Covanta & Partners Reach Financial Close on 21 MW Scottish Waste to Energy Plant

Covanta Holding Corporation has achieved financial close on the Earls Gate Energy Centre with strategic development partner Green Investment Group.

Image ©

Covanta and GIG will each hold a 25% equity ownership in the project, with co-investor and developer Brockwell Energy owning the remaining 50% stake.

"With today's announcement we mark our entry into the UK market alongside GIG, following on the heels of our very successful partnership on the Dublin project earlier this year," said Covanta's President and Chief Executive Officer, Stephen J. Jones.

According to Covanta, the combined heat and power facility located in Grangemouth, Scotland, Earls Gate is a well-structured project with long-term waste and energy contracts.

Each year, the facility will prevent approximately 216,000 tonnes of mixed household, commercial and industrial waste that cannot be recycled from entering landfills. Instead, the waste will be used as fuel to generate low-carbon heat and power that will be supplied to a co-located industrial site host.

Construction of the facility will be led by Constructions Industrielles de la Mediterranee (CNIM), which Covanta said has deep experience in energy from waste construction, primarily in Europe and the UK, and is expected to take approximately 36 months to complete.

CNIM will also provide operations and maintenance services when the project commences operations in late 2021. Covanta will provide technical oversight services during construction and operations.

Chemical manufacturer and site service provider, CalaChem, has entered into a long-term Energy Supply Agreement (ESA) for the offtake of electricity and steam produced by EGEC. The steam will be used in the manufacturing processes of CalaChem and others on site.

The ESA is expected to decarbonise CalaChem’s annual energy consumption by approximately 39kt CO2e per year – the equivalent of taking approximately 17,000 cars off the road for a year. The remaining electricity will be exported to the grid.

Earls Gate Project and Covanta Investment Details

  • 216,000 metric tonnes per year of waste processing capacity
  • 21.5 megawatt equivalent generation capacity
  • 75% of the waste secured under long-term agreements
  • 100% of electricity and steam output under a long-term agreement with industrial site host
  • Total project cost of £210 million with approximately 70% financed through non-recourse project-based debt

"Earls Gate is the first of four advanced development projects in the UK to reach financial close, with the Rookery South, Protos and Newhurst projects lined up close behind,” said Jones.

“We are very pleased with our partnership with GIG and expect it to continue to add meaningful value as we bring additional projects to market. Our expectation remains that these UK projects alone will provide $40 to $50 million in incremental annual free cash flow to Covanta when they are all fully operational," concluded the CEO.


New Payment Scheme to Replace FIT's

'New era' for UK solar, as government U-turn promises payments for exported renewable power

The new Smart Export Guarantee would ensure households and businesses are paid for any solar power fed back to the grid

Claire Perry unveils plans for a Smart Export Guarantee designed to ensure households and businesses are paid for the power they export to the grid

The government has today responded to fierce criticism of its plans to axe support for solar installations in a way that would have effectively required to households and businesses to provide power to the grid for free, unveiling proposals for a new Smart Export Guarantee (SEG) to ensure small scale generators can sell any excess power.

Speaking in the House of Commons this morning, Energy and Clean Growth Minister Claire Perry announced the launch of a new consultation on proposals to create a new market for the sale of power from new small scale renewables installations such as rooftop solar panels, following the imminent closure of the feed-in tariff incentive scheme.

The new scheme could also generate benefits for the energy system as a whole, she added, arguing it should "reduce strain on energy networks with a more decentralised and smarter local network delivering resilience much more cost effectively, unlocking innovative products for electric vehicles and home energy storage".

She hailed the proposed scheme as "a win-win for consumers and the environment and a key part of our modern Industrial Strategy".

The Department for Business, Energy, and Industrial Strategy (BEIS) said the SEG scheme would encourage suppliers to competitively bid for electricity generated by onsite renewables, giving exporters the best market price for any excess power they provide to the grid.

