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Octopus Investments has completed a £174 million refinancing of a biomass and landfill gas portfolio.
It is thought to be the first major UK biomass deal this year and is described as one of the “largest” transactions of its kind.
The company has refinanced the Melton Renewable Energy UK Limited (MRE) portfolio with a £152 million term loan, £10 million revolving credit facility and £12 million debt service reserve facility.
Eddie Wilkinson, chief executive of MRE, said: “This represents a positive step and is testament to the operational team which continues to deliver outstanding performance, dealing with vast quantities of agricultural residues and making a significant contribution to the UK’s renewable energy sector.”
Octopus has a £2.6 billion portfolio of clean energy assets, which total 2,026MW. It acquired the biomass portfolio, which includes five biomass plants and 22 landfill sites, on behalf of its investors in 2015.
All the biomass projects are dedicated biomass plants, as opposed to co-firing facilities, sourced from a range of UK sustainable feedstock including poultry litter, meat and bone meal, horse bedding, and forestry wood chips.
The projects have a combined generational capacity of 172MW which makes up the UK’s largest independently owned biomass and landfill gas portfolio.
Octopus Investments is part of the Octopus Group, which also includes Octopus Energy. The energy supplier announced a partnership with Marks and Spencer earlier this month. The retail giant will part ways with SSE in September after nine years working together.
Matt Setchell, head of energy investments at Octopus, 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.
“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 to drive value.
“More widely, this is a boost to the UK biomass industry, which plays an essential role in extracting maximum value from organic waste streams and diversifying our energy mix. The involvement of major bluechip lenders in the deal further highlights the confidence in the future of biomass in this country.”
The funding package was provided by six major banks.
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