Skip to main content
Share price

Virgin Money has agreed a new financing deal with Kyotherm, a European equity investment company based in Paris, which specialises in the development and operation of sustainable heat and energy efficiency projects.

The loan has been made to Kyotherm’s wholly owned subsidiary, Geothermal Leasing Limited (GLL), which structured, and now owns and operates, a portfolio of 20 ground source heat pump projects across England and Scotland. Once built, the portfolio will have a capacity of 27MW and will deliver over 700 GWh of renewable heat over the next 20 years. The end users serviced by the portfolio mainly operate in the agricultural, agri-food, and care sectors where the Bank is also active, with these end users benefitting from sustainable, reliable and affordable heat.

The Bank provided £14m of long-term project finance facilities. This is the first loan of this scale the Bank has made in ground source heat pumps, it represents a further step in its commitment to halving the carbon impact of its loan book by 2030, and was in particular made possible by the Bank’s strong relationship with Kyotherm. It is indeed the Bank’s third transaction with Kyotherm since 2019. In total, Kyotherm has deployed over £120m into 110MW of renewable heat and energy efficiency capacity throughout the world, including 53MW in the UK, and aspires to grow its portfolio to 750MW by 2025.

Thibault Chevallier, CFO and Investment Director at Kyotherm, commented: “Kyotherm’s mission is to accelerate the decarbonisation of the heating sector, by providing competitive funding for dedicated biomass, geothermal, solar thermal, district heating, waste heat, and energy efficiency projects. We are thus thankful that this fruitful relationship with Clydesdale Bank, now Virgin Money, enables us to provide clean and affordable heat to UK commercial and industrial heat users. This new portfolio of high-quality diversified geothermal installations strengthens Kyotherm’s position as a significant player of the renewable heat funding market in the UK.”

Keith Wilson, Head of Renewable Energy at Virgin Money said: “Decarbonisation of the heat sector is a key priority for the UK to allow it to successfully ramp up efforts to meet its 2050 net zero target. We are therefore delighted to partner with Kyotherm and to work with them on a third transaction in this space in what is the Bank’s first multi-project ground source heat pump deal.”

Virgin Money is committed towards 5% sustainable lending in its loan book by FY22, as well as halving its carbon emissions loans and investments. This latest deal with Kyotherm further solidifies the Bank’s reputation and evidences its commitment to lending to the renewables sector. The wider portfolio includes assets across solar, onshore wind, biomass and hydro-electric power.

Keith Wilson adds: “We very much value our working relationship with Kyotherm, and also welcome the opportunity to work with other sponsors in the renewable heat sector. This is a great example of our pledge to deliver on the Bank’s commitment to growing its sustainable lending book as part of our wider ESG strategy.”

The Bank is acting at speed to fulfil its strategic growth ambitions, with targeted new lending projects on the horizon. It will include green products and funding, as well as addressing residual carbon. Virgin Money has begun engaging with customers, colleagues, and industry forums to accelerate thinking and build out its plans in this area.