The government said the new scheme would prove more cost effective than the current FiT approach, whereby households and businesses which install small scale electricity generation are assumed to export 50 per cent of the electricity they produce and are paid for it - even when the electricity is not needed by the grid or they export less than 50 per cent.

The new scheme would instead make use of smart meter technology to ascertain how much power any installation is providing to the grid, allowing households and businesses to sell it at market prices. The approach could also open the door to wider use of energy storage systems and smart grid technologies, which could allow households and businesses to provide power back to the grid during periods of peak demand when prices for exported power will be highest.

The consultation is now scheduled to run until March 5.

James Court, director of policy and external affairs at the Renewable Energy Association, said the proposals had the potential to "usher in a new era for small-scale renewables and offer a subsidy free means for homeowners and businesses to generate their own low-cost, low-carbon electricity".

"It was clear that no-one should be asked to give away electricity for free, and we strongly advocated for a market based solution and are pleased this approach has been adopted," he said. "Whilst the details around the transition from the former subsidy scheme will be important, this signal of support for the sector from government will help our members continue to provide smarter, cleaner and cheaper electricity in the decade to come."

The new consultation follows a major row late last year when the government confirmed plans to scrap the FiT scheme from March 31 this year. It failed then to respond to industry warnings that the reforms would effectively force households and businesses installing solar panels without accompanying storage capacity after that date to provide some of their power to the grid to free.

Speaking at the time a government spokesperson said falling solar costs meant it was the right time to minimise costs for billpayers by ending the feed-in tariff and indicated the government would "consult shortly on a future framework for small-scale renewable energy generation". But they provided no indication the proposed future framework would ensure generators will in future be able to sell their exported power, prompting fierce criticism from green groups who branded the decision as "perverse" and "bizarre".

Green businesses and campaigners are likely to broadly welcome the new proposals, which promise to provide a boost to the market for solar installations, storage technologies, and other forms of onsite renewables.

However, some concerns are likely to remain over the gap between the FiT scheme ending this spring and the new SEGs scheme being fully up and running, as well as how the new market for exported power will be created and regulated given the high profile technical challenges and delays faced by the government's national smart meter roll out.

It also remains to be seen how energy companies will package purchase agreements for exported power and whether the price they are willing to pay will improve the financial argument for businesses, schools, and households to install onsite generation technologies.

Many industry experts maintain the best financial returns for solar installations are to be found by installing battery storage systems in conjunction with solar arrays, to ensure the vast majority of the power generated is used a site. It's a calculation that will only be strengthened as solar and storage costs continue to fall.

Chris Hewett, CEO at the Solar Trade Association, said the group gave the proposals "a cautious welcome".

"We are very pleased the government is unequivocal; small generators will be compensated for the power they contribute to the system, but the issue remains providing remuneration at a fair market rate," he said.

He said it was encouraging that only installations that meet independent industry standards would qualify for SEGs and that the proposals identify the System Sell Price as accurately reflecting the market value of power spilled to the grid.

"However, the consultation acknowledges many of the market barriers we have raised with government and the associated costs," he added. "Our worry is that these may impede the ability of suppliers to offer fair and meaningful rates, even though they may wish to. Customers are freely able to switch suppliers in a competitive market so where these costs fall remains vital to developing meaningful offers."


Decentralised Power Supplies

Consumers could have specialist EV power suppliers or buy from neighbours under proposed new rules

by New Power  January 3, 2019

Consumers could break away from having a single supplier for all their power by the start of 2020. An industry change that could take effect by then will mean customers can take some of their power from another supplier, such as a community energy scheme or neighbour, or they could have a dedicated supplier for one part of their usage such as charging electric vehicles. That opens new possibilities for competition, the industry believes.

The change will be enabled by a modification to industry rules proposed today by New Anglia Energy, which circumvents current industry processes that require customers to take all their power via a single ‘hub’ supplier.

