Is it true that the plant will be built and operated by Hitachi?
Hitachi Zosen Inova (“HZI”) would be the Engineering, procurement, and construction (“EPC”) contractor. The Installation will be operated by a special purpose vehicle (“SPV”) set up following financial close, whereby HZI would operate the installation on behalf of Broad Energy Wales Limited.
The financing process to bring projects such as the Buttington Energy Recover Facility to life occurs in three main stages over the lifecycle of the project from the concept stage to when the facility becomes operational. It may also involve more than one provider of capital.
The first stage of capital provision towards the project is during the early phases of the project where the initial concept of situating an ERF at a given location requires additional investigative and administrative research work to prove the concept. The capital provided at this stage by project originators such as Broad Group enables surveys, technical investigations and legal documentation to be progressed to the point where the viability of the project is confirmed
Once viability of the project is confirmed, an additional capital commitment is provided by growth investors such as Low Carbon to undertake the many workstreams involved in materialising and developing the project. Examples of these workstreams include securing and maintaining grid connection, servicing land obligations and preparing the planning and permitting applications.
The final stage of the financing process is triggered once all the necessary regulatory, commercial and other contractual documentation is in place, with the project having been acknowledged and/or approved by all stakeholders. At this stage, capital is provided for the physical construction of the facility by institutional investors (such as infrastructure / pension funds). Given these institutional investors are large, long term asset holders, it is typical for them to acquire 100% of the project and hold on to it for the lifetime of the facility’s operations. This type of transaction typically follows a project financing structure such that the project and all of its associated rights and contracts are held within a standalone Special Purpose Vehicle (SPV), which is acquired by the investor with funds comprising both equity and debt capital. Once construction is complete, the daily operation of the facility may begin and the benefits of such a facility to all stakeholders may be realised.