£110m CHP to power Stobart Biomass growth

19 December 2014


Stobart Biomass is to help build a combined heat and power plant (CHP) on its group site on Merseyside that will require 140,000 tonnes of waste wood a year.

It will provide enough electricity to power the equivalent of 35,000 homes and the heat offtake will be used by Stobart’s wood drying facility next door. Stobart Biomass also has a long-term contract to supply the fuel. The project is worth £110m.

Stobart will invest £9.8m for a 40% stake, while Danish power plant specialist Burmeister & Wain, which will build and operate the plant, has committed £2.6m for an 11% stake.

The UK Green Investment Bank has put in £13.2m for a 49% stake.

The remaining funds come from loans from UK GIB and investors arranged by fund manager Foresight Group.

The plant is expected to become operational by December 2016 and will provide revenues of around £200m for Stobart Biomass over the lifetime of the 16-year supply contract.

“This agreement secures an attractive energy investment for the group and will make an important contribution towards achieving our target of delivering 2 million tonnes of fuel per year into the UK biomass market by 2018,” said Stobart Energy & Infrastructure chief executive Richard Butcher.

Heat from the plant will be used by Stobart to dry 140,000 tonnes of virgin wood material a year for sale as wood chips and pellets.

“The plant itself uses waste wood rather than virgin, but it shows again that government subsidary would be better used adding value to timber products,” said Confor chief executive Stuart Goodall.

The Wood Panel Industries Federation said it was another step in the wrong direction.

“It’s not an insignificant amount, but you have to look at these things in the round: there is a finite amount of waste wood,” said WPIF director-general Alastair Kerr.