Octopus Investments completes $227mn refinancing for biomass and landfill gas
Octopus Investments has completed a refinancing round worth $226.7mn (£174mn) for its 172MW biomass and landfill gas portfolio in the UK.
The portfolio, called the Melton Renewable Energy UK Portfolio, was acquired by Octopus in 2015 and include five biomass sites as well as 22 landfill gas sites, which produce a mix of gases from microorganisms to be used as fuel. In total, Octopus’ total clean energy portfolio is worth $2.6bn.
Funding has come from major UK financial institutions including NatWest, HSBC, Allied Irish Banks (AIB), Investec, Barclays and Banco de Sabadell.
According to Energy Live News, Octopus’ Head of Energy Investments, Matt Setchell, said: “Following our record breaking solar refinancing last year, once again the Octopus team has delivered another significant transaction with this funding package for the biomass and landfill portfolio that we manage.”
He added, as reported by Utility Week: “As the UK’s largest non-utility investor in onshore renewables, we continue to set the benchmark high for negotiating market leading debt financings with innovative features such as a flexible fuel procurement and usage of short term PPAs (power purchase agreements) to drive value.
“More widely, this is a boost to the UK biomass industry, which plays an essential role in extracting maximum value from the organic waste streams and diversifying our energy mix. The involvement of major blue-chip lenders in the deal further highlights the confidence in the future of biomass in the country.”
Drax advances biomass strategy with Pinnacle acquisition
The Group’s enlarged supply chain will have access to 4.9 million tonnes of operational capacity from 2022. Of this total, 2.9 million tonnes are available for Drax’s self-supply requirements in 2022, which will rise to 3.4 million tonnes in 2027.
The £424 million acquisition of the Canadian biomass pellet producer supports Drax' ambition to be carbon negative by 2030, using bioenergy with carbon capture and storage (BECCS) and will make a "significant contribution" in the UK cutting emissions by 78% by 2035 (click here).
This summer Drax will undertake maintenance on its CfD(2) biomass unit, including a high-pressure turbine upgrade to reduce maintenance costs and improve thermal efficiency, contributing to lower generation costs for Drax Power Station.
In March, Drax secured Capacity Market agreements for its hydro and pumped storage assets worth around £10 million for delivery October 2024-September 2025.
The limitations on BECCS are not technology but supply, with every gigatonne of CO2 stored per year requiring approximately 30-40 million hectares of BECCS feedstock, according to the Global CCS Institute. Nonetheless, BECCS should be seen as an essential complement to the required, wide-scale deployment of CCS to meet climate change targets, it concludes.