GIB indicates likely investment winners in waste sector

PFI/PPP and merchant waste projects are to be singled out as frontrunner contenders for capital injection by the Green Investment Bank (GIB), it was confirmed this week.

The development follows the appointment of two specialist fund managers last week who will oversee £80m of investment in small scale waste infrastructure – mainly sub-£30m projects that could qualify for GIB support of £15m or less.

Adrian Judge, executive director of UK Green Investments – which will be managing transitional funds while the bank awaits state aid approval – said that the Government had taken a change of tack in concentrating on PFI/PPP projects that were nearing financial close.

“They weren’t originally envisaged to be part of our scope, but the practicalities of the finance markets and the withdrawing of finance from certain banks changed that,” he said.

Judge added that the bank would also be looking at merchant waste facilities and seeking ways to help get them financed.

“There are some perfectly good [merchant] projects which are struggling around technology risk or market risk that need to secure finance to make them economically viable,” he maintained, adding that he hoped the bank’s role could pave the way for other stakeholders to invest in the waste industry, such as pension funds.

Speaking at the letsrecycle awards in London this week (May 1), Judge said that the waste sector was being prioritised as it was identified as “having technologies and solutions that were commercially viable, but for various reasons was not attracting the investment needed”.

State aid approval for the GIB is expected towards the end of the year, but in the meantime a leading cleantech investor has announced its intention to invest over £14m in three waste energy recovery projects.

Ludgate Environmental Fund has committed £7m to Tamar Energy to fund the development of food and mixed waste anaerobic digestion plants. Tamar is developing a UK network of more than 40 plants with capacity to generate 100MW of electricity over the next five years.

The company has an advanced pipeline of projects, one of which is with Sainsbury’s. Ludgate will be investing alongside other investors including RIT Capital Partners, the Duchy of Cornwall and Fajr Capital.

Ludgate will also be ploughing £5.3m into a waste heat recovery project with German firm Micropelt. Micropelt’s thermal energy harvesting technology uses waste heat to generate electricity, displacing batteries in automated equipment for a range of industrial and domestic applications.

Scottish firm Ignis Biomass will benefit from Ludgate’s third investment of £3.1m to construct a biomass plant in Wick, Scotland to replace oil-fired heat production for the district heating network which is to be bought from the Highland Council.

Maxine Perella

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