TEG SECURES FUNDING FOR £21M ORGANIC WASTE FACILITY IN DAGENHAM
The new facility will be capable of processing 49,000 tonnes per annum of food and green waste via AD and In-vessel composting (IVC) technology on a 4.7 acre site on the Mayor of London’s 60 acre London Sustainable Industries Park (LSIP). The Mayor has committed over £10m for infrastructure development on this site, which the TEG scheme will be the first to benefit from.
Foresight’s UK Waste Resources and Energy Investments (UKWREI) fund has invested a further £2 million in the project. The Fund also secured an additional £2m in matching private sector funding from Quercus Assets Selection SCA SICAV-SIF (an institutional fund), raising the equity investment to £13m. UKREI is managed by Foresight who have been appointed to invest £50m on behalf of UK Green Investments – the team established within the Department for Business, Innovation and Skills to drive investment in low carbon infrastructure in preparation for the UK Green Investment Bank.
Alongside the equity investment, senior debt of £7.9m is being provided by London Waste and Recycling Board (LWARB) and Investec Bank plc. TEG’s introduction to the LGF, in which LWARB originally invested £18m, came through LWARB when the project first applied to the Board’s Waste Infrastructure Fund for investment.
TEG will construct and operate the plant on behalf of the SPV under an Engineering, Procurement and Construction Contract (EPC Contract), which is expected to generate approximately £16 million in revenues for TEG over the period of construction. Work is due to commence in September 2012, with completion scheduled for the first quarter of 2014.
In addition, TEG has been awarded an Operating and Maintenance Contract (O&M Contract) to operate the facility on behalf of the SPV. The O&M contract is for a 15-year term with annual revenue of approximately £1.3m per annum, escalated annually.
Mick Fishwick, CEO of TEG Group, said: "We are delighted to have secured funding for our first major project in the South East, which is set to become a flagship operation for TEG and which will make a significant contribution to London becoming a model European city for recycling. Our first co-located AD and IVC plant became operational in Perthshire earlier this year and is testimony to our confidence in the benefits of co-located organic waste technologies. Combined AD and IVC sites offer front-end flexibility on feedstock, enabling us to process a wide variety of waste streams including food waste only, green waste only or co-mingled organic waste. In addition, they produce natural organic fertiliser for use on the land and also valuable energy from waste which is fed into the National Grid. We are looking forward to starting work at Dagenham later this summer to provide this valuable service in London by early 2014. We will be using our award winning IVC technology which is proven in the UK combined with best of breed European AD technology, manufactured in the UK.”
Business Secretary, Vince Cable, said: "This project represents the first waste investment in the run up to the establishment of the UK Green Investment Bank and sends a clear message to the market and to potential co-investors that we are committed to investing in the UK’s green infrastructure”.
The Mayor of London, Boris Johnson, said: "This £21million investment into Dagenham is fantastic news providing new employment opportunities. TEG is also the first to start building at our new industrial park, which I have committed £10million to transform from brownfield land into an attractive space for businesses. We want the London Sustainable Industries Park to become a magnet for energy and environmental enterprises to support hundreds of new jobs.
'It is also good news that TEG becomes London's first anaerobic digestion plant providing an innovative, environmentally friendly way to manage the city's waste, helping to cut down on costly landfill. Through the London Green Fund and Foresight, my team has worked closely with TEG to secure the finance for this plant and we are set to support more facilities of this nature across the capital working with boroughs and the London Waste and Recycling Board.”
Nigel Aitchison, Partner at Foresight Group, commented: "We have been working with TEG for several months on this project which will see 49,000 tonnes of organic waste matter from Greater London diverted from landfill every year, and will enable householders to have their organic waste put to good use. We are looking forward to making further investments, to drive both growth and job creation in this important sector in Greater London and across the UK in the very near future”
Wayne Hubbard, Chief Operating Officer of LWARB, said: "LWARB is very pleased to be investing its funds in this project, particularly alongside the London Green Fund. This deal is a great example of how a project that is due to operate with short term waste supply contracts can be funded. Not only will the facility divert up to 49,000 tonnes of organic household and business waste from costly landfill sites each year, it will also generate power, create jobs and contribute to economic growth.”
James Donaldson, of Investec Bank’s Project and Infrastructure Finance team added: "We are delighted to have signed this landmark transaction which should transform the treatment of 49,000 tonnes of London’s waste and produce renewable electricity thereby saving 16,325 tonnes of CO2 emissions per annum. Investec Bank’s Project and Infrastructure Finance team has funded several projects in the UK waste to energy sector and we look forward to funding additional suitable projects in this sector which can deliver both economic and environmental benefits.”
Diego Biasi, Partner at Quercus Assets Selection SCA SICAV-SIF, stated: "Quercus is delighted to have reached an agreement to invest alongside Foresight Funds and to have closed this first deal effectively. We are confident that this will be the first of a series of successful investments.”
Simone Borla, Partner at Quercus Assets Selection SCA SICAV-SIF added: "We are very pleased to be working in partnership with Foresight to secure a sustainable, long term solution that will divert away some 49,000 tonnes of waste a year which would otherwise go to landfill. This flagship facility will not only create new jobs but will also reduce CO2 emissions by 75,000 tonnes per year, contributing to a ‘greener’ London for many years to come.”