GIB invests £30m in new biomass plant
The UK Green Investment Bank (GIB) is investing more than £30 million in a new combined heat and power (CHP) biomass plant in Merseyside.
The £110-million plant will be built and operated by Danish power plant specialist Burmeister & Wain Scandinavian Contractor A/S (BWSC) within the Mersey Multimodal Gateway project in Widnes, and, once online in December 2016, is expected to become the ‘biggest waste wood renewable energy facility in the North West’.
By burning 146,000 tonnes of both virgin and waste wood (both industrial feedstock grade and fuel grade) a year – sourced by Stobart Biomass Products Limited under a 16-year fuel supply contract – the facility will annually produce 150 gigawatt hours of electricity for the National Grid and 60 gigawatt hours of heat for use in Stobart’s adjacent wood drying facility.
According to its developers, over its 20-year lifetime, the plant could produce enough electricity to power the equivalent of 35,000 homes. They also say it will create more than 200 construction jobs, as well as 20 full-time jobs once operational.
Funding details
To help bring the project online, GIB will be providing £16.9 million of mezzanine loans and making a £13.2-million equity investment via its UK Waste Resources & Energy Investments (UKWREI), managed by the Foresight Group.
The remainder of the £42.1 million mezzanine finance is being provided by GCP Infrastructure Investors (GCP).
Investec Bank plc (Investec Bank) and Eksport Kredit Fonden (EKF) have together committed £42.5 million of senior loans, while Stobart and BWSC will both take an equity stake with commitments of £9.8 million and £2.6 million respectively. (BWSC also announced today (24 November) that it will be building its second biomass plant in England, a 44.2-megawatt straw-burning facility in Snetterton, East Anglia.)
The Widnes project has brought together the same investors who are behind the construction of the 15-megawatt CHP Evermore Renewable Energy project in Northern Ireland, announced by GIB and Foresight in July 2013.
‘Improving energy efficiency through innovation’
Speaking of the investment, GIB CEO Shaun Kingsbury, said: “This project is a great example of how we can build the next generation of energy and waste management infrastructure in a way that is green, cost-effective and highly efficient. This type of innovative infrastructure adds to our domestic electricity generation and reduces our carbon emissions.
“What is particularly important is that these projects are replicable and scalable. The Widnes project has been brought together by the team that supported a similar project in Northern Ireland, and I hope we will see many more.”
Christian Grundtvig, Director of Project Development & Investments of BWSC A/S, said that the company was “very proud of being part of the development team who have taken the Widnes project to financial close”, while Adam Gordon, Co-head of Power Finance at Investec, said that the project “really shows that experienced, capable partners working together can find solutions to deliver complex projects”.
The news has been welcomed by Business Secretary Vince Cable, who said: “This investment in one of the largest green power plants in the UK will create more than 200 local jobs, cut greenhouse gas emissions and generate enough renewable energy to power 35,000 homes a year.
“The project would not have happened without the Green Investment Bank – it is at the heart of our industrial strategy, improving energy efficiency through innovation and creating sustainable jobs and growth.”
The GIB was launched in November 2012 with £3.8 billion of funding from the UK government to ‘accelerate the UK's transition to a greener economy, and to create an enduring institution, operating independently of government’.
Environmental concerns
Environmental campaigners, however, have been highly critical of GIB’s investments in large-scale biomass power stations. Biofuelwatch and UK Without Incineration Network protesters even targeted GIB’s first annual review, at the same time as publishing an open letter to Lord Smith, Chair of GIB, calling on the organisation to ‘stop funding big biomass’.
The protests at GIB’s annual review were not the first time that environmental groups have raised concerns about large-scale biomass installations. Indeed, biomass plants have been a source of contention in the UK, after the RSPB, Friends of the Earth and Greenpeace warned that burning virgin biomass stock, such as whole trees, can be ‘dirtier than coal’. The groups’ report also refuted the argument that biomass is ‘carbon neutral’ because trees capture carbon as they re-grow, pointing out that it can take decades or centuries for new trees to offset carbon emissions from burning whole trees. Instead, the groups would like to see government re-focus policy to ensure that small-scale plants that use sustainable sources are prioritised.
However, the Department of Energy and Climate Change’s ‘Renewables Roadmap’ estimates that by 2020, biomass could potentially provide between 26 and 42 per cent of renewable energy in the UK, and government expects to provide a subsidy for biomass of between £442 million and £736 million (though it is still working out its long-term policy).
Find out more about the Green Investment Bank or the Widnes CHP plans.
