Author Archives: Fraser Macdonald

Palisade Real Assets Acquires Eco2 Management Services

25 July 2022

Sydney, Australia – Palisade Real Assets has announced the acquisition of Eco2 Management Services Limited (“EMSL”), a UK-based renewable energy asset management and development company.

The acquisition accelerates Palisade Real Assets’ energy transition investment ambitions in the United Kingdom and Europe and will underpin a dedicated Bioenergy Platform focused on anaerobic digestion assets and adjacent infrastructure.

Stephen Burns, CEO of Palisade Real Assets, said “embedding the asset management and development capability of the EMSL team into the Palisade Real Assets investment team will help drive high quality deal flow, enable operational value creation on complex assets that have multiple value propositions and ultimately deliver better investment returns for our investors.”

The Bioenergy Platform will own and operate anaerobic digestion assets that capture and convert energy from organic waste into efficient heat, electricity and transport solutions. It will aggregate bioenergy infrastructure assets – in what is currently a fragmented sector – to build a bioenergy enterprise.

The best-practice EMSL operational and feedstock management capabilities will be key to the delivery of strong and stable investment returns, and positive environmental outcomes. EMSL has a team of over 50 people and a 20+ year track record of managing high-performing renewables assets through concept, development, construction and operations.

“We see the decarbonisation of the waste, heat and transport sectors as key challenges for governments globally in achieving net zero emissions targets. The Bioenergy Platform’s investments in anaerobic digestion will be a valuable part of the decarbonisation toolkit for these sectors.”

“We have identified a significant pipeline of investment opportunities across the anaerobic digestion value chain, with the first major transaction for the Bioenergy Platform expected to be completed in the coming weeks.”

Darren Williams, CEO of EMSL, said “we are thrilled to join the Palisade Real Assets team. EMSL provides best-in-class asset management services to clients to ensure that their assets perform better and increase in value as a result of our active involvement.”

“Combined, the team will bring extensive real asset investment and operating experience across geographies and technologies to investors in the Bioenergy Platform.”

The opportunities and challenges of the Energy Security Strategy

The UK Government’s Energy Security Strategy was published this month following much anticipation and speculation about its contents. Intended to assist the UK in responding to the energy crisis and reduce reliance on foreign imports, the Government predicts the implementation of the Strategy will result in 95% of our electricity being low-carbon by 2030.

Any measures that lead to a cleaner energy supply and a more secure future are of course welcome, particularly in light of the IPCC’s latest report that emissions must peak by 2025 to have any chance of limiting global warming to that crucial 1.5C target. As such, the Strategy does offer encouraging commitments in sectors such as offshore wind and hydrogen, which will go some way to boosting our renewable energy supply and could even place the UK at the forefront of these developing industries.

In other areas, the Strategy seems to lack the same level of urgency in its pledges. It was only a few weeks ago that we welcomed the news that the prohibitive planning restrictions on onshore wind in England could be relaxed in the Strategy. Despite this, and due to growing pressure from backbenchers against the technology, the final result for onshore wind is lacklustre, committing only to consult on developing local partnerships for a limited number of supportive communities in return for benefits such as lower energy bills.

Indeed, the core focus of the Strategy seems to be long-term security, with a key push for nuclear which, whilst low-carbon, takes significantly longer to build and is expensive compared to more widespread renewable sources. That is not to say that nuclear should not have a place in our energy mix. Indeed, a more diverse mix of technologies only increases our energy security as we make the most of the low-carbon resources available to us. However, achieving energy independence via the nuclear route is going to require an immense level of financing, a fact that the Government is undoubtedly all too aware of as it calls on the Financial Conduct Authority to support investment in this new approach.

