SDCL Energy Efficiency buys CHP portfolio – SDCL Energy Efficiency Income Trust has bought a portfolio of energy efficiency projects in the UK from GET Solutions, a leading UK energy solutions provider for businesses. The initial cash consideration is approximately £5m to be invested over the next four months to acquire an initial portfolio, with an estimated additional £12m to acquire a follow-on pipeline of projects in the UK over the next year.
The initial portfolio of 15 projects, comprises four operating projects, two installed projects and nine ready to build projects. The installed and ready to build projects are expected to be operational within 4 months. The projects involve highly efficient combined heat and power (“CHP”) systems installed at Holiday Inn and Crowne Plaza hotels, which are both brands of the Intercontinental Hotel Group. The hotels are owned by a leading US private equity group and are managed by Interstate Hotels and Resorts, a leading hotel operator. There is a follow-on pipeline of up to 51 highly efficient CHP projects in the UK hotel sector.
The projects have all been developed by GET Solutions, which has served as a specialist provider of energy services to over 40,000 business clients over the last 20 years. The projects are installed and maintained by 2G Energy, an internationally leading manufacturer of CHP plants. The projects all meet the standards for ‘good quality’ or high efficiency CHP and help the hotels to reduce carbon emissions as well as energy costs, consistent with SEIT’s objectives to deliver solutions that are cheaper, cleaner and more reliable.
The projects in the initial portfolio have been designed to provide the base-load energy generation to meet the operational needs of the hotels, irrespective of their levels of occupancy. The contractual structure of the projects that has been negotiated with GET Solutions results in predictable revenues with potential for upside for SEIT in the event that certain levels of consumption are achieved. SEIT is not taking development or energy price risk and demand risk is substantially mitigated on the downside. SEIT will own the project assets that provide essential services to the buildings throughout the 15-year life of the project contracts. SEIT also benefits from a package of performance and revenue guarantees from GET Solutions as well as protective termination provisions. GET Solutions will continue to provide operational management to the projects during the operational phase.
SEIT will also benefit from additional rights to invest in a substantial pipeline of more than 100 energy efficiency installations with GET Solutions in the UK. This pipeline involves up to £30m of investment in CHP, solar and storage projects across multiple high-quality commercial and industrial counterparties in the logistics, senior living and infrastructure services sectors.
Increase in Revolving Credit Facility
In July the company, through its subsidiary SEEIT Holdco Limited, increased its Revolving Credit Facility (“RCF”) with Investec Bank from £25m to £40m on existing terms. The RCF expires in June 2022 and includes an accordion function for a further £25m increase on an uncommitted basis.
SEIT : SDCL Energy Efficiency buys CHP portfolio