Investors eye anaerobic digestion subsidies as power price predictions fall

The Vulcan AD plant acquired for £15.3m last August.

John Laing Infrastructure Fund plans further investment in anaerobic digestion (AD) after buying two plants in the last 12 months.

Announcing financial results for the year to 31 March, chairman Richard Morse said AD offers “attractive yield characteristics” and that increasingly competitive secondary solar and wind markets “suggest that more attractive risk-adjusted returns are present” elsewhere in the environmental infrastructure sectors.

“One of the attractions of sectors such as anaerobic digestion is that operational assets typically have a higher subsidy element and a consequent lower relative exposure to merchant revenues,” Morse added.

Noted lower assumptions for long-term electricity prices, the company said it “intends to prioritise acquisitions with lower merchant exposure in order to maintain JLEN’s low sensitivity to power price”.

At the year end, the company’s portfolio of generation assets topped 269MW.  It posted profit before tax of £21.1m, down from £25.6m the prior year.

Overall generation was slightly below budget, dragged down by reduced solar output due to lower irradiation levels, ongoing issues with the Branden solar farm, and HV failures at the Crug Mawr solar farm that it acquired last year as part of a 33.5MW portfolio.

Related stories:

John Laing pays £11m for 5MW AD plant

JELN buys Vulcan Renewables and 5MW of AD

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