Earth Capital Limited, a UK-based growth equity impact investor, has announced the formation of Sustainable Energy Holdings Limited (SEHL), a new company created via the merger of four low-carbon bioenergy generation assets in its portfolio.
Biomass-fuelled renewable energy plants Eccleshall Biomass, Limelight Energy, Black Dog Biogas and Bright Light Energy will now be led by a single management team, focusing on operational performance and a consolidation of financial and commercial functions, according to an announcement.
The new company is expected to have between GBP 8m-GBP 10m of turnover this year, a figure that is expected to grow to GBP 12m-GBP 14m within a year, head of investment and director at Earth Capital, Avent Bezuidenhoudt, told Unquote.
Earth Capital is now developing briquettes to be burnt in its plants’ logs, following government restrictions around the burning of wood, which is expected to provide a significant enhancement to SEHL’s turnover, she said.
After developing these four plants as individual sites, the GP wanted to strengthen their performance with the support of a strong single management team, Bezuidenhoudt said. “The reality is that these small individual sites simply cannot afford to make such changes on their own,” she said.
Craig Ibbetson, who had been the director of the Eccleshall Biomass plant since 2019, will be the CEO of SEHL, according to the announcement.
Many renewable energy sites across the UK might see an increase in their revenues due to current high energy prices, but as soon as they drop again, they tend to be loss-making, according to Bezuidenhoudt. As bioenergy output will become increasingly important in a volatile energy market dominated by wind and solar energy, “what you need is a really good management team to come in and tweak that,” she added.
Earth Capital has converted debt in some of the firms into equity over the past year, and it has invested a further GBP 4m in the new company to make further enhancements to the sites and to kick off SEHL’s buy and build strategy, said Bezuidenhoudt.
SEHL aims to improve its performance via additions to the platform’s asset base through the acquisition and development of new plants and the improvement of existing assets, she said. Management has identified a pipeline of possible opportunities to expand the portfolio through the addition of high-potential assets within the UK’s biomass and waste sectors. Around four distinct projects are planned for this year and next year, but management will be opportunistic when it comes to attractive opportunities, Bezuidenhoudt told Unquote.
The GP will target smaller sites within the 1MW-4MW range, initially inside the UK, said Bezuidenhoudt. The goal would be to enhance these small plants by finding new ways to produce energy, using steam or hot water in a different way for instance.
Earth Capital is now exploring developments around the theme of carbon capture to add on its biomass sites, as well as around ways to replace feedstock with food waste.
The sponsor is also in talks with factories and production sites that are willing to be operated and managed by the GP, she said. “There are some really interesting and exciting opportunities around that, where we can establish a site, use the waste as the feedstock, and then supply the energy straight back to them as well,” said Bezuidenhoudt.
Earth capital originally invested in Limelight Energy, a 0.5 MW anaerobic digestion plant located on a dairy farm in County Durham, prior to launching its Nobel Sustainability Fund in 2016. The GP continued to support the asset, which has been operational since 2017, after its fund held a final close on GBP 241m that same year.
Similarly, the GP invested in the Black Dog Biogas and Bright Light Energy plants both prior to and after the close of its fund. The plants have both been operational since 2016 and are co-located on the same site, in an operating 1.14 MW crop-fed anaerobic digestion plant located on the Isle of Wight.
Earth Capital acquired Eccleshall Biomass, an operating 2.26 MW wood-fuelled biomass plant located outside Eccleshall, in Staffordshire, in early 2017. The plant has been operational since 2007.
The Nobel Sustainability Fund is now fully invested, said Bezuidenhoudt, and the GP is expecting to launch a new fund in about 18 months’ time. Moving away from big sites and energy generation, the new vehicle will focus more on technology growth companies to accelerate the transition to Net Zero or mitigate climate change effects.
Earth Capital is already co-investing in the energy, food and water sectors via its existing funds, with a focus in technology that can take these investments into new markets, Bezuidenhoudt said. It is currently having a couple investments in its portfolio and has another couple under discussion, she added.
Founded in 2008, Earth Capital focuses on sustainable investments. According to the firm's website, it manages USD 1.7bn in sustainable PE assets, including through its associate companies Sustainable Development Capital and Berkeley Energy.
Sustainable Energy Holdings Limited is a UK-based low-carbon bioenergy generation firm, formed of a merger of Eccleshall Biomass, Limelight Energy, Black Dog Biogas and Bright Light Energy plants. Together its facilities will generate 3.89 MW of base load renewable energy, according to a press release.
Earth Capital Limited − Avent Bezuidenhoudt (head of investment and director); Nelson Abioye (analyst).
Sustainable Energy Holdings Limited − Craig Ibbetson (CEO).
Equity − Field Seymour Parkes, Penelope Garden (legal).
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