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July 1, 2010updated 12 Apr 2017 4:21pm

Leasing could benefit from biogas revolution

This was the message given to Leasing Life by long-standing Lib Dem peer and former energy spokesman Lord Redesdale last month, in the run-up to the UKs first trade show dedicated to the anaerobic digestion industry. He believes that the UK is ready to follow in the footsteps of Germany, currently the world leader in biogas production, by building 1,000 new anaerobic digestion (AD) plants worth up to 5bn within the next 10 years.

By Claire Hack

Britain is on the cusp of a biogas revolution, and the asset finance industry is in the perfect position to underwrite it.

This was the message given to Leasing Life by long-standing Lib Dem peer and former energy spokesman Lord Redesdale last month, in the run-up to the UK’s first trade show dedicated to the anaerobic digestion industry.

He believes that the UK is ready to follow in the footsteps of Germany, currently the world leader in biogas production, by building 1,000 new anaerobic digestion (AD) plants worth up to €5bn within the next 10 years.

Crucially, so does the coalition government, which announced in its 20 May Programme for Government that it would “introduce measures to promote a huge increase in energy from waste through anaerobic digestion.”

Measures are one thing, however, and means are another – while Redesdale is optimistic that the government’s position on subsidies for renewable energy will stabilise and improve going forward, it is clear that investment must come from the private sector.

Hence ADBA (the Anaerobic Digestion and Biogas Association), the brand new association chaired by Redesdale, which will hold its inaugural conference on 7 and 8 July, at the NEC in Birmingham.

ADBA aims to remove “a number of barriers from the (AD) industry’s growth”, with one of the most significant obstacles identified being the difficulty in securing finance for AD facilities.

The problem, Redesdale said, is one of understanding – AD equipment is simply not a familiar asset class in the UK.

On the other hand, should asset finance providers get involved in underwriting the oncoming wave of biogas plants, they stand to benefit greatly should the CRC carbon trading scheme be expanded to include green gas production as a means of procuring carbon credits.

Risk will also be mitigated by a plant accreditation scheme currently being developed by ADBA, which will make due diligence costs far less of an issue for potential AD lessors.

 

A fuller analysis of the investment opportunities for lessors interested in the AD industry will be published following ADBA’s conference in July.

 

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