Triple Point Energy Efficiency Infrastructure acquires Scottish hydroelectric portfolio – Triple Point Energy Efficiency Infrastructure (TEEC) has acquired a portfolio of operational, ‘run of the river’ hydroelectric power projects in Scotland for an aggregate consideration of £26.6m (excluding costs). This investment was identified in the IPO prospectus and formed part of the original pipeline. This follows TEEC’s announcement on 29 September 2021 that it had secured exclusivity to acquire a portfolio of hydro assets.
The portfolio acquired comprises six hydro assets with a total installed capacity of 4.1MW, all of which have five years or more of operational performance history. The company continues to have exclusivity to acquire a further three hydro assets, valued up to £19.7m and it is expected that these additional projects will be acquired early next year. The hydro assets benefit from the ‘Feed in Tariff’, government supported pricing that provides a payment for every kWh of electricity produced, and a price floor. To the extent the hydro assets are able to secure prices higher than this, they are able to enter power purchase agreements with commerical offtakers.
The assets were owned by entities advised by the manager and, as a result, additional measures were implemented and carefully monitored to manage any potential conflict of interest appropriately, including dedicated buy and sell side teams within the manager and obtaining an independent third-party valuation. In accordance with the IPO prospectus, the board were required to approve the transaction and were satisfied by the conflict management procedures put in place.
The hydro assets have a remaining FiT period of around 14 years, and a useful life beyond the remaining FiT period of a further 20 years, during which time they would be operated as unsubsidised assets selling power to the grid through PPAs. They are subject to a long-term lease with the local landowners, the majority of which are with Forestry and Land Scotland, which cover the expected useful life of the asset, with rent based on a percentage of gross income of the asset. They are also subject to an operations and maintenance contract with Green Highland Renewables, one of the UK’s leading developers and services provider for hydropower schemes.
TEEC has identified a number of opportunities to optimise the efficiency of the hydro assets, in particular, to help to regulate the flow feeding existing intake, protecting against periods of unusually high or low rainfall, thus increasing overall generation. Such projects will also be valuable in regulating power generation in the future when the assets are subject only to PPAs.
John Roberts, the TEEC’s chairman, said: “I am delighted that TEEC has acquired the portfolio of Hydro Assets which were first identified ahead of our IPO. Not only does this portfolio deliver in terms of avoiding carbon emissions, the Investment Manager has identified a number of opportunities to improve the performance of the assets further. We look forward to closing the next phase of this investment soon.”
TEEC : Triple Point Energy Efficiency Infrastructure acquires Scottish hydroelectric portfolio