Ingenious backs UK anaerobic plant

The London-based fund manager is backing its first anaerobic digestion deal with a £4.5m commitment.

Ingenious Clean Energy, a division of UK alternative investment firm Ingenious, is committing £4.5 million (€5.4 million; $7.5 million) to its first venture in the anaerobic digestion sector.

Ingenious will deploy the capital in a plant located on the premises of Thomas Swan, a family-owned specialist chemicals business in County Durham in the north-east of England.

Managed by investee company Generation X, the plant will produce around 8,500 megawatt hours (MWh) of electricity per year – the equivalent of powering 2,600 homes.

Sixty percent of the power produced will be sold to Thomas Swan through a long-term power purchase agreement, enabling it to reduce its reliance on fossil fuel-generated electricity by 100 percent and cut its energy costs by £60,000 per year.

The remaining 40 percent of power will be sold to the National Grid to create a regular return for Ingenious’ investors.

Anaerobic digestion (AD) is a form of renewable energy that involves breaking down farm crops, such as maize and grass silage, with anaerobic bacteria to release a biogas that is converted through an engine into heat and electricity.

The sector is a nascent one in the UK, which has just 131 operational AD plants in total. By comparison, market leader Germany has nearly 8,000 AD plants producing more than 22 million MWh per year (enough to power 7 million homes).

“Biogas generation is not seasonal or cyclical,” said Ingenious’ investment director James Axtell in a statement. “It can be produced continually throughout the year, creating a steady return on investment for our investors.”

Capital for the deal comes from the Ingenious Energy Efficiency EIS fund, which closed on more than £10 million in March 2012.