Investment in portfolio of BESS assets
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1 April 2022
Triple Point Energy Efficiency Infrastructure Company plc
("TEEC" or the "Company" or together with its subsidiaries, the "Group")
Investment in portfolio of Battery Energy Storage System ("BESS") assets
The Board of Directors of Triple Point Energy Efficiency Infrastructure Company plc (ticker: TEEC) is pleased to announce that the Group, via TEEC Holdings Ltd, has signed contracts to provide a debt facility (the "Facility") to a subsidiary of Virmati Energy Ltd (trading as "Field") (the "Borrower"), for the purposes of building a portfolio of four geographically diverse Battery Energy Storage System ("BESS") assets in the UK (the "Portfolio"). The total Facility amounts to £45.6 million and carries a fixed interest rate which will support TEEC to meet its dividend target.
The Portfolio has a total capacity of 110MW. The first BESS asset, which is a one hour duration battery, is expected to become operational in June 2022. It is located in the North of England and has a total capacity of 20MW. The other three BESS assets are located in Scotland (two hour duration battery; total capacity 50MW), Wales (two hour duration battery; total capacity 20MW), and the South East of England (one hour duration battery; total capacity 20MW). These are expected to become operational in 2023.
Key terms of the Facility include:
· funding will only occur once the projects are each sufficiently de-risked against construction and operational risks. It is expected that draw down will take place over the financial year to 31 March 2023;
· committed amortising term of 18.25 years following an initial 1 year period;
· increased yield in the event of inflation (consumer price index) exceeding base case expectations, subject to a cap;
· security including, amongst other rights, charges over the assets of the Borrower;
· TEEC will receive an arrangement fee, annual monitoring fees, and a non-utilisation fee on undrawn amounts of the Facility; and
· the Borrower benefits from an ESG margin ratchet which delivers a potential reduction in the rate payable if ambitious avoided carbon targets are met during trading.
The Portfolio forms part of the pipeline of BESS asset investment opportunities identified by the Company in its announcement of 1 February 2022, including over 500MW of further assets to be commissioned by Field. With the continued roll-out of intermittent renewable energy facilities across the UK's grid, demand for grid balancing and storage services in the UK is likely to stay high for a significant period of time. Grid-scale battery systems provide one of the most effective and proven solutions to this requirement, storing power when it is produced in excess and then making it available when demand is higher. As with other infrastructure asset classes, long-term debt capital has an important role to play in the scale up of BESS in the UK.
Field was established in 2020 with a vision to finance, build, operate and monetise the renewable infrastructure needed to reach net zero, starting with battery storage, and has aspirations to be a market leader in sustainable practices in energy storage. Alongside Field, the Group has negotiated robust provisions around responsible sourcing, as well as a strategy for tracking emissions associated with the projects, including scope 3. The Group also has consent rights over recycling strategy at end of cell life to ensure it meets its environmental standards.
This transaction is in line with the Company's targeted risk/return profile and objective of delivering a portfolio of secure investments that generates a total return for investors comprising sustainable and growing income and capital growth predominantly supported by long-term contracts. It also supports the transition to a low carbon economy in accordance with the UK government's overall environmental targets.
Commenting on the transaction, John Roberts, the Company's Chair, said:
"Now more than ever, we are seeing the increasingly urgent need for energy efficiency solutions. As the world moves towards greater use of renewable sources of energy, battery storage is essential to improve front of meter energy efficiency, maximising and making use of the intermittent power generated from such renewable sources. Efficient use of such power reduces the reliance on traditional fossil fuel generation, thus reducing energy costs and carbon emmissions."
For further information, please contact:
Triple Point Investment Management LLP
020 7201 8989
Akur Limited (Financial Adviser)
020 7493 3631
RBC Capital Markets (Joint Broker)
020 7653 4000
Winterflood Securities (Joint broker)
020 3100 0000
Field was advised on this transaction by Elgar Middleton.
Further information on the Company can be found on its website: www.tpenergyefficiency.com.
The Company is an investment trust which invests exclusively in a diversified portfolio of Energy Efficiency assets in the UK, which have a positive environmental impact.
The Investment Manager is Triple Point Investment Management LLP ("Triple Point") which is authorised and regulated by the Financial Conduct Authority. Triple Point manages private, institutional, and public capital, and has a proven track record of investment in Energy Efficiency and decentralised energy projects.
The Company was admitted to trading on the Specialist Fund Segment of the Main Market of the London Stock Exchange on 19 October 2020 and was awarded the London Stock Exchange's Green Economy Mark.