The Green Investment Bank and the Offshore Renewable Energy (ORE) Catapult have announced a three year agreement to work together to drive investment into offshore renewable energy through greater understanding and management of the associated risks, reducing the cost of energy from offshore renewables.
The Memorandum of Understanding sets out how the two organisations will bring their areas of expertise to bear on lowering the levelised cost of energy (LCOE). It identifies six areas on which they will initially work together, each aimed at addressing specific perceived risks in investment in offshore renewable projects:
Each organisation will also benefit from direct access to the technical expertise of the other, avoiding the costs of developing non-core internal capability.
Green Investment Bank CEO Shaun Kingsbury said, “Our respective organisations support the offshore wind industry’s moves to reduce risks and cut costs. We believe that allying our financial expertise with ORE Catapult’s technical know-how will help achieve that aim.”
ORE Catapult CEO Andrew Jamieson said, “Joined up thinking between finance and technology is a major enabler of offshore renewable energy deployment.
“ORE Catapult and GIB together will ensure an industry better informed as to what’s investable and markets better able to assess and manage investments through understanding of technology.”
The capital intensity of offshore renewables makes the cost of capital a key driver of the cost of such energy. The Crown Estates’ Offshore Wind Cost Reduction Pathways Study, published in June 2012, estimates that a drop of one percentage point in the Weighted Average Cost of Capital (WACC) is equivalent to a reduction in the Levelised Cost of Energy (LCOE) of around 6%.