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    Infinis
    UK

    Utilities

    Infinis

    Infinis is the largest generator of electricity from landfill gas (“LFG”) in the UK, with a portfolio of 121 landfill sites and total installed capacity of over 300MW.

    Alkane Energy acquisition

    In March 2018, the Company announced its intention to increase its investment in Infinis by £125 million to fund Infinis’s acquisition of Alkane Energy (‘Alkane’), an independent power generator from both coal mine methane (‘CMM’) and reserve power (‘Peaking’) operations and the largest generator of electricity from CMM in the UK.

    Developments in the year

    Infinis continues to perform well, operationally and financially, and to support the Company’s yield. Its core business, generating baseload electricity from captured landfill methane and captured mineral methane, exceeded budget. The positive valuation impact from this outperformance was offset by weaker power prices and lower power price expectations.

    Infinis continues to review growth opportunities, commissioning 12MW of new power response capacity during the year. It has also progressed development plans for energy parks which combine technologies, co-locating subsidy-free solar PV power generation with Infinis’s existing captured landfill methane activities and utilising spare grid capacity. Infinis appointed a new Head of Solar in March 2020 to support this initiative.

    The regulatory outlook has improved with the resumption of Capacity Market payments (including back-dated payments covering the suspension period) and a conclusion to Ofgem’s Targeted Charging Review of network ‘residual charges’. However, significant uncertainty still exists over the broader future of network access charging arrangements and the level of post-Brexit carbon price support.

    Although not yet quantifiable, we increasingly see additional value in Infinis’s strong environmental credentials and in particular its negative net carbon footprint due to the atmospheric emission of methane that it prevents. In September 2019, Richard Lewis was appointed as a non-executive director to the Board of Infinis, bringing 25 years of experience in the energy industry.

    Investment rationale

    The investment in Infinis is foremost a yield play. Its front-ended cashflows balance other recent investments by the Company in more growth-oriented businesses. Revenues are underpinned by the inflation-linked UK Renewables Obligation Certificate (“ROC”) regime until 2027. Infinis could also become a platform to make new investments in activities such as distributed power generation from other gas sources, distributed energy storage by exploiting the business’s spare engine and grid connection capacity, and additional landfill gas sites.

    Infinis and its market

    Infinis is the largest generator of electricity from LFG in the UK, with a portfolio of 121 landfill sites and total installed capacity of over 300MW. LFG is produced by decomposing organic matter in landfill sites. If released into the atmosphere unchecked, LFG contributes to pollution and is a potent greenhouse gas. By extracting LFG from landfill sites, Infinis fulfils an essential role in helping landfill operators meet their environmental compliance obligations. By using the collected LFG to generate electricity, Infinis supplies distribution networks with a consistent source of baseload power.

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