GIB invests £18m in NHS energy scheme

The green investment bank (GIB) is providing 50% of the funds for a new low-carbon energy centre that will save a Cambridge NHS Trust almost 30,000 tonnes of CO2 a year

The new energy plant for the Cambridge University Hospitals NHS Foundation Trust will include a combined heat and power (CHP) plant, a biomass boiler and heat recovery facilities, cutting the trust’s annual carbon output by 47% on current figures.

The GIB’s £18 million investment, which is taken from its £100 million programme to support commercial energy efficiency projects, has been matched by private investment firm Aviva Investors.

Ian Berry, fund manager at Aviva Investors, said such low-carbon energy projects are seen as a good investment opportunity for pension funds.

“The development of UK energy centres is a very exciting new area for long-term investors. 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,” he said.

Announcing the scale of the GIB investment in the project, Lord Smith, chair of the bank, said: “Non-domestic energy efficiency is a priority sector for the GIB and this deal is an early demonstration of our strategy to partner with co-investors and deliver a commercial return to the bank, while reducing carbon emissions in the UK.”

The joint £36 million investment means that the new energy centre should be operational as planned in 2015, providing heat and power to Addenbrooke Hospital and the Rosie Maternity Hospital. The centre, which will be one of the largest of its kind in the country, will replace the existing CHP plant that was installed 20 years ago and was then one of the first in the NHS.

The new incinerator and CHP system will use sustainably-sourced woodchips as fuel alongside burning waste produced by the hospitals. In addition to reducing carbon emissions by almost 30,000 tonnes a year, the trust will save more than £20 million in energy costs over the 25-year operational life of the plant.

The trust predicts that the centre will help the Addenbrooke’s halve the hospital’s energy consumption, and exceed NHS sustainability targets.

Ruby McGregor-Smith, chief executive of MITIE which will build and operate the centre, said: “This will be an advanced energy centre that demonstrates the economic and environmental value of local energy generation.”