Deputy prime minister Nick Clegg has announced the Green Investment Bank will pump investment into renewables from April 2012, with the government expecting its £3 billion spend to deliver an additional £15bn in private sector funding by 2015.
The GIB is expected to initially invest in offshore wind, waste and industrial energy efficiency.
But in an apparent u-turn, it will also look at early funding for delivering the Green Deal and can lend money to the nuclear industry from 2015.
Climate Change Capital head of European policy Ben Caldecott said: “It was a major announcement - the government adopted all the main recommendations from the GIB Commission and listened carefully to investors.
“The renewables sector is going to grow rapidly and create lots of opportunities. Firms can benefit from a growing UK market, as well as export opportunities abroad.”
CBI director-general John Cridland said: “I want it delivering the low-carbon infrastructure, leveraging the £450bn we need by 2025, that will bring jobs and opportunities to the UK.”
The National Infrastructure Plan set out the need for £200bn to be invested in the nation’s infrastructure during the next five years, and for more than 70 per cent of that to come from private investment.
Round three offshore wind licences were granted last year for a further 32 GW of wind power, and these could be among the projects to receive investment.
But sources said the government was “not ruling anything out”, with schemes including High Speed Rail, water, and carbon capture and storage plants all potentially under consideration.
Civil Engineering Contractors Association director of external affairs Alasdair Reisner said the GIB would address areas where investors currently lacked the certainty to invest.
Tier one contractors including Balfour Beatty, Laing O’Rourke and Mace are among those expected to target work in renewable energy, having previously secured contracts in the sector, while companies such as Siemens, GE and Mitsubishi are all believed to be gearing up to invest in renewables and offshore wind.
Business secretary Vince Cable confirmed on Tuesday that a Green Bank Advisory Group, chaired by former British Energy chairman Sir Adrian Montague and comprising independent finance experts, will advise the government on the direction of the new institution.
Consultancy Ernst & Young has already warned that private sector investment of about £200bn is required during the next decade if the UK is to meet binding EU climate change targets for 2020.