PE Tech Report

NEWSLETTER

Like this article?

Sign up to our free newsletter

Aviva Investors and UK GIB to fund one of UK’s largest NHS energy centres

Aviva Investors and the UK Green Investment Bank are to provide approximately GBP36m of funding for a new energy innovation centre for Cambridge University Hospitals NHS Foundation Trust at Addenbrooke’s Hospital.

 
The centre is designed to deliver substantial financial and carbon emissions savings for the trust and is expected to be one of the largest projects of this type in the UK.
 
Ian Berry (pictured), fund manager – infrastructure & renewable energy at Aviva Investors, says: “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.
 
“This is a landmark transaction and demonstrates how private sector know-how and pension fund money can be used alongside government funds to finance innovative infrastructure initiatives, and the ongoing development of renewable energy and energy efficiency projects in the UK.”
 
The development of the energy innovation centre is being funded by Aviva Investors, through its REaLM Infrastructure Fund, and GIB, through its investment in the Aviva Investors REaLM Energy Centres Fund. GIB’s share of this investment via the fund will be approximately GBP18m.
 
GIB has committed a total of GBP50m to the Aviva Investors REaLM Energy Centres Fund. Aviva Investors and GIB intend to provide funding to a range of other energy centres in the future through the two funds.
 
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. It will 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 will benefit from the energy centre’s materially lower energy costs and carbon emissions, with savings of over GBP20m in energy costs over the 25 year operational term of the project and expected CO2 savings in excess of 25,000 tonnes per annum.
 
It has also been announced that MITIE, the FTSE 250 strategic outsourcing company, has been awarded the contract to develop the energy centre and then operate it over the 25 year term. The project is subject to final planning approval.
 
Berry says: “We are delighted to be involved in this development, working with Cambridge University Hospitals NHS Foundation Trust, the UK Green Investment Bank and MITIE to fund, build and operate what is expected to be one of the largest NHS energy centre projects of its kind. We are pleased to have been able to leverage our substantial experience in the renewable energy and energy efficiency sectors, to develop a proprietary transaction template which sets us apart as leaders in bringing institutional investment into such assets.”
 
Lord Smith of Kelvin, UK Green Investment Bank chairman, says: “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.
 
“We are delighted to be working with Aviva Investors, Cambridge University Hospitals NHS Foundation Trust and MITIE on this project.”
 
Combined heat and power generation produced by energy centres captures excess heat, potentially enabling efficiencies in excess of 80 per cent to be reached compared to less than 60 per cent efficiency for standard gas power generation. This high efficiency allows energy centres to materially lower energy costs and carbon emission, potentially achieving reductions in excess of 50 per cent.

Like this article? Sign up to our free newsletter

MOST POPULAR

FURTHER READING

Featured

Blackstone Private Equity