Loan guarantees urged for green energy firms

Published Date: 29 March 2009
By Nathalie Thomas

GREEN energy experts are pressing the Scottish Government to set up a loan guarantee scheme for cash-starved renewables companies.
They warn that the major energy companies aside, the sector is struggling for finance and will not be able to fulfil the SNP Government's ambition of leading Scotland out of recession without an urgent lifeline. The green energy sector has repeatedly been named by Alex Salmond's administration as one of the brightest hopes for Scotland's future along with industries such as life sciences.Nathan Goode, head of the renewables team at Grant Thornton, the accountancy firm aimed at small and medium-sized companies, said Scotland had a competitive advantage over the rest of the world in many green technologies, but risked losing that if the financing problem was not solved quickly.He has proposed a scheme offering a combination of loan guarantees and equity targeted specifically at renewables.Goode said the programme, which could be managed by a body similar to the Scottish Futures Trust, would be particularly useful for smaller, local projects which are struggling for financial backing. He said: "The Government is taking a very proactive view of renewable energy and great strides have been made to encourage the big energy companies. "However, while regulation can help to support the massive wind and wave power projects that are now being planned, the Government can also help by investing in the local infrastructure and smaller projects that will be vital to deliver the greater diversity and security of supply that the country needs." Goode added: "Government money has tended to focus on early-stage development or on the revenue support mechanism for operating projects. The key challenge to be addressed at the moment is the bit in the middle – enabling companies to continue to move toward commercial operation and avoid market failure due to lack of financial support."At a conference held by trade body Scottish Renewables earlier this month, Grant Hodges, partner at PricewaterhouseCoopers, also cautioned that UK investment in green energy was falling far short of fiscal stimulus packages in rival countries such as China."Renewables could help lead Scotland out of recession but they currently won't because of the lack of government investment," he said.