Linklaters advises on new £138m green energy plant

Linklaters has advised Cramlington Renewable Energy Developments Limited on the development and ECA-backed project financing of a wood-fuelled biomass power plant, located in the North East of England.  

UK Green Investment Bank plc (GIB) and John Laing Investments Limited (JLI) have committed £48m of equity to a new £138m renewable energy facility, developed by Estover Energy. GIB will make a £21m investment in the project, with JLI investing in a stake worth £27m. Barclays will provide the remainder of the funding as debt, 60% of which will be guaranteed by the Danish export credit agency EKF. 

The biomass Combined Heat and Power (CHP) plant in Cramlington, Northumberland, will generate 213GWh of renewable electricity annually – enough to power 52,000 homes. It is also expected to reduce greenhouse gas emissions by circa 56kt CO2e annually, the equivalent of taking 25,000 cars off the road during its lifetime. 

Much of the generated electricity will be purchased by Statkraft under a long-term Power Purchase Agreement (PPA) neighbouring pharmaceutical manufacturers, Aesica and MSD will also benefit from the plant’s output. The fuel used at the plant will be low grade wood, the type unsuitable for timber production, which will be sourced from within a 50 miles radius of the facility. 

Richard Coar, Projects partner at Linklaters, said: “We are very pleased to have been able to assist the Sponsors in closing another biomass transaction in the UK. The Cramlington transaction follows on the back of the successful IUK guaranteed bond financing of the Speyside transaction just over a year ago. It is a real testament to the Sponsors that they have been able to drive this transaction to close. It also demonstrates that, with the right regulatory support, these transactions, which provide both renewable heat and power and do so on a baseload basis, would continue to be viable.”    

The Linklaters LLP team, which advised on all aspects of the project and finance documentation, was led by Richard Coar and included Elizabeth Charlesworth, Rasha Sami and Jia-Yi Tay.  This is the third biomass transaction that Linklaters have helped to successfully close over the last 12 months. Linklaters is also currently advising on another seven biomass mandates in Europe.

 For further information, please contact Surinder Sian on +44 207 456 4842