In order to get the most from these opportunities, significant investment will also need to be put into the infrastructure to support the increase in generation. In areas of the country that have previously hosted significant renewable energy projects, the grid is already at capacity, impeding further development. It is a promising sign that the pipeline of energy storage projects has doubled to 32.1GW in the space of a year, allowing the grid to be more effectively utilised but urgent investment in the grid itself, particularly in remote parts of the UK, is still needed to unlock further potential renewable energy projects.

If the Government remains truly committed to delivering on the long-awaited Energy Security Strategy, then we now have a real opportunity to both boost our energy security and achieve our vital decarbonisation targets. Naturally, this also presents huge opportunities for all corners of the renewable energy sector. As a leading asset manager and a developer of successful wind, solar and biomass projects, Eco2 is always looking for an opportunity to contribute to the UK’s goals of decarbonisation and energy independence. If you have a project or asset that we could help with, get in touch.

The energy crisis is not a reason to rethink Net Zero

The prospect of 54% hikes in energy bills from this April stunned many outside of our industry. While soaring gas prices have been rattling around news headlines since autumn, the reality is only fully dawning now that the prices are hitting all consumers’ pockets.

Ofgem has a difficult balance to strike with the new price cap. On the one hand, it has struggling consumers and the tripling in the number of households unable to afford their energy bills. On the other hand, energy suppliers themselves also need a cap with enough headroom to accommodate further wholesale price hikes – after nearly 30 suppliers have already gone bust. Meanwhile, wholesale prices have been a boost for generators, making this a good time to invest in renewable energy. But the political impact of the crisis might yet lead to a threat for the renewable generation industry, too.

Perennial critics of the Government’s green agenda – and of renewable energy in general – have been energised by the crisis. The climate-sceptic ‘Net Zero Scrutiny Group’ of MPs wrote last month that the UK had “almost uniquely caused our energy prices, through taxation and environmental levies, to increase faster than those of any other competitive country”, calling on the Government to cancel environmental levies on energy bills, and expand North Sea exploration and lift the ban on shale gas extraction. Then, hot on the heels of Ofgem’s new cap, Cabinet ministers also started pushing for a  ‘rethink’ on Net Zero, while the Chancellor, Rishi Sunak, asked for new licenses for North Sea gas exploration to be sped up. This marks a worrying deviation from the Government’s commitment to eliminate fossil fuels from the UK’s energy supply by 2035, a policy that was only set in October last year, before COP26. What’s more, this pressure – from both inside and outside the Cabinet – for a substantial change in direction on energy policy, should concern the renewable energy industry.

In normal times, a joint letter from a few backbenchers would not be so significant. But their pressure, along with manoeuvrings in the Cabinet, appear to be leading to decisions and shifts in direction that should concern the renewables industry. The risk is that whilst the current Government’s future is uncertain, further pro-renewables policies may be thrown overboard in an attempt to keep the ship afloat, or a new captain might change course entirely. Although the renewables industry currently has the wind in its sails, that could be lost if the siren voices of climate-sceptic MPs manage to coax the Net Zero policy agenda onto the rocks.

Environmental levies have nothing to do with the current increase in prices. Even in the short term, the upfront cost of green policies, about 12% of a household fuel bill, is dwarfed by the circa 250% increase in wholesale energy costs. And in the long term, it is the actually the scrapping of green policies over the last decade – such as energy efficiency schemes – that is now costing UK energy users £2.5bn a year due to lost savings, according to research by Carbon Brief.

The UK’s persistent overreliance on gas is at the crux of the problem. Natural gas heats more than 80% of UK homes and nearly a third of all UK non-domestic buildings, and provides roughly 40% of the UK’s electricity. While the North Sea means we are less reliant upon imports than most of our European neighbours, we still get roughly half of our gas from overseas, leaving us vulnerable to global energy market shocks. If current tensions over Russia and Ukraine boil over into actual conflict, then the further throttling of Russian gas supplies to Europe will make matters worse.

