Powering up with anaerobic digestion assets: a summer of bioenergy platforms

The new UK prime minister, Liz Truss, is raising eyebrows in the sustainable energy community this week by placing Jacob Rees-Mogg – who in April said “every last drop” of oil should be extracted from the North Sea – in charge of the UK’s energy policy.

But on the private equity side, there is increasing support for renewables. While the race for the leadership of the UK Conservative Party – and thus the country – took place over the summer, PE Hub Europe reported on two bioenergy platform launches and multiple deals, underlining the demand for anaerobic digestion assets.

In late July, Palisade Real Assets announced the acquisition of renewables asset manager Eco2 Management Services (EMSL), while teasing the launch of a dedicated bioenergy platform.

Headquartered in Cardiff, EMSL is an asset manager that develops and manages renewable assets. Its activities include biomass, wind, solar, anaerobic digestion, greenhouses and other emerging technologies.

Embedding the asset management and development capability of the EMSL team will “will help drive high quality dealflow”, according to Stephen Burns, Palisade Real Assets’ CEO.

Less than a month later, Sydney-headquartered Palisade Real Assets fully announced the launch of its dedicated UK bioenergy platform BioticNRG, with the acquisition of Malaby Biogas. Based in Warminster in the UK, Malaby owns and operates Bore Hill Farm Biodigester, an organic waste anaerobic digestion technology plant. The company recycles food waste into renewable energy and sustainable biofertiliser for local farmers.

Malaby’s managing director, Thomas Minter, who joined Palisade Real Assets’ ranks as part of the deal, said BioticNRG has an “exciting pipeline of investment opportunities across the value chain”.

Another platform launch, announced nearly in tandem with BioticNRG, was Earth Capital’s Sustainable Energy Holdings (SEHL). The new entity formed via the merger of four of Earth Capital’s portfolio companies: Eccleshall Biomass (based in Eccleshall), Limelight Energy (based in County Durham) and two firms based on the Isle of Wight, Black Dog Biogas and Bright Light Energy. All four firms are low-carbon bioenergy generation assets.

In addition to the four merged firms, Earth Capital is open to opportunistic new assets, head of investment and director, Avent Bezuidenhoudt, told PE Hub Europe. Bezuidenhoudt highlighted the potential of biomass, particularly given Russia’s invasion of Ukraine and its effect on global gas supplies. “Perhaps biomass isn’t quite as glamorous as the wind farms and the solar farms, but it has to form part of a bigger strategy,” she said.

More to come

In late April, Copenhagen Infrastructure Partners (CIP) announced the first close of its mid-cap green fuel strategy, CI Advanced Bioenergy Fund I (CI ABF I). The fund reached €375 million in commitments at first close, indicating hunger for anaerobic digestion assets on the LP side. The vehicle has a target size of €1 billion.

Before the close, CIP secured a portfolio of development stage advanced bioenergy projects in Europe. The fund will engage with infrastructure projects before the start of construction and aims to de-risk investments through project design, partner selection and contracting.

Earth Capital approaches projects in a similar fashion. SEHL will implement a buy-and-build strategy to add new assets. “I think there are some unloved, isolated, forgotten assets which need a strong management team,” Bezuidenhoudt explained.

While Bezuidenhoudt does not believe bioenergy will replace wind or solar power, she believes it can be used to ensure the base load stays secure. “We’ve known for the last couple of years that there was a risk around energy security, but this year shocked everyone,” she said.