Advanced Plasma Power featured in Environmental Finance

 A UK firm with a novel technology for turning waste into energy is proposing to raise a fund to finance installations across the country.

Advanced Plasma Power (APP) requires about £500 million ($790 million) to £1 billion to finance the installation of 10-15 plants over the next two to three years, according to Rolf Stein, CEO of the Swindon-based firm.

Leveraged Green Energy, a US private equity investor in APP, has agreed to make a £20 million cornerstone investment in a project finance facility, having also made around £15 million available to the company for project development. “Given the highly attractive investment returns on projects, APP is also securing interest from a number of other potential participants in the fund,” APP said.

“We are looking to raise equity and debt of an order of magnitude more,” Stein said, and APP is in the process of appointing advisors to both source the funding and structure the fund. The finance could be raised in multiple chunks of say £10-20 million, or it may be packaged-up to appeal to larger institutional investors, he said. An organisation with a strong balance sheet could, for instance, provide the investment and issue bonds against it, but Stein acknowledged that there aren’t that many firms able to do that.APP has agreed to install five of its plants in Belgium and one in Norway, and is developing a pipeline in the UK in collaboration with major UK waste operators, it says. APP’s process takes residual, non-recyclable municipal or commercial waste and converts it into a combustible gas, which can be used to generate energy, and produces an inert vitrified product suitable for use as a building material or aggregate. A typical APP plant is 17-20MW in size and generates about 150,000 MWh a year of electricity from around 150,000 tonnes of waste. The process is based on proven systems and “compares favourably to the cost of other thermal processes” such as waste incinerators, Stein said, claiming that “it is much more environmentally sustainable”.

In European projects, APP tends to be a partner supplying the technology, but in the UK it also plays the role of project developer and will secure waste supply and energy purchase contracts. “We have projects in planning and permitting,” Stein said. “In the second half of next year, we expect to reach financial close on the first of many projects.”

APP receives around 50-60 enquiries a month “from which we convert around five into real opportunities”, Stein said, and the current project pipeline adds up to about 100 globally. “The market opportunity in the UK is for treatment capacity for around 40 million tonnes per annum of residual waste currently going to landfill. Or, put another way, for 270 APP plants,” Stein said.

Stein said there are plenty of equity investors looking for a good home for their money, but leveraging that equity with debt is more difficult than it used to be, because of the constraints on bank lending. “We will get debt into projects, but it probably won’t be as much as we would have had say four years ago,” he said.

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