In April 2014, STAR established European Generation Ltd, a vehicle focused on investing in small scale renewables projects in the UK. European Generation has committed funding to Twinwoods Heat & Power Ltd (“Twinwoods”), a company that was set-up to develop and construct a 3.4MW combined heat and power facility on the Twinwoods Industrial Park in Bedfordshire.
STAR was exploring the creation of a platform to invest in “construction-ready” small scale UK renewable projects, and identified Twinwoods, a partially complete waste wood CHP project through the STAR Advisory network. The asset was controlled by the senior lender following bankruptcy of the original project sponsor / developer.
Why does the Twinwoods fit STAR’s investment strategy?
- Twinwoods represented an opportunity to acquire an asset with planning permission, grid connection and on site infrastructure at a significant discount to original cost.
- The project was “grandfathered” under attractive UK regulatory / subsidy regime, with potential upside from a range of initiatives.
- Attractive base case returns allowing all-equity funding and the ability to adopt a more flexible and cost-effective contractual structure.