Green Investment Bank (GIB) will start lending money to renewable energy projects from April next year, Business Secretary Vince Cable said on Monday, with offshore wind and waste energy projects a top priority over the first three years.
The government has set aside 3 billion pounds to support the bank until 2015, a sum which is expected to attract an extra 15 billion pounds in private investment to Britain's nascent renewable energy industry.
The GIB will be a critical component in the UK's transition to a green economy and its overarching objective will be to catalyse private investment - not replace it, said Vince Cable in a speech during an industry conference on Monday.
The bank will employ 50-70 staff in the period to 2015, from when it is also set to start borrowing money on the condition that public sector net debt falls as a percentage of Britain's
The start of the bank's operations depends on EU Commission clearance.
Around 20 locations across the UK, including London, Edinburgh and Manchester, have applied to host the GIB and Cable said he intends to announce the winner in February.
Offshore wind farms, energy-from-waste projects and energy efficiency programmes will receive at least 80 percent of the 3 billion pounds, or 2.4 billion pounds, over the next three years.
Next month, the government's department for business will start recruiting members of the bank's board and senior management and a chair will be appointed in spring 2012.
The GIB aims to help Britain develop its renewable energy industry, which is seen as a key driver to reduce the country's greenhouse gas emissions and to reach legally binding climate change targets.
Britain could develop 18 gigawatts (GW) of offshore wind power by 2020, a capacity which will help the country meet its 2020 target of generating 15 percent of energy from renewables, compared with 7.4 percent in 2010.
(Reporting by Karolin Schaps; editing by Jason Neely)