Proposer New Anglia Energy says the modification (P379) “will address a significant barrier to competition in the market rules.”  It notes that although some schemes disaggregating customers’ volumes, “This is only possible on the basis of agreement between those parties and a single default supplier, and these activities are not recognised in the BSC market rules.”

The modification would introduce a new Customer Notification Agent (CNA) to the process – possibly an app or platform,  which will reconcile power flows through the meter so payments can be allocated.

The option was set out early in 2018 by settlements company Elexon (see our article from May 2018, which said system changes made to accommodate GB participation in European balancing markets (Project Terre) had laid the groundwork for the new approach. However, the market rule change had to be proposed by a Balancing and Settlement Code (BSC) party.

New Anglia Energy said, “given the importance of the work to deliver the joint BEIS/Ofgem Smart, Flexible Energy Plan, … we believe the solution should be developed and tested during 2019, with an initial desire to implement in early 2020.” Its proposed timeline would see workgroups assess the change and industry consultation made, with a final modification proposal submitted for decision in October. That could allow new offerings to be made to customers at the start of 2020.


New Grangemouth incinerator claims to prevent landfilling a fifth of Scotland’s annual waste

19th December

By Brian Donnelly  @BrianDonnellyHTBusiness Correspondent

Image of Earls Gate Energy Centre and Edward Northam, head of GIG Europe

Image of Earls Gate Energy Centre and Edward Northam, head of GIG Europe

WORK on a new £210 million Energy from Waste plant that will prevent the equivalent of a fifth of Scotland’s total annual landfilled from going underground each year is under way after financial close was announced by its partners. 2 comments

The project in Grangemouth was launched by Edinburgh-based Brockwell Energy, which funded and led the development over the past three years, and the Green Investment Group (GIG), also rooted in the Scottish capital, and is described as having "unparalleled environmental credentials".

Earls Gate Energy Centre (EGEC) is the first investment in Scotland for GIG (formerly the Green Investment Bank) since it was privatised by Macquarie last year.

Brockwell will retain 50 per cent of EGEC while GIG together with its co-investor Covanta Energy will acquire the other 50% of EGEC though a jointly owned vehicle.

The move will "future-proof full time local jobs", said Alex Lambie, Brockwell Energy's chief executive.

It is claimed the heat and power generated will make it one of the most efficient EfW plants in the UK.ADVERTISING

The EGEC facility will prevent 216,000 tonnes of household and commercial waste going to landfill each year - about a fifth of the country's annual total - and provide low-carbon heat and power to four local industries.

The remaining electricity will be exported to the grid.

Mr Lambie said: "The success of EGEC reflects the skills and dedication of the Brockwell and GIG teams and delivers a new world-class renewable CHP (combined heat and power) facility to support the site.

"This is the first of a number of EfW projects that we will build over the next three years.

"As one of the most efficient plants in the UK, EGEC has unparalleled environmental credentials.

"The use of heat and power on-site will future-proof full-time local jobs."

He added: "It will also create roles during construction, including a range of professional, skilled and entry-level positions and apprenticeships."

Brockwell also aims to deliver community benefits focused on employment and training, support for local businesses and education programmes, it said.

HeraldScotland:

Edward Northam, head of GIG Europe, above, said that 2017 saw Scotland recycle more waste than it sent to landfill.

He said that is "a fantastic achievement, but there remains a lack of capacity to unlock the value to businesses and households from converting residual waste into low-carbon energy".

He added: "The Earls Gate facility will play a major role in changing that.

"GIG is very proud of its Scottish roots and base in Edinburgh.

"Earls Gate is our nineteenth investment in Scotland and we’re delighted it will further support the decarbonisation of the Scottish economy."

Neil Partlett, chief executive of CalaChem, the chemical manufacturer and site utility service provider, said: "CalaChem has been a part of Grangemouth industry for almost 100 years.

"In addition to improved environmental performance and operational reliability, EGEC will enhance CalaChem’s international competitiveness by controlling overall energy costs."

