The Helias CoRDe biomass plant reached financial close in 2011, securing £42.4 million of financing. The project is a combined heat and power project located in Morayshire, Scotland, UK. The facility will take biomass feedstock from the malt whisky manufacturing process at an adjacent distillery, and convert it into electricity and an animal feeds protein supplement, pot ale syrup, in a combined heat and power (CHP) plant.

The CHP unit will burn distillery co-products such as draff and wood chip to generate steam and drive turbines creating 7.2MW of energy, enough for 9,000 homes. Steam from the process will then evaporate liquid whisky residues (pot ale) into pot ale syrup, a popular and economical feed for livestock.

The plant saves 46,000 tonnes of CO2 per year compared to equivalent coal fired power stations and easily meets the emissions targets set under the Renewables Obligations (Scotland) directives. Currently under construction, the plant is slated to go into operation in early 2013.

Project history

The joint venture teamed up on a project Helius had been developing for some time – a 7.2MW CHP project that would take advantage of the large amounts of distillery by products available in Scotland. In August 2009, the JV – Helius CoRDe – was established between biomass developer Helius Energy and the Combination of Rothes Distillers (CoRDe). CoRDe is a long-established organisation that comprises the major whisky distillers of Speyside in Scotland.

The UK biomass industry has so far found it hard to gain momentum and access funding for projects. This may be in part due to a lack of publicity, and a lack of glamour – small-scale sources of energy from by-products just isn’t as exciting to investors, it would seem, as a new wind farm. And it has suffered the same fate as a number of other renewable technologies as investors stall, waiting for the UK government to finally finish mulling over Renewables Obligation banding.

However, the Helius CoRDe project benefits from some advantages that have enabled it to get off the ground, despite the harsh project finance climate of the past few years. One of the traditional stumbling blocks for many nascent biomass projects – guaranteeing a steady supply of feedstock – wasn’t a problem for this project.
Located next to a whiskey distillery, both transportation and the risk of intermittent supply was removed by its geography and the fact that the distillery was one of the sponsors of the scheme. The project was granted planning permission from Moray Council in 2009.

Project finance

The £60.5 million project was financed with a 70:30 debt to equity ratio. Helius Energy originally owned 51 per cent of the joint venture, with CoRDe owning the remaining 49 per cent.

Helius Energy announced financial close on the project in April 2011, after Rabobank bought 44.7 per cent of the equity in the project. The ownership of the project is now as follows:

•    Helius Energy - 50 per cent plus one share - £9.1 million
•    Rabobank - 44.7 per cent minus one share - £8.1 million
•    The Combination of Rothes Distillers Limited (CoRD) - 5.3 per cent - £1 million

Lloyds and RBS provided a total of £42.4 million in debt financing to the project.

Legal adviser

Norton Rose acted as legal adviser to the project. Burges Salmon was legal adviser to the sponsor. Ambrian Partners were financial adviser to the sponsor. Shaw Group acted as technical adviser to the lenders. PKF UK LLP was model auditor.

Conclusion

Helius Energy continues to secure funding for projects, and is also developing a 100MW project at Avonmouth and bringing forward a similar scale scheme in Southampton. Further UK sites are also in negotiation. Helius Energy secured further capital investment last year by placing shares on the London Stock Exchange for the first time.

Helius CoRDe has been recognised for its speedy progression through the development chain and its effective project financing, winning Renewable Energy Transaction of the Year last year at the Renewable Energy Infrastructure Awards.

The project is proof of how innovative ideas can quickly come to fruition if the private and public will is there, alongside the right conditions. The Combination of Rothes Distillers has described the project as creating a “virtuous circle”, that saves all parties money by locating the fuel stock, the biomass facility and the energy consumers (both of the human and animal variety) all within a local area.

The Helius CoRDe project presents a holistic, localised approach to biomass energy generation that has been well received both by its financiers and the public – surely an indication of the way things should be done in the years to come if biomass is to truly take off in the UK.