£14.8m energy plant investment signals bright future for green gas
- Credit: Archant
A major investment in an anaerobic digestion (AD) plant on the Norfolk-Suffolk border signals the long-term viability of green gas, an expert said.
Listed environmental infrastructure fund JLEN has announced the acquisition of Warren Power Ltd, which runs an AD plant at Methwold, near Thetford.
The £14.8m deal marks the second AD plant in East Anglia to be bought by JLEN, which also owns the Egmere Energy plant in north Norfolk.
JLEN says its investment policy is to "invest in environmental infrastructure projects that have the benefit of offering its investors long-term, predictable, inflation-linked cash flows supported by long-term contracts or stable regulatory frameworks".
Chris Tanner, an investment advisor to JLEN, said AD plants fit this bill.
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AD works by breaking down organic material using micro-organisms to produce a methane-rich biogas that can be used as fuel to provide heat and power on site or, as is predominantly the case with the Methwold plant, to inject into the national gas grid.
Mr Tanner said AD plants are popular in farming areas such as East Anglia because they offer farmers the ability to derive an income from waste products which are fed into the digester, such as sugar beet pulp, grain husks and animal slurry, as well as break crops like rye and maize.
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The Methwold AD plant requires around 40,000 tonnes of this feedstock per annum and the digestate by-products can also be used as a fertiliser and soil improvers.
According to industry web portal www.biogas-info.co.uk, there are more than 40 agricultural AD plants in East Anglia and several hundred spread across the country.
"Generally speaking, the country is doing well in generating renewable electricity, mainly driven by the off-shore wind sector," said Mr Tanner.
"But we are doing less well when it comes to reducing the carbon from our heat and transport needs. Green gas can make a contribution here both in terms of heating and transport as there are examples of fleets being run on green gas."
Mr Tanner said AD is "never likely to rival wind and solar" in its overall contribution to reducing the country's carbon footprint but, unlike these other renewable energy technologies, new-build AD still attracts subsidies in the form of the Renewable Heat Incentive (RHI) and Feed-in-Tariff (FiT) schemes - albeit at a lower level than the older Methwold AD plant that attracts 7.24p per kWh under RHI.
He said these incentives still offer opportunities to build new plants although JLEN prefers to buy operational plants that are already earning revenues.