A FUND run by Scottish Equity Partners has sealed its first clean energy infrastructure investment – committing up to £9 million to a venture to instal about 200 small wind turbines across the Highlands and Islands.
Glasgow-based private equity house SEP highlighted the fact that many of these turbines would be manufactured in Scotland, with local contractors used to instal them.
The SEP-run Environmental Capital Fund is investing up to £9 million in a special purpose vehicle called Hamsin Wind, which it will own, to fund the roll-out of about 200 community-based, single onshore turbines. These will be located in high wind-speed locations across the Highlands and Islands.
SEP said that the project would provide farmers and landowners with the opportunity to instal turbines on their properties, and benefit from free or discounted power for 20 years and beyond.
Hamsin has engaged Kingspan Wind, based at Stewarton in Ayrshire, as its turbine supply partner. SEP said: “Many of the Kingspan turbines are manufactured in Scotland.”
Renewables project developer Mistral Energy and adviser ABG Corporate Finance are also working with Hamsin on the venture.
The £135 million Environmental Capital Fund has been backed by Perth-based electricity and gas company SSE and a syndicate of financial investors led by Lexington Partners.
The fund was launched last September and anchored with the acquisition of an existing SSE infrastructure business, SSE Pipelines, which provides low-pressure gas connections for residential and commercial customers across the UK.
Asked why it had taken about a year to seal the first new investment, a spokeswoman for SEP highlighted the need to determine target projects for the fund, after reviewing various clean energy sub-sectors.
SEP also cited the work put into creating an “investible” deal, after electricity generation from small wind turbines was identified as a key target, and the effort put into areas such as obtaining planning permission.
Peter Bachmann, a director at SEP, said, in the case of small residential users, the hosts of the turbines would receive their power free of charge. In such instances, the turbines were connected directly to homes.
He added that larger energy users would receive discounted power through a 20-year Power Purchase Agreement. Such a PPA would allow them to buy power at a fixed price that was well below that they were currently paying.
Asked if it was possible Hamsin would look for external investment in future, Mr Bachmann replied: “It isn’t needed at present, but it is possible in the future once Hamsin reaches a larger scale.”
SEP said that the turbines, measuring no more than 20 metres high, would be “sympathetic with rural landscapes”, grid-connected, easy to erect, and subject to a straightforward planning process.
It added that Hamsin had the potential to save more than 5,000 tonnes of carbon dioxide per year, or in excess of 100,000 tonnes over the life of the turbines.
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