Octopus utilises Nest fund to acquire biomass portfolio

Octopus Renewables has acquired two biomass plants in one of its first deals to be backed by the government’s workplace pension scheme.

Octopus Group’s clean energy investment arm has taken on two operational biomass plants with a combined capacity of 85.7MW from a joint venture by Copenhagen Infrastructure Partners and Burmeister & Wain Scandinavian Contractor.

The value of the deal was not released.

The two plants, located in Brigg, North Lincolnshire and Snetterton, East Anglia, have been acquired with investment provided by funds managed by Octopus, one of which includes the government’s automatic pension enrolment scheme, Nest. Last month Nest announced it expects to invest around £250 million under the partnership over the next year and potentially up to £1.4 billion by the end of the current decade.

Both facilities at Brigg (40.8MW) and Snetterton (44.9MW) are fuelled by a mixture of locally sourced biomass feedstocks. Octopus will manage both sites, adding to the five biomass plants that it currently manages across the UK.

Peter Dias, investment director at Octopus Renewables, said: “We’re delighted to grow our portfolio of biomass power with these two plants – marking one of the largest deals of its kind in the UK. As one of the UK’s leading specialist investors in energy generation, we view biomass as playing a crucial role in diversifying the UK’s energy mix and supporting the UK farming industry through the sourcing of feedstock fuels.

“The acquisition marks a significant step for our fund that has Nest as a cornerstone investor. The fund benefits from a healthy pipeline that will help target strong and stable returns. We see institutions and pension funds as playing a vital role in hastening the energy transition and helping to unleash pent up capital to fight climate change.”

Stephen O’Neill, head of private markets at Nest, added: “We’re delighted to have our account with Octopus Renewables up and running, investing our members’ money into something that should provide steady returns for years to come.

“Biomass is an exciting technology and energy crops, such as miscanthus, could play a significant role in the UK hitting its carbon emission targets. We want to continue investing in the energy of the future and looking ahead for what opportunities will be presented in the drive to the low-carbon economy.”

It was revealed last month that Octopus Renewables is to be acquired by its sister company, Octopus Energy, to create Octopus Energy Generation.