VH Global funds new UK CHP plants – VH Global Sustainable Energy Opportunities has announced a £78m programme commitment to fund innovative net zero flexible power generation projects in the UK, which support the energy transition towards more renewable power generation.
The fund’s investment will fund the construction of two UK-based combined heat and power (CHP) plants. These will combine high-efficiency, gas-fired engine technology with a carbon capture and re-use system to provide a clean, net-zero, flexible and dependable electricity solution. The combined capacity will be 45MW. The assets are at the ready-to-build stage, with full planning permissions and commercialisation plans in place.
The first plant will begin construction in Q4 2021 in Nottinghamshire, with a second plant in County Durham expected to begin construction by Q2 2022. Once operational, the plants will be contracted under long term power purchase agreements (PPAs) with well-known energy companies for the power output, and long-term CO2 offtake contracts with large industrial companies for the carbon. Together, these revenue arrangements will provide the plants with downside risk protection and visibility of revenues for the medium-to-long term. The unlevered returns are expected to exceed the target return of 10% and target annual dividend yield of 5%.
Once operational, the projects will produce highly efficient flexible power, which will help secure the supply of power within the UK electricity grid and contribute to the growth in renewable generation capacity. At present, energy security is predominantly provided by higher carbon unabated sources such as coal fired power plants and large, gas fired generators. The projects will therefore play an important role in the development of a more resilient and sustainable power infrastructure in the UK for years to come.
Victory Hill will be partnering with Landmark Power Holdings Ltd. a specialised developer and operator of gas-fired power plants, and the owner of these unique and highly differentiated plant designs. The team’s principals bring a wide range of expertise from past roles at leading firms such as PowerGen, RWE, Sterling & Wilson, British Energy and JP Morgan.
The projects will be supported by the established engineering, procurement, and construction capabilities of UK-based Smith Brothers Contracting Limited a specialist high voltage engineering and contracting group.
To date, 92% of the net proceeds raised on VH Global’s IPO have been committed or deployed.
[45MW is not enormous in the scheme of things but the carbon capture element of this, the long-term PPA (although long-term isn’t specified) and the ability to deliver baseload power are all positive aspects that we welcome.]
GSEO : VH Global funds new UK CHP plants