Prestige Funds finances £23m biogas plant to help UK meet clean energy goals
Loan finance helps the expansion of a strategically important anaerobic digestion plant network and supports the UK in meeting its renewable energy and climate change targets.
Prestige Funds, a leading provider of private finance to the UK’s agriculture, clean energy and SME markets, is pleased to announce it has agreed to a £23.2m funding deal to finance the construction of a 2.5MWe (700 nm3/h biomethane) ‘gas to grid’ anaerobic digestion plant in the south England county of Kent.
The plant will take approximately 20 months to build and is the second project to be announced in Kent in 2019. The deal is the latest in a long series of financing agreements to fund anaerobic digestion (AD) facilities in the UK, which are helping farm, food and agri businesses to process waste into energy.
Prestige Funds, via its specialist asset backed direct lending fund, has approved £40m of new lending in this sector in January and February alone. Prestige is funding the project through Privilege Development Finance Limited, a provider of specialist asset-backed finance and part of the Prestige/Prime group of companies.
Craig Reeves, founder of Prestige Funds, said: “Private lending funds are an important source of much-needed finance for clean energy projects of this kind. Around the country, biogas and other clean energy projects are being brought into being through the investment of private loan capital, helping Britain to meet its clean energy goals.”
The plant, which has the support of the local municipal council, is to be run 100% on food and animal waste sourced from the local community and businesses. It will generate renewable gas that is ready for injection into the natural national gas grid, reducing the UK’s reliance on imported fossil gas, and helping to meet the country’s renewable energy and climate change targets.
Favourable Macro Environment
Rising electricity prices in the UK and higher taxes on landfill are causing these businesses to turn to green energy projects as a source of on-farm energy, utilising existing waste. The UK government also needs to source more clean energy to meet its Paris Climate Change Agreement commitments.
In January 2019 the UK government announced plans to organise dedicated food waste distribution nationwide for the first time. Much of this will be used to power local anaerobic digestion plants.
Prestige Funds’ latest deal follows this announcement by the UK government that it will provide funding for local municipal council authorities to introduce weekly food waste collections for all households in England. Much of this will be delivered to local anaerobic digestion plants, supplying power to local homes and businesses. Further reforms are expected to release between £150-300m of investment into anaerobic digestion plants in the UK over the next year, which should help to bring up to 30 plants online.
The number of anaerobic digestion plants has grown dramatically over the past six years, with more than 500 anaerobic digestion plants now operational in the UK. The Anaerobic Digestion and Biogas Association (ADBA) says anaerobic digestion plants have a capacity of 861 MW, powering 1.2 million homes, representing a 20% growth in generating capacity.
Charlotte Morton, chief executive of ADBA, has estimated that “universal food waste collections for households alone could achieve a carbon saving of up to 1.5 million tonnes of CO2-equivalent per year, the equivalent to taking three quarters of a million cars off the road, while the National Infrastructure Commission has estimated that they will save local municipal council authorities up to £400m in capital costs and £1.1bn in operational costs between 2020 and 2050”.
Phil Gerrard, CEO of Privilege Finance, commented: “This is one of several green ‘gas to grid’ projects that Privilege is currently funding for its development partners across the UK. Following the delays of the last 18 months it’s very encouraging that the Government has now actioned not only the food-waste collection initiative but reiterated its objectives for the decarbonisation of the National Grid. We are looking forward to funding many more waste to energy projects in support of these aspirations.”