Renewables Ltd. for two onshore facilities of 117 megawatts, said Richard Simon-Lewis, senior director in Lloyds’ project-finance renewable energy team. The second deal is for a 39-megawatt wind farm, he said, without disclosing their values.
While Chancellor of the Exchequer George Osborne’s budget yesterday sought to spur lending to try to revive the economy, he opposes a carbon target for the power industry that companies say would promote green investment. Developers such as PNE Wind U.K. shifted focus to Scotland, which gets as much as 35 percent of its power from renewables, against 9 percent in England.
Lloyds plans to lend about the same to renewables this year as 2012, subject to support from the so-called U.K. Electricity Market Reform, with a price for low-carbon power due in July.
“Our sense is that the government will get it right,” Simon-Lewis said in an interview in London. “The EMR has the ability to be the catalyst for institutional investment on a grand scale, fusing the twin disciplines of structured finance and capital markets. The art in EMR is to set it up in such a way that it attracts institutional investors, keeps attracting commercial banks and the rating agencies understand it.”
The London-based bank will keep its focus on offshore and onshore wind, solar photovoltaic projects and biomass, he said. Lloyds aims to close a biomass deal in the “near future.”
Helius Energy Plc (HEGY), a U.K. biomass developer, said on Feb. 18 that it was talking to Lloyds and Royal Bank of Scotland Plc to help fund a 100-megawatt power station in Avonmouth.
Both banks supported Helius’s previous operation.
Lloyds sees growing interest in U.K. energy from sovereign wealth funds, insurance companies and pension funds, while the nation is “very attractive” for Asian investors keen to enter as equipment suppliers or equity holders, Simon-Lewis said.
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