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A scheme intended to tackle delays to infrastructure investment has supported just one project in its first year, the latest Treasury data reveals.
Of a potential £40 billion worth of UK Guarantees, designed to help developers attract credit, less than 0.2 per cent has been allocated since legislation was passed in October 2012. Nothing has been signed since Drax secured a £75 million guarantee in April for its biomass conversion project.
A further 20 projects, of which half are in the energy sector, have “prequalified” for support and a Treasury spokeswoman insisted the industry was “very positive” about the scheme.
However, critics say that far from addressing market failure, Infrastructure UK is only backing projects that are already commercially bankable.
Labour shadow energy minister Tom Greatrex said there were “serious questions to be raised” about how the guarantees were allocated.
He said: “It is clear that the UK’s energy infrastructure will require massive levels of investment over the next decade. But the government’s delays to the Energy Bill, its faltering commitment to the green agenda and its tepid support for key infrastructure projects raise real questions about whether such investment can be secured.”
Independent generator Intergen has two new gas power stations in the pipeline for UK Guarantees. Mark Somerset, general manager Europe, said the guarantees were “potentially important” as a means of support but “no substitute for attracting the banks to lend in the first place”.
That requires a bankable Capacity Market and long term power purchase agreement, said Somerset. “[The UK guarantees] may make a difference, but that is still to be played out.”
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