The UK Green Investment Bank (GIB) will provide £18m of funding towards a new biomass project in Cambridgeshire that is expected to power two hospitals in the Cambridge University Hospitals NHS Foundation Trust. In what will be its first investment in the NHS, GIB’s participation is expected to mobilise a further £18m of private capital into the project.

 

The new energy innovation centre will house a combined heat and power unit, biomass boiler, efficient dual fuel boilers and heat recovery from medical incineration. 

 

Combined heat and power generation produced by energy centres captures excess heat and is said to enable efficiencies in excess of 80% to be reached compared to less than 60% for standard gas power generation.

 

It will aim to provide heat and power to the Trust including the Addenbrooke’s and Rosie Hospitals. As an alternative to sourcing power from the National Grid, the Trust expects to benefit from the energy centre’s materially lower energy costs and carbon emissions, with savings of over £20m in energy costs over the 25-year operational term of the project and expected CO₂ savings in excess of 25,000 tonnes per annum. The project is subject to final planning approval. 

 

MITIE, the FTSE 250 strategic outsourcing company, has been awarded the contract to develop the energy centre and operate it throughout the 25-year term.

 

The funds provided for the energy centre are part of a commitment of £50m to the Aviva Investors REaLM Energy Centres Fund, a fund specialising in investment in non-domestic UK energy centres. 

 

This fund forms part of GIB’s allocation of funding into one of its priority sectors; non-domestic energy efficiency.

 

According to GIB, the investment in the Trust will finance one of the largest projects of this type in the UK and is designed to deliver substantial financial and carbon emissions savings for the Trust. 

 

The total investment required for the project is approximately £36m and is being made in partnership with the Aviva Investors REaLM Infrastructure Fund, which is providing the balance of the investment.  

 

GIB chairman, Lord Smith of Kelvin said: “Non-domestic energy efficiency is a priority sector for the Green Investment Bank and this deal is an early demonstration of our strategy to partner with co-investors and deliver a commercial return to the bank, whilst reducing carbon emissions in the UK."

 

Business secretary, Vince Cable added: “The UK Green Investment Bank’s £50m commitment to the new Aviva Investors REaLM Energy Centres Fund will help to deliver much needed energy and financial savings for NHS hospitals.

 

“The size of the NHS estate means there will be huge opportunities to invest further in building energy centres like the one planned for Cambridge University Hospitals NHS Foundation Trust.”

 

According to Ian Berry at Aviva Investors: “The development of UK energy centres is a very exciting new area for long term investors such as pension funds. 

 

"They can achieve stable, diversified and relatively low risk income streams, while also helping to fund important infrastructure projects that deliver long term savings and sustainability benefits to their clients.”