GIB announces investment in biomass CHP project

By U.K. Green Investment Bank | August 18, 2014

John Laing and the U.K. Green Investment Bank have announced plans to invest in a new £74 million ($123.78 million) green energy facility in Speyside, Scotland, developed by Estover Energy Ltd.

The new biomass combined-heat-and-power (CHP) plant near Craigellachie, Moray, will generate 87.4 GWh per annum of renewable electricity – enough to power more than 20,000 homes. It will also generate 76.8 GWh per annum of renewable heat. Together, the carbon saving equates to 42,000 tons of CO2 equivalent (tCO2e) per annum, the equivalent to taking over 18,000 cars off the road.

The project will create 123 jobs (100 in peak construction and 23 permanent) and support one of Scotland’s most important export industries.

The new CHP facility will contribute to reducing the cost of energy at The Macallan distillery by providing 90 percent of all of the steam needed in the distillation process. By using biomass to generate heat instead of natural gas, the distillery will reduce its greenhouse gas emissions by over 17,500 tCO2e, equivalent to taking almost 8,000 cars off the road.

John Laing and GIB intend to make a £26m equity investment in the project. The remainder of the funding, in the form of debt, will come from a bond to be issued by the project company and listed on the London Stock Exchange. When issued, the bond will be guaranteed by Infrastructure U.K., part of HM Treasury. The bond marketing commenced today. GIB and John Laing’s investment is conditional on the successful conclusion of the bond process.

The project is being developed by Estover Energy, an Edinburgh and London based SME specializing in developing biomass CHP projects. The plant will be fuelled with sustainable forestry by-product sourced from the local area, one of the UK’s most productive forestry areas. A consortium of local growers and forest industry suppliers including Stobart Biomass Products Ltd. and UPM Tilhill will supply the plant.