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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.

    As at December 2017, Alkane had 160MW of installed generating capacity operating from 32 sites across the UK.

    The merger of Alkane with Infinis will create a business with significant scale, offer operational improvement opportunities and the potential to further elevate Alkane’s generation performance and growth potential.

    Developments in the year

    The business has performed well operationally and financially. Infinis was a strong contributor to the Company’s income in the year, as expected in our investment case.

    In August 2017, Infinis appointed Tony Cocker as Chairman of the Board and Scott Longhurst as nonexecutive director and chairman of the audit committee.

    A new development team was established to pursue opportunities to exploit the business’s spare engine and grid connection capacity. 35MW of peaking power generation capacity is now under development, funded by a £12 million further equity injection from the Company  in November 2017.

    In the course of 2017, Ofgem confirmed its intention to cut the value of a significant embedded benefit, known as ‘Triads’, sooner than had been anticipated. The impact of this change was factored into the valuation of the Company’s holding in Infinis.

    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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