The heat and power plant will use mixed household, commercial and industrial waste from the Central Belt that would otherwise enter landfills every year.

Matthew Mulcahy, of Covanta, said: "Today marks a significant milestone in our valued partnership with GIG, as Earls Gate represents the first of our four advanced UK development projects to reach financial close.

"The project is well-structured with long-term contracts on both waste and energy and will provide critical sustainable waste disposal capacity in Scotland.

"It will also greatly benefit the local economy by supplying neighbouring industry with reliable, low-carbon heat and power."

HeraldScotland:

GIG was launched by the UK Government as GIB in 2012 to boost the green economy and sold last year to Australian bank Macquarie for a reported £2 billion.

EGEC, as GIG’s nineteenth Scottish project, follows a range of investments supporting sustainable economic growth in Scotland.

It says that by preventing volumes of waste equivalent to around 20% of Scotland’s total annual landfilled household waste from going to landfill, the facility will make a significant contribution to the local authority’s ability to achieve the goals of Scotland’s biodegradable municipal waste landfill ban, which is due to come into effect on January 2021.

Brockwell moved to "myth-bust" that "Scotland has too many incinerators", adding: "Although there are a number of EfW plants consented in Scotland, very few of these are expected to be built."

Permission to replace a gas-fired plant at Earls Gate was granted in January 2017.


Scotland Prepares For The Future Of Landfill With Sector Plan

Posted on 11 December 2018 by Darrel Moore

An ambitious plan to drive environmental compliance at Scotland’s landfill sites, harness innovation and help the sector responsibly manage site closures and aftercare has been launched by the Scottish Environment Protection Agency (SEPA).

SEPA’s Landfill Sector Plan is one of 16 sector plans being launched this year in line with the regulator’s One Planet Prosperity strategy. This reflects that, if everyone in the world lived as we do in Scotland, we would need three planets. There is only one.

In response to mounting scientific evidence about climate change, resource scarcity and security, the sector plans set out a range of actions to help all regulated businesses meet – and go beyond – their compliance obligations.

“This plan is ambitious,” says SEPA chief executive Terry A’Hearn. “It spells out how we will use our full suite of regulatory powers, including the creation of a new national enforcement team, in clearer and more powerful ways. It also sets out some new ways such as novel partnerships that we will develop and use to support innovation and transformation in this sector.

SEPA chief executive Terry A’Hearn – “The transition to a circular economy is an environmental and economic win-win for Scotland. That said, it’s important that we work to ensure operators responsibly manage site closures and aftercare.”

“As Scotland’s environmental regulator, we’ll work to ensure operators protect the environment from the impacts of landfilling and ensure that communities are safeguarded. As some wastes break down, they produce powerful emissions such as leachate (a highly polluting liquid that poses a risk to downgrading surface water quality and groundwater aquifers if not adequately contained, extracted and treated) and powerful greenhouse gases such as methane that contribute to climate change.”

There are currently 55 operational landfill sites and 217 non-operational sites regulated by SEPA in Scotland.

Scotland’s landfills provide a waste management solution for the disposal of around 4 million tonnes of waste each year. Over the next three years, SEPA expects to see between 1.3 million to 2 million tonnes of waste a year move from landfill as a result of the Scottish Government’s 2021 ban on the landfilling of biodegradable municipal waste.

Scotland’s globally ambitious circular economy strategy aims to safeguard resources for re-use, recycling and re-manufacturing in Scotland. Doing so will increasingly negate the need for landfill and the Scottish Government’s target is that by 2025, only 5% of waste will be disposed of via landfill.

“The transition to a circular economy is an environmental and economic win-win for Scotland,” Mr A’Hearn adds. “That said, it’s important that we work to ensure operators responsibly manage site closures and aftercare.”

All businesses that SEPA regulates in a sector use water, energy and raw materials to produce the products and services they sell. In doing so, they also create waste and emissions. Sector Plans aim to systematically identify the compliance issues that need to be tackled by sector – and help identify the biggest opportunities to support sectors in going beyond compliance.

