Announced today (January 26), the deal will see Stobart Energy source, process and supply 250,000 tonnes per annum of recovered waste wood to the Margam plant over 14 years, equating to 3.5 million tonnes over the life of the agreement.
The index-linked deal will also see the company’s transport business deliver 250 loads of fuel each week to the Margam facility, which is expected to take around two years to build and to commence operations in March 2017. Planning permission for the facility is already in place.
Richard Butcher, chief executive of Stobart Energy & Infrastructure, said the deal would contribute “significantly” to Stobart’s target to supply two million tonnes of fuel per year by 2017/18.
He said: “This agreement secures an attractive supply contract for the Group and will contribute significantly to our target of supplying 2m tonnes of fuel per annum into the UK biomass market by 2017/18. We supply 1m tonnes per annum at present.
“Coupled with the recent successful financial closure on the Group’s Widnes Biomass Project, this agreement confirms we are firmly on track to achieve our strategic aims in this sector and reinforces our position as the number one supplier of biomass in the UK”.
In a statement, the company said: “The fuel supply agreement is the largest supply contract by volume entered into by the Group.”
A spokesman for Stobart said that the waste wood for Margam would be sourced from a network of suppliers from within the UK.
He commented: “Three quarters of the waste material will be sourced via third parties from local sources. Stobart will process a quarter of the material itself, also sourcing from the local area/region. No fuel will be imported.”
Project
The announcement comes after the Margam project was last week acquired from renewable energy company ECO2 Ltd and timber supplier Western Logs Group by clean energy investment management company Glennmont Partners for £160 million.
However, ECO2 Ltd will still operate the plant as it has experience in developing, building and operating biomass facilities. The construction contract has been placed with a consortium consisting of Babcock Wilcox Volund A/S, who will also operate the plant, and Interserve.
The Margam Green Energy Project will see a new biomass power generation plant built in Port Talbot, Wales, providing 40 MW of renewable energy to the Welsh and UK Energy market.
The purchase and further construction of the Margam Green Energy Project is being supported by debt arranged by Deutsche Bank with the support of Eksport Kredit Fonden, the export credit agency of Denmark.
Joost Bergsma, chief executive of Glennmont Partners, said: “In the current market it is important to be versatile and technically skilled in order to close the right deals. Glennmont is demonstrating an excellent track record of being among the leading investors for producing value in difficult circumstances. Margam is a great example of this and sends a strong message to the market that it is full steam ahead for us.”
Register for free to comment