UK Green Investment Bank plc

January 2014

Rob Cormie – Group Operations Director

2

ONE YEAR OLD

Mobilising private sector investment in the UK’s green economy.

We are up and running and investing

Our business model is working

But we are facing some restrictions

We want to do more

Our context Up and running Model is working Restrictions Next steps

3

OUR STARTING POINT

Notes: 1) vs 1990 levels; 2) from 3% in 2010; 3) vs 1995 levels; 4) Source: Vivid Economics. Estimates of required green investment in the UK varies between £220bn and £500bn depending on sources

Our statutory commitments … … demand unprecedented investment

Our context Up and running Model is working Restrictions Next steps

4

INVESTMENT SO FAR

Historic and projected investment run-rate is consistently half the required amount

Our context Up and running Model is working Restrictions Next steps

5

Global Renewable Energy Investment by Region, £bn

• Global investment in clean energy reduced for second year in a row• This decline is steepest in Europe (c.40%), while investment in Asia continued to

increase

2013 GLOBAL CLEAN ENERGY INVESTMENT DOWN 12%

Source: BNEF

$24bn $35bn $45bn$70bn $82bn $84bn

$115bn $127bn$109bn

$68bn$13bn$23bn

$42bn

$58bn$63bn $50bn

$68bn

$88bn

$71bn

$66bn

$18bn

$22bn

$29bn

$39bn

$49bn $62bn

$78bn

$103bn

$109bn

$121bn

46%

45%

44%

17%

0.6%

34%

21%-9%

-12%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

EMEA AMER ASOC

6

INSTITUTIONAL INVESTORS ARE INCREASINGLY ACTIVE

Source: BearingPoint Institute, BNEF, FT, Prequin

Current Medium-term Targets0

20

40

60

80

100

10-49.9%

5-9.9%

1-4.9%

Less than 1%

6%

69%

19%

6%Agree Strongly

Agree

Disagree

No opinion

BearingPoint Institute SurveyInstitutional Investors and Infrastructure (Europe)

Prequin Research on Insurers Capital Allocation Targets

In the next 3-5 years a significant number of insurers and pension funs will develop their own internal infrastructure teams to manage

investment?

Infrastructure investment allocation by insurance companies, proportion of investors (%)

• Institutional investment in renewable energy has more than doubled between 2007-13, with listed funds being the preferred route to the market for pension funds and insurers

• Insurers and pension funds are building infrastructure teams and increasing allocation to the sector – for example: Axa recently announced that is aiming to invest €10bn (c.

£8.5bn) in infra debt Allianz GI raised a £1bn fund for UK Infra in 2013 Legal & General announced an aim to commit up to £15bn in

the sector Pension Denmark are actively involved in European infra

market and closed renewable energy deals in the UK Blackrock is growing its EU Infra Debt team

Institutional Investors Commitment to European Renewable Energy Projects ($m)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2007 2008 2009 2010 2011 2012 2013

PE/infrastructure fund

Quoted fund

Bond

Direct

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2007 2008 2009 2010 2011 2012 2013

PE/infrastructure fund

Quoted fund

Bond

Direct

7

OUR JOB

Our vision: green and profitable Our task: crowding-in capital

Our context Up and running Model is working Restrictions Next steps

8

OUR FOCUS

Our proposition

• We have £3.8bn of capital to invest, provided by the UK Government

• We expect to commit this capital by March 2016• We have the ability to structure products across the

capital structure, from senior debt to equity• We deal on commercial terms; GIB does not provide

grants, ‘soft capital’, regional assistance or development capital

• Investment must be additional. Our involvement must be necessary for the project to go ahead. We aim to crowd-in other private sector capital

9

WE’RE UP AND RUNNING

Our context Up and running Model is working Restrictions Next steps

10

WE ARE INVESTING

Closed the funding gap for a new high-technology waste plant

that had been stuck for 4 years

Financed NI’s largest waste wood power plant

Invested in 30% of the UK’s operating OSW capacity

First ever minority refinancingof an OSW project

Backed a large scale NHS energy efficiency project

(will save the Trust £20m)

When built, our investments will produced enough renewable

electricity to meet energy needs of 2.7 million homes

Financed the UK’s first large scale coal to biomass

conversion

Over £750m committed

Delivered the UK’s first listed renewable energy infrastructure fund

We have backed 25 projects We have invested in all our main sectors and in each part of

the UK

When built, our investments will cut CO2 emissions equivalent

to taking 1.4 million cars off the road

Our context Up and running Model is working Restrictions Next steps

11

AN EXAMPLE - TOMATIN

12

INVESTING IN OFFSHORE WIND

13

WE ARE MAKING AN IMPACT

Up and running Model is working Restrictions Next steps

2012/13 2013/14 so far

Our context Up and running Model is working Restrictions Next steps

43%market share

48%market share

14

BUT WE ARE FACING SOME RESTRICTIONS

Policy uncertainty:

Financial volatility:

State aid:

Our context Up and running Model is working Restrictions Next steps

15Notes: 1) vs 1990 levels; 2) from 3% in 2010; 3) vs 1995 levels; 4) Source: Vivid Economics. Estimates of required green investment in the UK varies between £220bn and £500bn depending on sources

WE WANT TO DO MORE

Our context Up and running Model is working Next StepsRestrictions

16

WHERE WE BEGIN AND END

Operating on fully commercial terms is the only way to achieve

scalable, long-term green impact.

Our context Up and running Model is working Next StepsRestrictions

17

The information in this document and any accompanying material (“The Document”) is confidential and commercially sensitive. This Document is provided to each recipient on a confidential basis solely for information purposes only. No reliance can be placed on this Document by any recipient or any other person. This Document and its contents are confidential to the person to whom it is delivered and must not be reproduced or distributed, either in whole or in part, nor its contents disclosed by such persons to any other person without the prior written consent of UK Green Investment Bank plc. Except as required by law, neither UK Green Investment Bank Plc nor any of its connected persons accepts any liability or responsibility for the accuracy or completeness of, or makes any representation or warranty, express or implied, with respect to the information contained in this Document or on which this Document is based or any other information or representations supplied to the recipient. UK Green Investment Bank Plc will not act and has not acted as your legal, tax, accounting or investment adviser. This Document does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase, any investment and UK Green Investment Bank Plc does not arrange investments for/introduce parties as a result of sharing the information set out in this Document. Registered Office: Atria One, Level 7, 144 Morrison Street, Edinburgh, EH3 8EX. Company Number SC424067. UK Green Investment Bank Plc is wholly owned by HM Government. The company is not authorised or regulated by the Prudential Regulation Authority or the Financial Conduct Authority.

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