Brigg: Investment in biomass fired power plant in Lincolnshire

Burmeister & Wain Scandinavian Contractor A/S (BWSC) and PensionDanmark have formed a joint venture, BWSC PLC, which will build, own and operate power plants internationally.

The company’s initial investment of GBP 160m will go to a new biomass power plant, Brigg Renewable Energy Plant, which is to be built in Lincolnshire, in the east of England.

BWSC and PensionDanmark have joined forces to build, operate and own a brand new biomass power plant in Lincolnshire, in the east of England. They have committed to the investment of a total of GBP 160m via the BWSC PLC joint venture established by the two parties.

The new power plant will have a capacity of 40 MW and will be primarily fuelled using locally sourced straw. The plant is expected to produce enough energy to cover the total consumption of 70,000 households and will result in an annual CO2 emissions reduction of approx. 300,000 tonnes.

BWSC’s share of the investment in the new power plant is GBP 32m and they will be in charge of building, operating and maintaining the plant, which is expected to be operational from early 2016.

BWSC is a global leader with more than 30 years’ experience in developing, building and operating power plants, while PensionDanmark has specialised in direct investments in energy-related infrastructure. The BWSC PLC joint venture provides the necessary framework for establishing further new power plants in future.

“This is a breakthrough for Danish energy technology exports. The financial crisis has challenged the success of Danish businesses exporting sustainable energy plants. Now, BWSC and PensionDanmark are forming a joint venture with the aim of building, owning and operating select biomass power plants internationally. This adds more strings to our bow. With this model, not only will we be market leaders in power plant technology, but we will also own, operate and finance new plants in collaboration with PensionDanmark. This boosts our competitiveness considerably and establishes Danish energy technology on the world map,” says Anders Heine Jensen, CEO, BWSC.

“We have found a model that provides PensionDanmark an attractive return with limitedrisk. The risk is limited by the fact that the majority of PensionDanmark’s investment is in the form of loans and the bulk of earnings are regulated, with the costs fixed via long-term contracts. We are looking forward to working with BWSC, whose established expertise meets our high standards for industrial partners in this type of joint venture,” says Torben Möger Pedersen, CEO, PensionDanmark.

PensionDanmark’s share of the investment in the new power plant is GBP 128m and will be funded via the Copenhagen Infrastructure I fund, which was established in 2012 and is administered by Copenhagen Infrastructure Partners (CIP). PensionDanmark is the sole investor in the fund with DKK 6bn.

“Over the years, BWSC has proven to be a market leader in building medium-sized power plants, so we see considerable potential in the partnership. A closer and more direct  collaboration between financial and industrial players in the energy sector has significant prospects,” says Christian Skakkebæk, partner, Copenhagen Infrastructure Partners.

Following on from the much awaited announcement by the British Government regarding the UK Biomass Cap, the investment commitment was finally agreed between all parties on the 8th August.

Facts about the project:

The Brigg Renewable Energy Plant has been developed by the leading British renewable energy company, Eco2, with whom BWSC collaborates on a number of projects, including a woodchip-powered plant in Wales and a similar straw-powered plant, which BWSC is currently building in Sleaford, Lincolnshire.

The new biomass power plant is being built by BWSC who will also be responsible for operation and maintenance of the plant for a period of 15 years. The power plant will be primarily straw-fuelled and will have a capacity of 40 MW. The energy produced by the plant will correspond to the total consumption of 70,000 households and will result in an annual CO2 emissions reduction of approx. 300,000 tonnes.

The plant, which is expected to be operational in early 2016, will be based on energy technology developed in Denmark. The core of the plant will be a boiler primarily used for firing straw from the Danish High-Tech company BWE. The steam created by firing straw will be conducted to a turbine generator, which will produce electricity for households and businesses in the vicinity.

Facts about the parties:

About BWSC: Burmeister & Wain Scandinavian Contractor A/S (BWSC) is a Danish engineering and contracting firm which develops, builds and operates high-performance biomass, biogas and diesel power plants. The majority of the projects are supplied as turnkey systems. BWSC has supplied more than 170 power plants to 52 countries all over the world. Currently, BWSC has ongoing activities in Suriname, Kenya, Panama, Lebanon, Northern Ireland and England. In 2012, BWSC had a turnover of DKK 1.1bn. Although established independently in 1980, the company has been building and installing diesel-powered plans since 1904, as the stationary engine division of Burmeister & Wain’s (B&W). In 1990 BWSC was acquired by Japanese-owned Mitsui Engineering & Shipbuilding Co. Ltd.

About PensionDanmark: PensionDanmark A/S manages labour market pensions under collective and corporate agreements and health care products on behalf of 630,000 members in 25,000 businesses within the private and public sectors. PensionDanmark is owned by its customers, and profits belong entirely to the members. Premium income totalled DKK 10.7bn in 2012, and the members’ savings total more than DKK 145bn. PensionDanmark currently has DKK 6bn directly invested in infrastructure and expects to invest a further DKK 12bn in infrastructure over the next four years. The majority will be in energy-related infrastructure and half will be invested via Copenhagen Infrastructure I.

About Copenhagen Infrastructure Partners K/S (CIP): CIP was established in October 2012 with PensionDanmark as seed investor of DKK 6bn in CIP’s first fund, Copenhagen Infrastructure I K/S. The management company is owned and operated by our partners: Jakob Baruël Poulsen, Rune Bro Róin, Torsten Lodberg Smed and Christian Skakkebæk, all of whom have significant expertise and many years’ experience in infrastructure investments as well as corporate sales and acquisitions.

About Eco2: Established in 2002, Eco2 is a leading renewable energy project developer specialising in initiating, developing, financing and operating renewable energy projects throughout the UK and Europe. Initially focused on onshore wind and landfill gas projects, since 2006, Eco2 has concentrated on developing biomass projects. Over the last 20 years the management team have unrivalled experience in the development, construction and operation of over 390MW of biomass projects throughout the world and the Eco2 Team have been involved in over 60% of the UK Dedicated Biomass Capacity.

About Copenhagen Infrastructure Partners

Copenhagen Infrastructure Partners P/S (CIP) is a fund management company focused on energy infrastructure including offshore wind, onshore wind, solar PV, biomass and energy-from-waste, transmission and distribution, and other energy assets like reserve capacity and storage. CIP has approximately 110 employees and offices in Copenhagen, Taipei, New York, Tokyo, Utrecht, and London.

CIP manages six funds and has more than EUR 8 bn under management. CI I, CI A I and CI A II have PensionDanmark as founding- and sole investor. CI II has 19 Danish and international institutional investors and CI III has 42 institutional investors from the Nordics, Continental Europe, the UK, Israel, Asia, Australia, and multi-lateral organizations e.g. EIB. CI NMF I has 15 investors from the Nordics and Continental Europe.

CIP was founded in 2012 by senior executives from the energy industry in cooperation with Pension Denmark.