Finnvera to provide financing for MGT Teesside biomass plant

By Finnvera | September 15, 2016

The world’s largest power plant fueled solely by biomass will be built near the town of Middlesborough, England. The circulating fluidized bed boiler and the flue gas cleaning system are delivered by Amec Foster Wheeler Energia Oy.  Finnvera’s contribution to the financing of the project is GBP 100 million ($132.37 million), or roughly EUR 120 million.

The construction of the power plant is estimated to cost approximately GBP 650 million, or about EUR 780 million.

Preliminary construction work for the MGT Teesside plant will begin within the next few months. Commercial operations are due to start during the first quarter of 2020.  The 299 MW power plant will be fueled solely by clean wood pellets and chips.

“We’re glad of this opportunity to contribute to the export of Finnish renewable energy technology. Finland has solid expertise in this type of renewable energy technology. Elsewhere in the world—surprisingly—it is still often perceived as something new,” says Tuukka Andersén, vice president and head of underwriting at Finnvera.

“Finnvera’s participation in the project enabled long-term financing of 15 years. This is a key factor if a project of this type is to succeed,” he adds.

Jaakko Riiali, vice president of commercial operations at Amec Foster Wheeler Energia Oy, the company delivering the power plant boiler, sees the project as a good bridgehead for large biomass boilers of the power company class in Central Europe. In addition, the project serves as an example for more northern countries as well, showing that biomass as well as fossil fuels can be used to fuel large baseload plants. 

“Finnvera’s inclusion in the financial arrangements gave stability to the negotiations and made it considerably easier to reach an agreement on project financing,” Riiali says.

Fuel from responsibly managed forests

In order to ensure the sustainability of fuel supply, the biomass-fueled power plant uses fuel acquired from FSC Forest Management certified forest areas. FSC certification guarantees that the fuel is derived from responsibly managed forests.

The price paid by the British government for electricity produced using clean biomass is considerably higher than the normal price of electricity. The purpose is to support the attainment of the targets set by the U.K. government and the European Union for CO2 emissions and to promote the objective of reducing coal combustion at both small and large power generation units.