Government guarantees £48.5m for biomass plant
Artist's impression of the Speyside Biomass Power plant.
The Treasury has said it will guarantee bonds worth up to £48.5 million for Scotland’s Speyside Biomass Power project, to help ensure it comes online.
The guarantee, part of the UK Guarantees Scheme, will see governmentact as a loan guarantor to the project, as part of its efforts to ‘create the right conditions for more investment in our infrastructure’ (especially those regarding energy, transport, communications, waste and housing) that may have otherwise been delayed due to ‘adverse credit conditions’.
Of the remaining £26.5 million needed to fund the project, £13.5 million will come from infrastructure investors John Laing (its first investment in a biomass project), with a further £13 million of equity coming from the Green Investment Bank (GIB).
This is the most recent investment GIB has made in whisky distilleries, after it invested in a similar biomass project at the Aberfeldy Distillery in Perthshire, earlier this year.
Biomass project details
Located at a new whisky distillery at The Macallan Estate in Moray, Scotland, the project will burn ‘sustainable forestry by-product’ sourced from a consortium of local growers and forest industry suppliers (including Stobart Biomass Products Ltd. and UPM Tilhill) to produce heat (in the form of steam) for the whisky-making process and energy for the local area.
It is estimated that once commissioned in 2016, the combined heat and power (CHP) plant near Craigellachie, Moray, will annually generate 87.4 gigawatt hours (GWh) of electricity for the National Grid – enough to power more than 20,000 homes – and 76.8 GWh of renewable heat for The Macallan distillery (providing 90 per cent of all the steam needed in the distillation process).
According to the project developers, Estover Energy Ltd, an Edinburgh and London based company specialising in developing biomass CHP projects, the carbon saving brought about by the biomass plant will equate to 42,000 tonnes of carbon dioxide emissions (tCO2e) per annum, the equivalent to taking over 18,000 cars off the road.
Indeed, despite some studies showing that the burning whole trees in biomass facilities can be ‘dirtier than coal’, the developers have said that by using biomass to generate heat instead of natural gas, the distillery will reduce its greenhouse gas emissions by over 17,500 tCO2e, equivalent to taking almost 8,000 cars off the road.
The project will create 123 jobs (100 in peak construction and 23 permanent) and support one of Scotland’s export industries.
‘Giving companies the confidence to invest’
Speaking of the government’s guarantee of the project,Chief Secretary to the Treasury, Danny Alexander said: “The Speyside guarantee is fantastic news for Scotland’s economic future. It will power thousands of homes with clean energy, and also support the whisky industry, a cornerstone of our economy, which brings in billions for Scotland and employs over 10,000 people.
“Today, over £1 billion of infrastructure projects have now been brought forward as a result of the UK guarantees scheme and £36 billion worth of projects are pre qualified. Our action is creating the right conditions for more investment in our infrastructure and helping to build a stronger economy.”
Business Secretary, Vince Cable added: “This investment in Speyside will not only help secure jobs, boost a vital industry and support the local supply chain but also generate renewable energy for homes in Scotland. Through our industrial strategy we are working in partnership with business to give companies the confidence to invest, securing green jobs and a stronger UK economy.
The Secretary of State for Scotland, Alistair Carmichael said he was “delighted that the UK Green Investment Bank is investing in Speyside” as it “spans two of Scotland’s great strengths – renewable energy and whisky”.
Graham MacWilliam, General Manager for Distillation, said that “the new distillery, which will benefit from the heat generated, is creating further employment opportunities through the commencement of this project in addition to delivering environmental and economic benefits”.
Find out more about the Speyside Biomass Power project.