Client: Teal Energy
Teal Energy is a UK power project developer that plans to develop up to five 20MWe CHP projects, the first of which is located in Dartford in Kent.
The projects use gasification technology to produce energy from renewable fuels. Financially, the most viable source of biomass is from processed waste: biomass from processed waste has a negative fuel cost since the alternative for the waste contractor is to simply send the waste biomass to landfill (under the European Waste Directive). This squanders a renewable energy resource and contributes to the comparatively high proportion of waste sent to landfill in the UK, compared with other EU Member States.
Gasification is classified as an “advanced combustion technology” by the British Government, which incentivises its use through the Renewables Order. The principal differentiators between gasification and normal combustion are that gasification requires limited flue gas filtration because the high temperatures involved avoid the production of the noxious pollutants created during standard combustion, and the “syngas” produced can potentially be used for the production of liquid fuels, in addition to electricity.
Despite the government incentives however, take-up of gasification technology in the UK has been almost non-existent. The main reason for this is that the technology is not well developed and projects have tended to be developed as technology demonstrations, rather than proven operational plant.
Bainton Capital’s Role:
Teal Energy had conducted a significant amount of research into various gasification technologies and appointed Bainton Capital to establish a plan for financeability so that the project development could be done from a blank sheet upwards with the goal of getting it financed. This is a unique approach in the industry, and together with Fichtner consulting and working with Mace and Wardell Armstrong we have arrived at a standard design that has been optimised for maximum financeability. The key to this lay not only in the normal project finance disciplines of placing risk with those parties best able to manage them, but also involved a re-design and optimisation of the fuel supply chain as an integrated element of the project. Taking fuel supply and plant design together led to the commercial optimisation of the plant size with the transport matrix, and the detailed specification of the fuel with the cost of fuel preparation. There were also regulatory efficiencies to be grasped, when considering the fuel supply and the power plant as an integrated system.
- The result is a plant with some key differences to other developments:
- simple, proven technology: financeable track-record and no cutting-edge technology to go wrong
- proven fuel: refined biomass flock from selected sources giving homogeneous specification and making low-tech gasification simple
- Off site fuel preparation
- large unit size: economies of scale
- whole cycle approach: entire value chain is optimised for profitability rather than innovation
Bainton Capital has now also been appointed to raise the finance for the project. The engineering and commercial design has been well received and the next stage of the financing is awaiting a successful result from the planning permission application, which was submitted in October 2013.