Kedco Planning to Construct Five Biomass Plants Across the U.K.

Kedco Plc (KED), an Irish renewable energy developer, is planning to build five projects in the U.K. for 59 million pounds ($92 million) that will use wood and waste to generate electricity, its chief executive officer said.

The company plans to build facilities in the south of England, the midlands, northern England and Derbyshire, Gerard Madden said in an interview in London. Together they will have a capacity of 15 megawatts. The Cork-based company is aiming for financial close on the projects by the end of 2012, he said.

The facilities will utilize gasification and anaerobic digestion to produce power and heat. Gasification uses high temperatures and oxygen to turn biomass materials into a gas that can help generate electricity. Anaerobic digestion breaks down the material in the absence of oxygen to make a biogas that can also be used to generate power.

Britain has set a goal of getting 15 percent of its energy from renewable sources by 2020. The Department of Energy and Climate Change estimates at least 30 percent of that may come from bioenergy.

Kedco this month agreed on a loan from the Royal Bank of Scotland Group Plc’s Ulster Bank unit to finish a biomass plant in Newry, Northern Ireland. It’s also planning a 12-megawatt plant in Enfield that will cost 46 million pounds. Kedco is seeking debt to cover about 70 percent of this, Madden said.

Banks interested in the sector include RBS, Lloyds Banking Group Plc and Barclays Plc, he said.

Biomass ‘Tipping Point?’

“There are no guarantees that RBS will fund our future plants but you could take the view that they wouldn’t have invested all the effort they have in Newry if they didn’t see potential in the future, they know we have a pipeline and they know that the London project is three times the size of Newry,” the CEO said.

The biomass industry is coming to a “tipping point” as the U.K. government has removed much of the uncertainty in the sector, he said. It has proposed to keep the level of Renewable Obligation Certificates, or ROCs, the same and it brought the ROC banding review forward by a year, Madden said. In July 2010 it also decided to “grandfather” biomass facilities, meaning ROC levels are now fixed for 20 years, he said.

The European Landfill Directive and the U.K. government’s landfill tax are helping too to boost the industry, Madden said. In April, the U.K.’s landfill tax was 56 pounds a ton and this is rising by 8 pounds a ton every year to 2014, making it expensive for waste to go underground.

“We have quite a strong pipeline of companies that we are looking at forging possible partnerships with,” the CEO said. “Partnering with waste companies is a good option for us.”

To contact the reporter responsible for this story: Louise Downing in London at Ldowning4@bloomberg.net

To contact the editor responsible for this story: Reed Landberg in London at landberg@bloomberg.net

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