In its Landfill Sector Plan, SEPA sets out a number of actions to improve compliance – and to go beyond compliance to help Scotland achieve its circular economy ambitions.

These include:

  • Focusing regulatory effort, including enforcement interventions, at sites with the worst compliance records and those with greatest community impact.
  • Supporting operators to prepare for the ban on landfilling biodegradable municipal waste from 1 January 2021 and the target of no more than 5% residual waste to landfill by 2025.
  • Working with operators to ensure that all extractable landfill gas is utilised or, where this is not technically feasible, converted into less harmful gases.
  • Identifying opportunities to help the landfill sector to develop and share best practice examples that support compliant operations.
  • Developing effective intervention strategies to disrupt and deter illegal activity in partnership with Police Scotland, local authorities, industry trade bodies, other UK environment agencies and other relevant partners.
  • Working with partners to support development of alternative products for landfill engineering, potentially reducing the reliance on virgin quarried clay.
  • Developing a forum for businesses to work in partnership with SEPA and other stakeholders to consider the sources of the energy used, with the aim of moving away from fossil fuels.
  • Working co-operatively with the landfill sector, communities and other partners to promote and develop sustainable land uses for restored landfills.

SEPA is also producing sector plans covering:

  • Chemicals Manufacturing
  • Crop Production
  • Dairy Processing
  • Dairy Production
  • Finfish Aquaculture
  • Forestry and Timber Production and Processing
  • Housing
  • Leather
  • Metals
  • Nuclear
  • Oil and Gas Decommissioning
  • Scotch Whisky
  • Strategic infrastructure (transport and utilities)
  • Tyre Sector
  • Water and Waste Water Sector

Read SEPA’s sector plans here.


Scotland to send millions of tonnes of waste to English landfills

Lack of EfW capacity in Scotland means waste will be diverted to English landfills, according to industry

Viridor’s Glasgow plant is “ramping up”
Viridor’s Glasgow plant is “ramping up”

A waste industry expert has told ENDS Scotland will be forced into sending up to a million tonnes of waste each year to English landfills because it does not have alternative options for dealing with the extra waste arising from its 2021 landfill ban on biodegradable waste.

Stephen Freeland, policy adviser at the Scottish branch of the Environmental Services Association (ESA), told ENDS that estimates from the Scottish government had found there would be a 950,000-tonne capacity shortfall. "Almost a million tonnes that has got nowhere to go," he said.

"Really we are looking at landfill in England – and there is nothing in the regulations to stop it – as potentially the only practical route until such time as the capacity gap in Scotland is closed," he said.

The comments come after the Convention of Scottish Local Authorities (COSLA) published minutes of a meeting between the association’s environment and economy board this week. COSLA said: "As it stands, it seems unlikely that the 2021 ban will be fully achievable. Work on delivery and on possible solutions will continue with future reports to the board likely."

COSLA says in the board document that it is working to establish a "realistic suite of options" that would enable all councils to meet the ban.

The Scottish government confirmed to ENDS that it was pushing ahead with the landfill ban, despite these concerns.

A spokesperson said: "We are committed to fully enforcing the ban on biodegradable waste to landfill as part of our commitment to a more circular economy. SEPA, Zero Waste Scotland and Scottish government officials are working closely with councils to help them prepare for the ban, and will provide comprehensive guidance to help authorities plan properly for the implementation of the ban."

The Scottish government says the main alternative to landfill is energy-from-waste, but there is currently only about 100,000 tonnes of EfW capacity in Scotland.

A number of Scotland-based EfW facilities should come into operation in the next few months. Viridor’s Glasgow plant is "ramping up" after completing steam blowing last month, while its Dunbar EfW plant is also close to being officially operational.

Germany-based MVV also started construction work on new plant to serve Dundee during the summer, although that is expected to replace an existing facility rather than adding new capacity.

Suez also said in September its under-construction Haverton Hill EfW plant in the North of England could take Scottish waste.