But caving in to pressure to extract even more gas from the North Sea won’t combat rising energy bills in the short term, or even in the long term. Gas is a global commodity, and an increase in UK production would only benefit oil and gas producers, not lead to lower retail energy prices. The only way to insulate ourselves from the vagaries of the global energy market is to lessen our dependence on gas in general, which goes hand-in-glove with UK policy to eliminate fossil fuel use and promote renewables in their place.

While the Government’s primary system for supporting renewables investment, Contracts for Difference, might have added to energy bills in the past, right now it is actively helping to limit the impact of the wholesale energy price spikes on consumers. With wholesale energy prices now far in excess of agreed strike prices on CfDs, wind and solar generators are set to pay around £770m back to consumers via the Low Carbon Contracts Company by the end of winter. This is one of many reasons we are so glad that the current round of CfD auctions includes onshore wind and solar projects again.

After years of missed opportunities, the recent growth in renewables can’t come fast enough to wean the country entirely off gas within a decade. Even if wind, solar and biomass could replace all of the UK’s remaining gas-fired power stations tomorrow, there are still tens of millions of homes heated with gas boilers with 15-year lifetimes. Since we can’t eliminate gas quickly, we need to change how we produce it, with more from renewable, carbon-neutral bio-sources, not fossil fuels.

This brings us back to green levies, specifically the Green Gas Levy, which supports the Green Gas Support Scheme to encourage investment in biomethane production, to replace the North Sea’s carbon-intensive natural gas with carbon-neutral green gas from anaerobic digesters across the country. The GGSS brings tremendous opportunities for Eco2’s clients and the wider biogas sector, and we are delighted to be working on projects designed to utilise this scheme.

There are several other things the Government could be doing for the long-term – beyond the measures announced recently – to protect consumers and businesses from the price spike that is coming in April. While green levies and other ‘policy costs’ only account for a small portion of energy bills, the schemes they support could instead be funded through general taxation – which would also lessen the burden on those facing the worst fuel stress. Additionally, the 5% VAT on energy bills – an aberration compared to food and housing costs, which are zero rated – could be abolished. The Government should also seriously consider a one-off windfall tax on oil and gas producers, who have enjoyed abnormal bumper profits from the crisis, to subsidise peak energy bills. Those solutions would actually help limit the impact of the energy crisis on consumers and businesses, without undermining our long-term energy security or Net Zero.

Eco2 Management Contract Low Carbon Greenhouses

Eco2 and Greencoat Capital sign management contract for world-first low-carbon greenhouses

Renewable energy asset managers Eco2 have signed a contract to manage two giant low-carbon greenhouses, the first of their kind in the world, on behalf of one of the UK’s largest clean energy funds, Greencoat Capital.

The two enormous greenhouses, located near Norwich and Bury St Edmunds, together cover more than 29 hectares and are capable of producing 12% of the country’s tomatoes, as well as cucumbers and peppers. They provide ideal growth conditions all-year-round for a range of crops requiring high temperatures and relatively low light. In a world-first for the decarbonisation of agriculture, the greenhouses make use of residual heat from Anglian Water’s nearby water recycling centres, to produce fruit and vegetables with only 25% of the carbon footprint of standard greenhouses.

The new management services agreement deepens the relationship between Eco2, a leading UK renewable energy asset manager based in Cardiff, and Greencoat Capital, the UK’s leading listed renewable infrastructure fund. Eco2’s asset management portfolio already includes two of Greencoat’s biomass renewable energy plants, in Templeborough in Yorkshire, and Sleaford in Lincolnshire.

Eco2 has led the commercial deployment and management of several new green technologies over the last two decades. Eco2’s diverse experience in wind, solar, biomass, AD, and EfW, means it can apply its expertise to novel low-carbon projects, such as the low-carbon greenhouses, as well as established technologies.

