Simec Atlantis Energy has agreed conditions with infrastructure investment fund Equitix to sell a stake in Uskmouth Power, the old coal-fired power station in Newport that it hopes to convert to burn waste pellets.
If completed the deal would give Equitix a 25% stake for £32.9m. Subject to due diligence, the deal could complete by June 2019. Equitix would also help fund the power station’s conversion.
Atlantis shares climbed more than 20% in early trading on the news.
Atlantis aims to convert the power station into a 220MW facility that burns waste-derived pellets called ‘subcoal’. It plans to make almost a million tonnes of these pellets next to the power station from paper, card and plastic waste.
The company, which owns steel works, has also agreed a 20-year power purchase agreement for a proportion of its output with the pellet factory it plans to build at the site.
Atlantis hopes to start generating power from the facility in 2020. If it is successful, the company aims to export the coal conversion model and the pellets globally.
“Equitix is one of the most sophisticated and experienced investors in the waste to energy sector in the UK,” said Atlantis CEO Tim Cornelius.
“They will bring expertise in financing, EPC contracting and negotiation, waste contracting and offtake negotiation to this world leading project. This is a huge milestone for Uskmouth Power, which will ensure the UK is ready for a future focused on reduced coal and increased renewable energy generation.”
Equitix chief executive, Hugh Crossley, said the deal “represents a great opportunity for Equitix”. He added that the company is “as committed as SIMEC Atlantis Energy Limited, the majority owner and operator, to using Uskmouth Power as a blueprint for further conversion of similar plants worldwide to help address the key challenge of how we can treat waste material in an environmentally-responsible manner and use it to generate low carbon energy”.