BlackRock-Backed Renewable Energy Invests in U.K. Green Ventures

Renewable Energy Generation Ltd., a developer of low-carbon assets that’s backed by BlackRock Inc., may invest 300 million pounds ($478 million) in onshore wind, solar and bio-energy projects over the next three to four years.

The company is waiting for planning consent on about 140 megawatts of onshore wind sites and it plans to file applications for another 100 megawatts, Andrew Whalley, chief executive officer of Guildford, Surrey-based REG, said today by phone. It’s also building a solar plant and a bio-energy facility that converts used cooking oil into electricity.

REG aims to exploit demand for renewables in Britain as the country seeks to get 15 percent of its energy from clean sources by 2020 from about 9.4 percent now. BlackRock in January bought wind farms from REG and agreed on a five-year partnership that allows it to buy more plants from the developer.

“We have a colossal amount of investment to do over the next three years and it will be funded by recycling some of the investment through our relationship with BlackRock, partly by debt and partly by other means,” said David Crockford, finance director.

Outside of its agreement with BlackRock the company has seen “quite a big appetite” for operating wind projects that may see prices go up, as there are more buyers than assets, Whalley said. In addition, there has been a change in the type of buyer as more pension funds and institutional investors enter the market, he said.

REG expects to reach financial close on two wind farms totaling 18 megawatts by year-end. The projects already have planning approval and they should start working by the middle of next year. The two plants will cost about 20 million pounds.

The company has been in talks with German and Dutch banks as well as some Scandinavian banks for the debt. They typically lend for 10 to 15 years and are “used to” infrastructure finance, Crockford said. They’re looking to increase activity in the U.K. renewables market as British banks struggle to offer infrastructure-style debt, he said.