Another option the Scottish industry could explore is exporting the waste as refuse-derived fuel to mainland Europe for energy recovery. However, Brexit and the resulting unfavourable exchange rates leave a big question mark over how viable this route would be, according to Freeland.

"There is no option but to send the waste elsewhere," he said.

Freeland added that the Scottish government hoped landfilling in England would be a  short-term measure but he said it would be "years" before the capacity gap was closed.

England faces its own problems with waste treatment capacity. The latest waste management figures from the Environment Agency, revealed an increase in landfilling for the fourth year running and a continued decline in landfill capacity. This is combined with concerns that Brexit might hamper England’s waste exports to Europe and China closing its doors on waste imports.


Funding secured for Bridgwater EfW plant

30 NOVEMBER 2018by Elizabeth Slow

Infrastructure investor, Equitix, and environmental investment firm Iona Capital, have announced the planned development of a £72 million energy from waste facility in Bridgwater, Somerset.

The 7.7MW Resource Recovery facility will process around 100,000 tonnes of commercial and municipal refuse derived fuel (RDF). Construction is expected to start in Q1 2019 and the plant to begin commercial operation in 2021.

The £72 million energy from waste facility will be sited in Bridgwater, Somerset

RDF

Waste will be supplied by Geminor UK Limited – a leading exporter and supplier of Refuse Derived Fuel – under a long-term waste supply contract.

The project will be delivered under a turnkey design and build contract with STC Power SRL – a specialist in the supply of small-scale thermal energy plants. The company has delivered 20 facilities since 2001.

Pinnacle Power Limited has been appointed as the operations and maintenance contractor. Pinnacle Power is part of the Pinnacle Group and is a provider of construction and operations services for district heat and power projects.

According to Iona Capital, the facility is based on the conventional combustion of RDF with heat recovered via a boiler to generate power from a steam turbine. The grate use technology was consented earlier this year. The facility has secured a 15 year power purchase agreement with electric utilities firm, Engie.

‘Huge opportunities’

“This is a sector that we see huge opportunities in and are very excited to be working with our partners, Iona Capital, in developing this top-quality, high-impact facility.”


Geoff Jackson
Equitix

Nick Ross, director and co-founder of Iona Capital said: “We are very pleased to partner Equitix in the financing of the Bridgwater project which is the first of a number of planned investments in the EfW sector.”

Developer Bridgwater Resource Recovery secured planning permission for the facility in January 2015. Once completed, it will employ up to 25 full-time staff.

Equitix

Based in London, Equitix describes itself as a leading investment firm that manages over £3 billion. The firm’s investment strategy focuses on small to mid-cap infrastructure projects, predominantly located in the UK, covering a range of sectors with a focus on social infrastructure and renewable energy.

Iona Capital

Iona Capital has managed funds on behalf of institutional pension funds and invested these in long term projects within the UK bio-energy and low carbon markets.. It has offices in London and York.


Orsted Plots $30 Bln Green Energy Investment

Orsted Plots $30 Bln Green Energy Investment

By Stine Jacobsen and Jacob Gronholt-PedersenWednesday, 28 November 2018 09:13
Denmark's Orsted will invest $30 billion in green energy up to 2025, it said on Wednesday, as it seeks to become one of a handful of future "renewable majors" leading a global transition from fossil fuels to green energy.
(Photo: Orsted)
(Photo: Orsted)

While renewable energy technology is now able to compete with traditional power sources, the industry remains vulnerable to changing political winds as governments around the world scramble on how to address climate change.

Orsted, the world's largest offshore wind developer, said it would have 15 gigawatts (GW) of offshore wind power capacity by 2025, up from a previous target of 11-12 GW and plans to further double capacity by 2030 to more than 30 GW.

One of the key drivers will be expansion in the nascent U.S. market, where it recently made two acquisitions to gain a foothold in both onshore and offshore wind.