Dr Andrew Toft, Operations Director at Eco2, said:

“Eco2 is delighted to sign this new Management Services Agreement with Greencoat Capital, to take on the technical and commercial management of two world-first low-carbon greenhouse projects. These projects integrate water source heat pumps, combined heat and power gas engines and advanced greenhouses in sustainable projects that balance high efficiency CHP technology with carbon capture and renewable heat. Eco2 is delighted to play such an important role in the ‘greening up’ of a diverse range of sectors, including in agriculture.

“The continued faith in Eco2 shown by Greencoat is a testament to the great work done by our teams that support our Management Services Agreements at Templeborough and Sleaford.”

New Year means new opportunities

Traditionally, if the first visitor to your home after midnight on New Year came bearing a lump of coal, it was thought to herald a prosperous year. But this year, with fossil fuel use hitting its lowest ever level in the UK for a few hours shortly before the new year, and renewable energy investment surging, perhaps it is time for a new symbol of prosperity, suitable for our low-carbon future.

We are only three weeks into 2022, and there is already a lot to be enthusiastic about for the renewables sector. Global investment in clean energy is soaring, and leaders are looking to how to implement the commitments made at COP26. In the UK, we’ve seen the fourth round of Contracts for Difference launch in December, covering a wider range of technologies, and the launch of the new Green Gas Support Scheme, currently open to applications.

2021 saw significant commitments from world leaders at COP26, on phasing out fossil fuels, encouraging renewables and EVs, and mobilising climate finance, alongside the UK and over 100 other countries signing the Global Methane Pledge. The UK itself also released long-awaited strategies and policy statements on heat and buildings, hydrogen, industrial decarbonisation, and biomass.

But 2022 must be the year where we start to deliver on 2021’s commitments. This is especially important given Europe’s ongoing energy crisis, which has already seen nearly 30 UK retail energy suppliers go bust, and millions of households threatened with fuel poverty. Already, the UK Government is coming under pressure from both energy providers and climate-sceptic MPs to cancel green levies, a move which could endanger important measures such as the Green Gas Support Scheme and energy efficiency measures.

For renewable energy developers, however, the current market presents big opportunities for investment in new generation assets, with analysts predicting a 25% increase in global renewables investment as corporations and investors look to offset rising energy bills through investing into new energy generation. Harnessing this investment will be key in achieving the most ambitious targets and ensuring a brighter, greener future for us all.

Eco2 is excited by the possibilities ahead. Indeed, we are already making progress with several exciting renewable energy development projects in the pipeline, including our 54MW Lluest Y Gwynt Wind Farm project in Mid Wales in partnership with Statkraft, and some valuable AD projects to take advantage of the Green Gas Support Scheme. We can’t wait to show you what Eco2 is doing to make renewables work in 2022.

If you have any projects or ideas you would like to see come forward, don’t be afraid to get in touch and make this year a green and prosperous one.

Green Gas Support Scheme open for applications

Eco2 sponsored and attended the ADBA National Conference last week, which involved some fascinating conversations with fellow participants in the UK bioenergy industry. One of the key themes that really caught our interest was the role of biogas over the next decade in meeting our vital Net Zero targets, with the Conference including a keynote by Lord Callanan.

The GGSS, which recently opened to applications, will play an important part in encouraging the development of biogas installations. The scheme offers far more flexibility to new AD plants in where they sell their gas when compared to the RHI, and so should be an attractive incentive to many developers.

The GGSS, funded by the Green Gas Levy, will be placed on all licensed gas suppliers unless they can evidence that they provide at least 95% biomethane using certificates from a recognised scheme, such as the Green Gas Certification Scheme, thereby providing even greater incentives to make a green transition.

As we move to decarbonise the country across multiple sectors, including the national gas grid, any encouragement to supply more biomethane is a welcome development. In turn, this will also provide significant opportunities for the development of AD as a source of sustainable biomethane.

There are a range of complicated rules to navigate when applying to the GGCS and this is where Eco2 can help.

