North East pharmaceuticals industry to benefit from investment in new £138m Northumberland green energy plant

• UK Green Investment Bank plc and John Laing Group plc commit £48m to 27.7 MW Cramlington Combined Heat and Power plant, developed by Estover Energy
• Finished facility will generate 213 GWh of renewable electricity annually – enough to power 52,000 homes per year
• Generated electricity will be split between local businesses and Statkraft
• The reduction in greenhouse gas emissions will equate to the removal of 25,000 cars from the UK’s roads over 20 years
• Project to create up to 25 positions in plant operations and approximately 20 jobs in the supply chain.

UK Green Investment Bank plc (GIB) and John Laing Group plc have committed £48m of equity to a new £138m renewable energy facility in North East England, developed by Estover Energy.

The biomass Combined Heat and Power (CHP) plant in Cramlington, Northumberland, will generate 213 GWh of renewable electricity annually – enough to power 52,000 homes. It is also expected to reduce greenhouse gas emissions by circa 56 kt CO₂e annually, the equivalent of taking 25,000 cars off the road during its lifetime.

Much of the generated electricity will be purchased by Statkraft under a long-term Power Purchase Agreement (PPA), but the area’s thriving pharmaceutical sector, recognised as an essential element of the North East economy, will benefit from its output.

Electricity will be supplied to local businesses operating in the adjacent industrial estate, namely Aesica Pharmaceuticals and MSD. The plant will also have the potential to provide renewable heat to neighbouring facilities.

GIB will make a £21m investment in the project, with John Laing investing in a stake worth £27m. Barclays will provide the remainder of the funding as debt, 60% of which will be guaranteed by the Danish export credit agency EKF.

The construction of the plant will be undertaken by a consortium of Burmeister & Wain Scandinavian Contractors A/S (BWSC), the consortium leader, and Burmeister & Wain Energy A/S (BWE). BWSC will operate the plant upon completion under a 12-year Operations & Maintenance contract. Up to 25 permanent positions will be maintained at the operational facility, with further jobs created within the project supply chain.

Fuel for the plant will be provided by local growers and forest industry suppliers.

"The Cramlington plant promises to create local jobs, support an industry whose vitality is essential to the growth of the regional economy and help cut UK greenhouse gas emissions while promoting the country’s adoption of green energy sources."

Ed Northam
Head of Investment Banking at the UK Green Investment Bank

"Our investment in Cramlington biomass CHP plant builds on the success of our partnership with Estover and GIB established on Speyside Renewable Energy plant. This exciting new project demonstrated the valuable contribution biomass can make to delivering renewable heat in the UK. Cramlington adds further depth to John Laing’s growing portfolio of renewable energy assets in the UK and internationally."

Ross McArthur
Managing Director of Renewable Energy for John Laing

"Nearly £140m invested in the Cramlington CHP plant is fantastic news for the North East and for Estover. It means more jobs in forestry, and a secure energy supply for industry. Twice the size of our first plant in Scotland, it shows Estover is becoming a real force in these long-term energy and infrastructure projects."

Marcus Whately
Founder and Co-CEO at Estover Energy

"With Barclays’ strong track record in supporting renewables projects we saw our part in such a high-profile project through the provision of debt finance as a natural fit. Working with GIB, John Laing and Estover to help deliver this deal further demonstrates our continued commitment to the UK renewable energy sector."

Nial Gemmell
Director at Barclays Bank
 

Total GIB share of investment: £21m

Total capital mobilised: £138m

Co-investors: John Laing, Barclays

Expected completion: Late 2017/early 2018

Developer: Estover Energy

EPC contractor: Consortium of BWSC and BWE

O&M operator: BWSC

Advisers to GIB: Pinsent Masons, Operis