U.S. President Donald Trump has blasted renewable energy as expensive, accused wind turbines of killing birds and ruining landscapes while vowing to revive the coal industry.

While Trump this week rejected projections from his own government that climate change will cause severe economic harm, many states have set ambitious targets to source energy from carbon-free sources.

However, so far the impact on Orsted's business has not been negative, its U.S. chief told Reuters.

"It has been quite positive under this administration," Thomas Brostrom said, pointing to efforts to remove red tape around environmental approvals and new auctions for acreage.

He said the efforts were driven more by consideration for energy independency and job creation rather than reducing carbon emissions.

Orsted is also betting big on growing in Taiwan, which with a big push to attract investments in renewable technology, has become a key battleground for the world's top offshore wind developers seeking a foothold in Asia.

However, Orsted acknowledged that offshore wind projects in Taiwan could face delays after voters last week decided against a government plan to abolish nuclear power.

The vote prompted Taiwan to scrap its target of having no nuclear power by 2025 and to review its energy policy, which since 2011 has been driven by the Fukushima nuclear accident.

Before the vote, the island's offshore wind market was expected to expand to 5.5 GW by 2025, with government investments into onshore and offshore wind of $23 billion.

"It was not a vote to stop the nuclear phase-out," senior vice president at Orsted, Thyge Boserup, said.

"I think it's rather the speed of the phase-out that is up for discussion," he said.

($1 = 6.6081 Danish crowns)

(Reporting by Stine Jacobsen and Jacob Grønholt-Pedersen Editing by Alexandra Hudson and David Evans)


Leading Estonian Energy Business sold to Infrastructure Fund

European Diversified Infrastructure Fund II invests in Utilitas, leading private Estonian energy group

The European Diversified Infrastructure Fund II SPSc (“EDIF II” or the “Fund”), a dedicated long-term infrastructure fund managed by First State Investments (“First State”), has become a financial investor in OÜ Utilitas (”Utilitas”), Estonia’s largest district heating company and a leading renewable power producer.

According to an agreement signed in Tallinn today, EDIF II has acquired an 85% shareholding in Utilitas with current shareholders and managers of Utilitas retaining 15% shareholding.

Utilitas is the largest district heating company and one of the largest renewable power producers in Estonia. The Company operates 521km of district heating networks and supplies heat to approximately 166,000 households in eight Estonian cities, including in Tallinn, the capital city.

Kristjan Rahu, Chairman of the Supervisory Board at Utilitas said: “With EDIF II we have on board an acclaimed international infrastructure fund with many investments in Western and Northern Europe and access to international capital markets. Utilitas is the Fund’s first investment in the Baltics and the only investment in this region by a major international infrastructure fund to date. We look forward to a long term cooperation with EDIF II and the team at First State. Our goal is to ensure that Utilitas will remain in the forefront of green energy development as an efficient energy services provider to its clients in the region.”

Niall Mills, Partner, Infrastructure Investments at First State, said, “We are delighted that Utilitas is First State’s inaugural infrastructure investment in Estonia. Utilitas’ position as the leading operator of a sustainable, reliable district heating network with an increasingly strong focus on renewable energy production is especially attractive to us as a long-term investor. We look forward to partnering with our co-shareholders, management team and employees to further develop the company.”

In line with its integrated approach to Responsible Investment across all business areas, First State has focused on pursuing the implementation of the UN Sustainable Development Goals across all of its portfolio companies. In 2017, more than 50% of Utilitas’ energy production was produced from renewable sources and the company is at the forefront of innovation in the energy industry, making it a very natural fit with the Fund’s investment strategy.

The management and supervisory boards of all three subsidiaries of the group, AS Utilitas Tallinn, AS Utilitas Eesti and OÜ Utilitas Tallinna Elektrijaam will remain unchanged. Priit Koit will continue as the CEO and Kristjan Rahu as the Chairman of the Supervisory Board of Utilitas. The supervisory board will be reinforced by two new members, Gregor Kurth, Director at First State, and Andreas Greim, a district heating and energy expert with experience from Dalkia International, Areva and Électricité de France, as an independent member.

