SSE to divest stake in Ferrybridge and Skelton Grange Multifuel plants
UK energy utility SSE plc has recently announced that it has entered into an agreement to sell its 50 percent share in energy-from-waste (EfW) ventures Multifuel Energy Ltd (MEL1) and Multifuel Energy 2 Ltd (MEL2) to European Diversified Infrastructure Fund III, an infrastructure fund managed by First Sentier Investors, for a total cash consideration of GBP995 million (≈ EUR 1 billion). The transaction is expected to complete by late 2020 subject to antitrust approval by the European Commission.
MEL1 and MEL2 are 50-50 joint ventures between SSE and Wheelabrator Technologies Inc., consisting of the operational Ferrybridge Multifuel 1 and Ferrybridge Multifuel 2 facilities (MEL1), as well as the Skelton Grange Multifuel development project (MEL2), all in West Yorkshire.
Ferrybridge Multifuel 1, which entered commercial operation in 2015, and Ferrybridge Multifuel 2, which entered commercial operation in 2019, each has an installed power capacity of 75 MW and capable of processing around 725 000 tonnes and 675 000 tonnes of waste per annum respectively.
The proposed Skelton Grange Multifuel facility, which is due to reach financial close around April 2021 and commence commercial operations in 2025, will have an installed capacity of 45 MW and will be capable of processing around 400 000 tonnes of waste annually.
Part of asset disposal strategy
In June 2020, SSE identified its 50 percent interest in MEL1 and MEL2 as an early priority for sale as part of a strategy to secure at least GBP 2 billion (≈ EUR 2.21 billion) from disposals of non-core assets by autumn 2021.
The announcement follows the sale of SSE’s 25.1 percent non-operating stake in Walney Offshore Wind Farm to Greencoat UK Wind for GBP350 million (≈ EUR 387.3 million) and the agreement to sell its 33 percent equity interest in meter asset provider MapleCo to Equitix, under which SSE will receive net proceeds of around GBP90 million (≈ EUR 99.6 million) on closing.
The proceeds of these disposals will support the company’s plans to invest GBP7.5 billion (≈ EUR 8.3 billion) in low-carbon energy infrastructure over the next five years, helping the UK to reach net-zero carbon emissions, as well as reduce SSE’s net debt.
This sale marks a major step in our plans to secure at least GBP2 billion (≈ EUR 2.21 billion) from disposals by autumn 2021, with just over GBP1.4 billion (≈ EUR 1.55 billion) now delivered. While these multifuel assets have been successful ventures for SSE, they are non-core investments and we are pleased to have agreed to a sale that delivers significant value for shareholders while sharpening our strategic focus on our core low-carbon businesses. Our disposal programme demonstrates how the company can create value from our assets and supports our plans to invest GBP7.5 billion (≈ EUR 8.3 billion) over the next five years in the low-carbon infrastructure needed to stimulate a green economic recovery and help the UK transition to a net-zero future, said Gregor Alexander, Finance Director, SSE.