Capital Dynamics, as the private asset manager for a UK pension fund, has acquired a 26-megawatt (MW) portfolio of gas-fired power plants from UK Coal Plc.
The portfolio consists of four sites located in North Yorkshire and the East Midlands that recover waste mine methane and convert it to electricity, which is sold under long-term sales contracts with both UK Coal and other major UK energy suppliers.
Capturing waste mine methane to produce electricity is an important step toward more sustainable energy production. Preventing methane – a 25-fold more potent greenhouse gas than CO2 – from escaping directly into the atmosphere helps reduce the emission of greenhouse gases resulting from coal mining. The assets acquired by Capital Dynamics are well-proven gas engine technology in widespread use throughout the industry.
The Capital Dynamics Clean Energy and Infrastructure (CEI) team previously established an innovative sole investor ownership structure in conjunction with a specialist operations and maintenance entity to oversee the day-to-day management of a 64-MW UK landfill gas portfolio acquired in January 2012. The 26-MW coal mine methane portfolio acquisition increases the scale and diversification of the original investment and is a natural addition to this cash yield focused structure, allowing the achievement of operational synergies, reduced investment risk and increased cash flows. Capital Dynamics will manage these assets under a long-term agreement.
“The successful acquisition of this portfolio of methane-to-power assets is a testament to the CEI team’s accomplished sourcing and execution abilities,” says Rory Quinlan (pictured), managing director in Capital Dynamics’ CEI team. “It is another tangible example of our broad industry and operational experience, and ability to structure bespoke investments for our institutional clients.”
“We are pleased to have completed what has the potential to be another strong and long-term cash-yielding investment for our investment partner,” says Stefan Ammann, chief executive of Capital Dynamics. “The transaction highlights the firm’s ability to provide our investment partners with opportunities that feature the capacity for regular and long-term cash generation.”
