Railways scheme among DB backers in biomass plant acquisition

Greencoat’s takeover of the combined heat and power plant — which uses a blend of straw and sustainable woodchip to generate power and useful heat — was funded by the £30bn RPS alongside Greencoat’s own Renewable Income fund, which counts Local Government Pension Scheme member funds and private sector DB plans among its investors.

Greencoat declined to disclose the terms of the deal, but said it would run the plant with “involvement from investors on strategic matters”.

The manager touted the plant’s benefits to the local economy as a way for farmers to sell straw. Sleaford also supplies heat to a local swimming pool and other facilities in the community, while its projected cash flows will be protected by the government for around 15 years.

Minal Patel, partner at Greencoat Capital, said: “Sleaford is a high-quality asset that will deliver predictable cash flows and significant inflation protection over the long term, helping our clients meet their liabilities. It also plays an important role in the area, supplying sustainable heat to local community facilities and providing arable farmers with a reliable offtake for their excess straw. We look forward to assuming stewardship of the plant as part of our strategy to build our portfolio of diversified renewable energy investments.”

RPMI Railpen, the investment manager for the RPS, said the plant would be an important diversifier to its real estate, wind and solar assets.

Lewis Vanstone, deputy portfolio manager of Railpen’s Long-Term Income Fund, said: “The project is an ideal match for the Long-Term Income Fund’s continued focus on investing in a diversified portfolio with sustainable, long-dated and asset-backed income characteristics, particularly in the current environment. We hope to continue playing an active role in the UK’s transition to a low-carbon economy while securing stable cash flows for our members.”