As an experienced asset manager, we know how to navigate the complicated regulatory landscape to ensure that your asset complies with the latest policies and guidance. Additionally, as a developer-for-hire, we can make sure your asset hits the ground running and is set up within the regulations from the outset. If you have a project you would like to discuss, get in touch.

Biomass

UK pledges to reduce methane emissions by 30 percent by 2030

The curtain has been drawn on COP26, so we can now look back on the achievements and the missed opportunities to weigh up this crucial event’s overall success. It has become apparent from industry and stakeholder reactions that, whilst COP26 made some important political progress, there is significant opportunity for industry and private investment to shape future policy to increase the pace of decarbonisation.

However, world leaders, including the Prime Minister, did manage to make commitments that, if properly fulfilled, could put us on the right track. It was great to see the UK, amongst over 100 other countries, sign up to the EU-US-led Global Methane Pledge, committing to reduce methane emissions by at least 30 percent by 2030 from 2020 levels. With methane being several times more potent than CO2 as a greenhouse gas, keeping this under control will be vital for combatting the climate emergency and keeping alive the goal of limiting global warming to 1.5C.

Whilst the pledge is a welcome move, we must now look to develop a strategy and fill the legislative and policy support gaps to ensure this ambitious level of reduction is achievable. A previous statement by the US and EU specifically highlighted biomethane and anaerobic digestion as routes to significantly slashing methane emissions. As one of the leading developers and asset managers of bioenergy in the UK, Eco2 appreciates the amount of work and investment that will need to be put into these sectors if we are to accomplish a 30 percent reduction in the relatively short, albeit necessary, timeframe of 10 years.

We can help make this a reality. Whether it is the development of a new bioenergy asset, or you require a highly capable asset management service, part of our mission is to ensure that your project can realise its full potential and help to expand the industry so it can do all it can to mitigate the climate crisis.

More renewables will help build the UK’s energy resilience

Amid the soaring gas prices, the bankrupting of small energy companies, and the growing awareness of the need to rapidly decarbonise our energy sector, the energy regulator, Ofgem’s chief executive, Jonathan Brearly, has said that the way it regulates the energy market needs to change, to build an energy market that is more resilient in future.

Resilience is just another way of describing the UK’s energy security – the uninterrupted availability of energy sources at an affordable price. Recent events have shown just how weak that energy security is, and its consequences. Several retail energy suppliers have gone bust from the rapid jump in gas prices, and the UK came perilously close to running out of fertiliser and industrial CO2, needed for transporting fresh food and even medicine. Consumers will eventually see the price hikes reflected in their energy bills too.

Several factors have combined to create this perfect storm. Domestically, gas reserves were depleted by a cold winter, and then went unreplenished as gas power stations made up the shortfall for a relatively windless summer. Chinese demand for energy is soaring, while Russia stands accused of throttling gas supplies to Europe.

There are also long-term domestic factors, including a lack of gas storage capacity. The UK has only enough gas storage capacity to meet the demand of about four or five winter days, significantly less than our European neighbours. During the cold snap in March 2018, the UK came alarmingly close to running out of gas altogether. But we have continued to rely on gas imports to cushion any spikes in demand.

Fundamentally, the UK remains too dependent on gas. 87% of the UK’s homes use gas for heating, and it provides roughly half our electricity too. It isn’t just climate change that should compel us to wean ourselves off gas as soon as possible, but also the fact that North Sea production could cease by around 2030, leaving the UK entirely reliant on imports for half a decade until the UK’s energy supply is planned to become fossil-fuel free, and remaining gas users even more exposed to global gas market shocks.

Part of the answer to this conundrum must be faster development of domestic renewable energy generation, using the resources we the UK has in great abundance – wind, sun and sea – and faster decarbonisation of heating. But to increase the pace of development, we need to see more frequent wind farm auctions, and a concerted effort to remove major obstacles, such as dealing with the lack of capacity in the electricity grid.

