Government support for green projects has never been more important. Because of the current economic environment, large corporates like BP and Shell have pulled away from renewable energy initiatives to focus on their core business. Bank debt in the UK has gone, or almost gone, so projects need to be funded with unleveraged equity, which makes it quite challenging to generate returns. Ultimately that means if the debt is not there, the equity is not there either.

With that in mind, I find the Budget’s emphasis on cleantech very encouraging. The promise of £525 million for offshore wind, together with up to £4 billion of new capital from the European Investment Bank, is a powerful combination.

How much impact will £525 million have? The price of turbines, especially in offshore wind, has come down significantly because the market is approaching oversupply. If the cost of an offshore turbine is £2.5 million per megawatt of capacity (MW), the government incentive is equivalent to about 210 MW. If the subsidy funds 50 per cent of the project, you would be looking at 420 MW that would probably not have been generated without the subsidy, due to the lack of bank financing.

Wind is probably the most important source of renewable energy in the UK, and this is a significant amount of extra power. But the government’s proposals are still quite vague. It’s not clear what the eligibility criteria will be and how companies will apply for the funding.

There is another question mark over the money set aside for energy efficiency measures [£435 million]. This is good, but what does it mean, and how will it be allocated?

What is missing from the Budget is any emphasis on getting corporate lending flowing again. Renewable energy assets have long-term purchase agreements from utility companies or the state, good cashflows, and visibility of production. If they are still struggling to get finance from banks, then we need to put pressure on those institutions to redefine their lending criteria so they can take on these lower-risk assets.

The government has shown that green issues are a priority for them, but if they want a 34 per cent cut in carbon emissions by 2020, they need to make sure the money is there to build the projects. At the moment it’s still extremely challenging simply because there is no debt.

Amplio Partners’ portfolio includes ‘clean coal’ company Nviro Cleantech and renewable power businesses Maestrale Green Energy and Sungem.