P3P was approached by AssetGen Partners, a specialised investment fund, to collaborate on a ground-breaking 10MWe waste-to-energy plant at Hoddesdon, Hertfordshire. The plant reached financial close in February 2015, and when completed in 2017, it will be the largest installation of its type in the UK.
“P3P did two things for us. The first was to supply us with working capital to do the development, to allow AssetGen to take the project through to financial close,” says Mark Denham, MD of AssetGen. “That was enormously helpful, because without that we wouldn’t have been able to do it – and that was capital at risk. It’s an extremely risky thing to do, as you have no guarantee of close. If you don’t reach close, those funds are lost. It takes a lot of faith, knowledge and understanding.
“P3P are also one of the funders of the project, working with a pension fund. They act as the general partner, managing the fund on behalf of the investor.”
THE SOLUTION: A STATE-OF-THE-ART WASTE-TO-ENERGY PLANT
P3P worked closely with Bouygues Energies and Services Limited, who are responsible for the engineering and construction of the site, as well as Fichtner Consulting Engineers and two feedstock suppliers (Biffa and Powerday) to create a financeable project.
Bouygues have designed the plant using core technology from Biomass Power Limited, a UK supplier. As a gasification technology, it’s ROC (Renewable Obligation Certificate) eligible. It uses refuse-derived fuel (RDF) – essentially, a high concentration of biomass, or organic material – which is gasified to produce electricity.
The plant will be the largest ‘merchant provider’ in the country once it’s finished: privately funded and operated, buying feedstock from independent suppliers, and feeding enough clean energy into the grid to meet the demand of approximately 7,000 homes.
- Cutting-edge 10MWE biomass energy plant
- Reached financial close February 2015
- Due for completion in 2017
- Uses 90,000 tonnes of refuse-derived fuel per annum
- Qualifies for Renewable Obligation Certificate (ROC)
- Backed by the Green Investment Bank
- Designed by Bouygues
- Largest merchant provider in UK
THE PROCESS: RIGOROUS ATTENTION TO DETAIL AND A SOLID BUSINESS CASE
Biomass plants are more complex, take longer to build, and have a much higher failure rate than gas-fired ones. So creating a credible, financeable project is crucial.
“There are many components. Obviously you’ve got to get a funder, it’s got to pass through an investment committee, and you’ve got to get due diligence done,” says Mark Denham. “Then there’s all the legal work, the feedstock contract and the construction contract. They’re tough to put together, they take time and require a level of understanding of risk.
“Julian Harris has been quite significantly involved, and has been a big support in going through the project and getting it to financial close. He’s been very active, as has Mark White, who produced the financial model for the project. P3P were very hands-on.
“Ultimately it was our project, but P3P had faith in us and brought their considerable expertise, knowledge and skillset to bear. We couldn’t have done it without them.”
“We were one of very few biomass projects last year to actually achieve financial close. Judging by the number of people who’ve asked me to speak at conferences to tell them how we did it, I’m assuming that not many people have.
“The problem is that the rewards are good, so you have a lot of small companies who get planning consent, and try to put it all together. As a result, there are a lot of casualties along the way.”
WORKING WITH P3P
The waste-to-energy plant is currently under construction, with a scheduled build time of 22 months. When completed, it will consume 90,000 tonnes of refuse-derived fuel per year that would otherwise have to be sent to a landfill site.
So with the project now under way, how would AssetGen’s Mark Denham rate P3P’s involvement?
“I’ve had a great experience,” he says. “Julian and I get on very well. There’s a good level of mutual trust, and it’s been a good experience. I appreciate it that in the early days they put a lot of faith in us that we could deliver. I value their views on any future projects that we discuss with them.
“They’re a small and dynamic outfit. They’re not a big organisation, but they’re a proactive one, and they’re great to work with. They don’t mess about, say it like it is and get on with things. If they decide to do something, they stick with it and get on with it.
“We have a very positive and strong working relationship. They’ve been very supportive and a great help.”