Treasury says 40 projects worth £33bn have prequalified for a UK Guarantee, with over half the eligible schemes energy projects
A host of energy, road and rail projects worth £33bn are in line to receive state backing through the government’s infrastructure guarantees scheme.
Chief secretary to the Treasury Danny Alexander said this week that 40 projects had now pre-qualified to be underwritten by the government through the £40bn UK Guarantees scheme, with over half of those eligible schemes energy projects.
Of the 40 eligible projects 15 have been named by the Treasury (see box below).
As well as energy and infrastructure projects plans for the redevelopment of the University of Roehampton’s campus redevelopment in south London and the relocation of Northampton University from its current campus into the Northampton Enterprise Zone.
The Treasury said that while further discussions, assessment and due diligence on the schemes still needed to be carried out, the projects were in line to secure government agreement to act as a guarantor, giving private lenders confidence that they will get their money back if the project cannot pay.
Alexander said: “Having passed the first hurdle these companies know the government is there to help if they need it. I hope today’s announcement will encourage even more businesses to consider how they can take advantage of a guarantee.”
Nick Prior, head of infrastructure at Deloitte, said the guarantees schemes was “driving forward infrastructure projects that would not otherwise receive funding, particularly much-needed investment in energy infrastructure”.
But he added: “The guarantees scheme is due to expire in 2015, which could create issues for projects coming through after this deadline.
“Debt markets will be expecting large and complex infrastructure to come with a guarantee. “When they are no longer available, a mechanism will need to be put in place to accommodate this transition.”
Projects in line for UK Guarantee
The Treasury said 15 of the newly prequalified projects had agreed to be named:
- Helius Energy - Avonmouth biomass energy generation is a 100MW capacity facility in the South West expected to produce energy for the national grid, costing around £300m to construct and creating approximately 450 full time jobs during the construction phase
- Islandmagee gas storage project in Northern Ireland worth £400m which will be capable of storing up two month’s worth of Northern Ireland’s total gas requirement.
- Two Intergen gas-fired power generation projects at Spalding in Lincolnshire and Gateway Energy Centre in Essex, the latter being an investment of £600m.
- Countesswells mixed use development in Aberdeen, Scotland which will see 3000 new homes built alongside business spaces and retail outlets
- Neart Na Gaoithe 450MW Windfarm in the outer Forth Estuary, Scotland
- Able Marine Energy Park, a port facility to support the manufacture, assembly and installation of offshore renewable technologies on Humberside
- Chinook Energy plants, producing renewable energy from waste at sites around the UK
- Gasrec, a producer and distributor of new, low carbon Bio-LNG fuel for UK commercial vehicle fleets
- University of Roehampton campus redevelopment in South London
- Tilbury Green Power 60 MW waste wood fired power generation plant in Essex
- The relocation of Northampton University from its current campus into Northampton Enterprise Zone
- Five Quarter Energy plant to process unconventional gas extracted from below the North Sea to create low-cost energy for British manufacturing and new jobs in the North East
A further three schemes have already been announced as qualifying for a guarantee:
- Northern Line Extension - UK Guarantee will be provided to support up to £1bn of borrowing by the Greater London Authority for the Northern Line Extension to Battersea scheme
- Mersey Gateway - a guarantee to support the construction of a bridge to relieve congestion and improve road transport links in the Northwest
- Hinkley C nuclear power in Somerset - the first new nuclear power plant to be built in Britain in a generation, a £16bn investment.
While one project has received a guarantee:
- Drax Power Station in April 2013 a Guarantee for £75 million was issued to Drax Power for the partial conversion of their coal-fired power station to biomass