The Equitix managed fund Energy Savings Investments (ESI), in which GIB is a cornerstone investor, is investing in the project.
An additional £15m of private capital has been mobilised from the Equitix Energy Efficiency Fund (EEEF).
The plant is to be developed in the Holbrook area of the city and was developed by UYE (UK).
It will generate over 6.5 MW of green electricity and will be built as Combined Heat and Power (CHP) 'ready' with the potential to supply heat to more than 6,700 local homes and commercial properties.
Greenhouse gas emissions are expected to be cut by approximately 12,700 tonnes of CO2e per year.
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Kantor Energy will acts as the EPC Principal Contractor. The scheme's biomass boiler and flue gas cleaning systems are being supplied by biomass specialists VAS Energy Systems International GmbH.
Turboden Srl will supply the clean electricity generation equipment.
Once operational, the project will sell electricity to GDF Suez UK under a long-term power off take agreement and Veolia Energy Services has been awarded the long-term operations and maintenance contract.
A total of 60 jobs are expected to be created during development with a further 15 full-time positions once operational.
Ed Northam, Head of Investment Banking at GIB, said: "We are very pleased to be able to help UYE realise its vision of a highly-efficient, smaller-scale, CHP ready plant. It is a project that typifies the role of the GIB in helping developers to utilise innovative technology to create new sources of green power to cut carbon emissions and create important local benefits for communities."
Stephen Brooks, Director at UYE (UK), said: "It has taken us over five years and almost half a million pounds to get this project designed, consented and funded and we are absolutely delighted that the UK Green Investment Bank and Equitix have had the courage and commitment to work with a local, small private company and fund this community-scale CHP ready project."
(LM/CD)
