UK Infrastructure Bank looks to accelerate investment in electricity storage to help UK deliver on net zero ambitions
UK Infrastructure Bank looks to accelerate investment in electricity storage to help UK deliver on net zero ambitions
25 July 2022
The UK Infrastructure Bank has launched an Expression Of Interest (EOI) process, searching for proposals from established fund managers that can partner with the Bank to identify equity investment opportunities in electricity storage, an increasingly important technology for hitting net-zero targets.
The launch of the EOI marks an important step for the UK Infrastructure Bank as it continues to build its capability to make direct equity investments. Should a suitable fund manager be identified, it will allow the Bank to provide finance to help accelerate the deployment of storage technologies while it grows its own abilities to invest.
The Bank has set out an intention to provide a cornerstone investment of £50 million to £150 million of matching capital, with the aim of building confidence of a wider pool of private investors in the storage sector. The prospective fund manager will be required to raise private sector finance, which will make up the majority of total capital committed to the fund.
This has proved a successful model with the Charging Infrastructure Investment Fund (CIIF) and the Digital Infrastructure Investment Fund (DIIF). The CIIF is managed by Zouk on behalf of the UK Infrastructure Bank where an original £200m cornerstone investment attracted a further £220m of private sector capital. The CIIF is projected to fund the installation of over 100,000 electric vehicle charge points by 2026. DIIF launched in 2017 provided cornerstone investment in two funds: Digital Infrastructure Investment Partners (DIIP) and the National Digital Infrastructure Fund (NDIF).
Storage technologies have a crucial role to play in ensuring that the energy transition is affordable, secure and delivers the emissions reductions required to achieve net zero across the UK by 2050.
With government ambitions to deploy up to 50 gigawatts (GW) of offshore wind by 2030 and up to 70 GW of solar by 2035, an increasing amount of storage will be required to support the integration of these renewables onto the grid. National Grid expect up to 29 GW of storage to be needed by 2030 and up to 51 GW by 2050, compared to just 4 GW today. This storage will help balance out fluctuations in supply and demand and provide wider grid stabilisation, ensuring green energy can be deployed sustainably.
The Bank is now inviting fund managers to come forward with their proposals by 29 August 2022. It is particularly interested in larger scale short duration projects and longer duration projects, as well as those that are co-located with renewable generation. Potential providers are requested to email procurement@ukib.org.uk to request a copy of the EOI documentation.
The Bank recently launched its first strategy in which it confirmed that improving energy security and supply remain a top priority and that it expects clean energy to be the largest sector in its portfolio. The Bank has an initial £22bn of financing capacity.
Further information
The UK Infrastructure Bank opened for business in June 2021 to help tackle climate change and boost growth across the United Kingdom. The Bank has now announced eight deals worth £760 million – mobilising over £4.5 billion of private capital, with a range of investments in line with its strategic objectives and investment principles, which can be found on the UK Infrastructure Bank website.
The Bank is wholly owned by HM Treasury but is operationally independent from government. The Bank identifies, selects and assesses projects and approves them through its Investment Committee.