Royal Bank of Scotland may channel funds for biomass projects in 2013

Britain’s state-owned lender The Royal Bank of Scotland (RBS) may lend up to £400m for clean energy projects in 2013.

The bank is likely to fund biomass plants that employ organic matter such as wood chips to generate electricity.

RBS structured finance division energy head Andrew Buglass was quoted by Bloomberg as saying that the bank will help build bio-energy facilities from the scratch and each of these facilities will have an installed capacity of anywhere between 50 and 150MW.

"Biomass will occupy quite a lot of our time and effort this year. It can make a material contribution to the generation mix," said Buglass.

Projects with the proposed capacity could cost up to £300m, and RBS expects other banks to invest as well.

"Financing for the larger biomass projects is likely to be finalized towards the end of the year," added Buglass.

RBS had initiated a £200m fund in December 2012 to help UK businesses reduce energy usage and related costs.

As part of the bank’s efforts to increase the usage of cleaner fuels in the country, it also initiated discussions with its customers to switch from fossil-fuel power stations to biomass facilities.

The Department of Energy and Climate Change estimates that biomass industry will cater to 8 to 11% of the country’s energy requirement over the next eight years.

The biomass sector in the UK received further support under the Renewables Obligation scheme, unveiled in July 2012.