The taxpayer-funded Green Investment Bank (Gib) has announced plans to raise £1bn to encourage new investors to put money into offshore wind farms.

The public body charged with financing green energy projects, is planning to raise a private equity-style fund.

The Edinburgh-based bank, set up in 2012, is a wholly government-owned funding institution financed with £3.8bn of public money, which it lends out to green projects.

But in a significant expansion of its role, the bank announced yesterday it would begin raising its first equity fund, having received authorisation to do so from the European Commission in May, under state-aid rules.

The agency is now seeking authorisation from the UK Financial Conduct Authority to act as a regulated fund manager. It is aiming to complete the first round of fundraising for its new vehicle by the end of 2014.

It is looking to raise £1bn from "a suitable group of strategic, long-term co-investors" to put into acquiring equity stakes in operational offshore wind projects in the UK.

In a trading update GIB revealed an operating loss of £5.7m last year but said it was still on track to become profitable once its current portfolio of investments is up and running.

The bank has targeted an annual return of eight per cent on taxpayers’ money and said all of its investments is set to be profitable.

Business Secretary Vince Cable said: “GIB’s plans for a dedicated, offshore wind fund are a real boost for our industrial strategy in a sector where we have a strong competitive advantage compared to other countries.

“There are great opportunities for British companies and the industry has the potential to create 30,000 jobs for the UK.”

It said: "Equity investments in operational wind farms can offer a compelling opportunity for investors seeking long-term, inflation-linked returns. These attributes can be well matched to the needs of long-term infrastructure investors such as sovereign wealth funds and pension funds."

GIB said that it had invested £668m in green projects during 2103-14, taking the total invested since its launch 18 months ago to £1.3bn. An additional £1.9bn of private money has also been put into the projects.

Among its investments are anaerobic digestion plants at the Wilton site in Redcar, and support for Yorkshire’s Drax power plant to help it transform into a predominantly biomass-fuelled electricity generator.