React Energy reports progress with bioenergy projects
U.K.-based React Energy plc has issued an operational update and announced the issuance of a £ GBP 1.5 million ($2.55 million) secured loan note. The company is developing several bioenergy projects, including the 4 MW Newry Biomass Ltd. in Northern Ireland, the 12 MW Enfield Biomass Ltd. project in London, the 12MW Clay Cross Biomass combined-heat-and-power (CHP) project in England, the 12 MW Plymouth Biomass CHP project in England, and the 25 MW Londonderry Port Biomass CHP project at the Derry Port.
In its operational update, React Energy indicated the revised term sheet for its Enfield project is expected to be signed soon, with financial close scheduled to follow three months later. The company announced the signing of the heads of terms for partial financing of the project with the Foresight Group in early June. Under the heads of terms, co-investors are required to finance the project alongside Foresight. According to React Energy, it has been in detailed discussions with co-investors since March. “The company has sought to change the structure of the transaction, which is now expected to see React receiving a cash development fee on financial close as well as retaining a minority shareholding in Enfield. It is envisaged that the investors will provide 100 percent of the funding required for the construction and operation and on that basis React will not be required to invest any further funds,” said the company in the update.
Regarding the Newry project, which is a joint venture between React and its largest shareholder Farmers Business Developments plc, React Energy said the board has been evaluating rollout of the second phase of the project since Ulster Bank approved financing in January. According to the company, phase one operations are dependent on the completion of upgrades to local grid infrastructure. Those upgrades are being completed as part of the second phase of development. In the update, React Energy noted that discussions with the project’s current technology provider have proved to be challenging. As such, discussions have commenced with a number of alternative technology providers. A final decision is expected to be made in the coming weeks. The 2 MW phase one portion of the biomass gasification project was commissioned in June 2013. Phase two is expected to bring an additional 2 MW of capacity online.
In addition to electricity production, React Energy is also active in the biomass thermal sector. In late March, GG Eco Solutions Ltd., a company acquired by React Energy, signed a 20-year heat supply agreement with Old Buckenham Hall School. Once complete the 398-kW project will feature two boilers that provide heat and hot water to the school’s buildings and swimming pool. Construction on the project has already begun, with startup expected within the next three months.
“We have been working hard across the group’s portfolio to progress our projects as quickly and efficiently as possible. We have encountered some time consuming hurdles which have delayed progress, particularly at our Enfield and Newry Biomass projects,” said Gerry Madden, CEO of React Energy. “However, the due diligence and term sheet negotiation with regards to the Enfield project and the review of the technology provider at the Newry project are key to ensuring we are able to maximize potential return from these projects for shareholders.”