The transaction was financed by an international syndicate of banks consisting of Skandinaviska Enskilda Banken, Crédit Agricole Corporate and Investment Bank as underwriters and HSH Nordbank.

“This transaction clearly shows that renewable energy projects, as well as ambitious Estonian companies are attractive for global investors and SEB is happy to support further development of Utilitas,” said Artjom Sokolov, Member of the Management Board of SEB Estonia.

Shareholders of Utilitas were advised by Superia Corporate Finance and Triniti Law Firm. First State Investments was advised by DC Advisory and Cobalt Law Firm.

About Utilitas
Utilitas is the largest district heating company and one of the largest renewable power producers in Estonia. The Company operates over 521km of district heating networks and supplies heat to approximately 166,000 households in eight Estonian cities, including in Tallinn, the capital city, Maardu, Keila, Rapla, Haapsalu, Kärdla, Jõgeva and Valga.  Utilitas produced approximately 1.7 TWh of heat and 263 GWh of renewable electricity in 2017.  Utilitas had consolidated sales revenue of €117m and total assets of €301m in 2017.

About EDIF II
EDIF II is a leading European infrastructure fund managing core infrastructure assets on behalf of its investors. The fund targets primarily energy, renewable, utility and transportation assets across Europe. Its investors are largely pension funds investing for long-term stable returns.


Research reveals regional disparities in energy revolution

Research reveals regional disparities in energy revolution

The research, commissioned by Drax Group, found that businesses and households in London and Scotland are better placed to take advantage of the benefits of the ‘energy revolution’, including cheaper energy bills, electric vehicles and smart appliances.  Meanwhile, the North of England and East Midlands lag furthest behind.

The report breaks down the energy revolution into 12 metrics for the power, transport and buildings sectors, to provide a barometer of national and regional progress. Achievement against each of these metrics is scored as ‘not on track’, ‘within 90% of target’ or ‘ahead of target’.

image001

 

The authors found London leads progress jointly with Scotland because its transport system is the country’s greenest. As public transport, walking and cycling are more dominant in London, a Londoner’s carbon footprint from transport is up to 2.5 times less than residents in other regions. The capital also receives 45% of national funds for rail electrification, resulting in the country’s lowest carbon emissions from rail. It is also cheaper, on average, to own an electric car in London than in any other part of the country. This is due to the average London driver travelling shorter distances and the exemption of electric vehicles (EV) from London’s Congestion Charge.

Scotland leads in the energy revolution with London due to its successful shift from fossil fuels to renewable generated electricity. The number of EV charging points in Scotland is also high compared to the number of vehicles. Despite the low population density, the average Scottish household is around 2km from a charging point, but with the lifetime cost of running an EV being the highest in Scotland and Wales, this is affecting uptake in these areas.

Residential homes in leading regions London, Scotland and the East are also more energy efficient, and more likely to score high A-C Energy Performance Certificate (EPC) ratings, and have fewer buildings rated F and G.

By comparison, all of the regions lagging behind, including Wales, Yorkshire, the East Midlands and the north of England suffer from particularly low EPC ratings.  The cost of heating, combined with lower average incomes in these areas mean that fuel poverty rates are particularly high. As the country transitions to more electric heating in future, this is likely to result in increasing energy bills in these regions unless homes can be made more energy efficient, or the cost of electric heating can be reduced, particularly for vulnerable residents.

Imperial’s Dr Iain Staffell said: “Our research reveals that Britain is at risk of creating a two-tier economy, leaving millions of families and businesses less well equipped to enjoy cheaper bills and better health outcomes. Our concern is they will not be offered the same opportunities as people living in regions which are modernising their energy infrastructure.”

Research was conducted independently by researchers from Imperial College London and E4tech, facilitated by Imperial Consultants and commissioned by Drax Group.