But that is not the whole story. More wind and solar energy might make us less vulnerable to global energy market shocks, but it will make us more susceptible to changes in the weather. That is why we come back to the subject of storage, but of electricity rather than gas.

According to Wärtsilä, the UK needs to reach 49.5GW of energy storage this decade, from just 1.3GW of operational storage capacity today. Fortunately, the pipeline for utility-scale battery storage is growing rapidly, and is now over 20GW, across more than 800 different projects.

When coupled with developments in other low carbon technologies, the rapid development of renewable generation and storage will establish the energy resilience that the UK currently lacks. With all these opportunities, experienced developers and asset managers are essential for getting the most out of your investment. If you have a project or asset that Eco2 could help with, get in touch.

Operational Asset Management

PM commits to fossil fuel-free energy by 2035

If the UK is to have any chance of reaching Net Zero by 2050, it is essential that the UK decarbonise its energy supply along the way. That is why Eco2 keenly welcomes the announcement from the Prime Minister earlier this week, committing to eliminating fossil fuels from the UK’s energy supply by 2035.

Mr Johnson said that the country can significantly reduce its reliance on fossil fuels through the development of renewable and nuclear energy. If achieved, total generation from clean energy sources will represent a key step towards meeting the UK’s target of a 78% cut in CO2 emissions by 2035, and eventually to the ultimate Net Zero target.

However, there is a long way to go to meet these targets. Making the UK’s energy supply entirely free of fossil fuels is not just a case of building more wind, solar, tidal and nuclear power plants. With so much interruptible energy capacity on the grid, we will also need investment in crucial infrastructure for storage and balancing. That is why the UK today is still falling back on fossil fuels when renewable energy generation is interrupted, as it did earlier this year when generation from fossil fuels shot up by 36% due to unfavourable weather. More nuclear power and rapidly improving battery storage technologies will help with this, but nuclear plants take longer to develop and build than we have time, and storage technologies are not yet being developed at the requisite scale.

To meet the target, the renewable energy industry will also need support from the Government to access funding and skilled workers, and to expand grid capacity as the Welsh Affairs Committee reported earlier this year. The grid capacity issues, in particular, are the single biggest constraint on renewable energy development in some parts of the country, and the UK Government and Ofgem must urgently plan investment in the grid to enable further renewables generation.

The Prime Minister’s commitment is immensely important, but it must be backed up with greater detail, and quickly. There have already been considerable delays on the Environment Bill, and on strategies for Net Zero, hydrogen, and heating; Ministers will need to pick up pace if the key policy hurdles are going to be cleared in time to meet this critical 2035 target.

Whatever the case, decarbonising our energy sector presents huge opportunities for the renewable energy sector, from developers to investors and everyone in between. With Eco2’s experience as a developer of successful wind, solar and biomass projects, as an asset manager, and in the growing market of ESG consulting, we are always looking for new opportunities and partnerships. If you have a project or asset that we could help with, get in touch.

UK is sixth in the world for wind and solar

As we draw nearer to COP26, there are encouraging signs that the UK is starting to meet the pace of change needed to reach net zero by 2050.

Recent analysis by Ember shows that the UK is now sixth in the world for wind and solar energy production. While nearly a third of the UK’s energy now comes from wind and solar, other advanced European economies including Denmark, Ireland, Germany and Spain show that far more is possible.

There is still huge potential for growth over the next decade, both in generation and in the storage infrastructure needed to make the transition possible. Eco2 are always looking to put our development expertise to work, such as our Welsh wind development and Canadian biomass development activities.

With ever greater competition in the renewable energy sector, owners of existing assets also need to ensure they are keeping up with the rapid advances in the industry. As an experienced developer and asset manager, Eco2 can help you get more from your existing wind, solar, biomass or AD asset, be it through adding battery storage, a mid-life update, or re-energising a project at the end of its life.

If you have a new project in the pipeline, or an old project in need of optimisation, get in touch.