Financing renewable CHP plants Estover Energy 5 November 2014 About Estover • Developer of local-scale biomass plants – 10-25MWe range – £75m-£125m per development – Financed with third party equity & debt • Combined Heat & Power (CHP) – Co-located with industrial partners – Grid-connected for bankability – Proven technology • • Fuel from local, sustainable forestry Estover Energy Ltd – – – – Operating since 2010 Backed by private investors Leading developer in biomass CHP Team involved in 8 of operating biomass CHP plants in the UK Confidential Reminder! These guys support local biomass from UK woodlands Confidential The Macallan, Speyside – financed Summer 2014 Confidential Cramlington, Northumberland Project overview estimates Aesica & Merck pharmaceutical plants Planning status Granted - Jan 2013 Size Mwe / MWth 27 / 6+ Financial close target June 2014 Operations start 2015 Tonnes of fuel per year 240,000 Contractor BWSC (Denmark) Confidential Discovery Park, Sandwich, Kent Project overview estimates Pharma manufacturing & office park Planning status Granted - Oct Size Mwe / MWth 15MWe / 12MWth Financial close target Mid-late 2015 Operations start Late 2017 Tonnes of fuel per year 135,000 Contractor Gestamp Biomass (Spain) 6 ArjoWiggins Stoneywood Mill, Aberdeen Project overview estimates Paper mill, Aberdeen’s second largest employer & maker of Conqueror paper Planning status Granted - Jan 2013 Size MWe 15MWe / 15MWth Financial close target 2015 – 2016 Tonnes of fuel per year 150,000 Contractor TBC Confidential Why do industrial sites like biomass CHP? • Main commercial benefits – Reduce energy costs / carbon taxes§ – Decarbonise energy supply for marketing benefits – Future carbon tax risk mitigation – Security of steam and power supply separate from gas & electricity grids • Estover’s offer is a complete package – We option land, gain relevant consents – Our consortium engineers & finances the plant – Estover finds the fuel – Plant operates independently Finding biomass CHP sites is long, hard work Criteria sites have to meet:      Land Grid Heat load size & type Counterparty risk Counterparty appetite for contracting  Selling through an organisation 153 sites evaluated 93 site meetings 15 met criteria 9 exclusivities 4 in financing Taken us 4+ years and millions of development money to finance one! 1 financed How is renewable CHP financed? Biggest challenge? Renewables policy mismatch between RO and RHI Current CfD system doesn’t work for biomass CHP • The current CfD for biomass CHP isn’t a “contract” as your “difference” is taken away based on your heat load’s performance • Means big risk • Puts everything on the business of your customer – no longer an infrastructure investment but a bet on a heat customer Key messages • Biomass CHP can be done – Yes we are building one, and financing another – But it’s a lengthy, expensive and extraordinarily difficult process to develop & finance biomass CHP • ROCs work but RHI doesn’t – The mismatch makes financing extremely difficult • CfD doesn’t work at the moment – Dependence on heat makes biomass CHP unfinanceable without major changes Thank you [email protected]