New venture company to pursue multi-million pound power projects

Infrastructure group Hargreaves Services has set up an offshoot company to pursue two multi-million-pound waste-to-energy projects in Fife and Grangemouth.

Brockwell Energy Limited has been formed to lead on Hargreaves’ growing portfolio of power projects, which also includes onshore wind and flexible gas interests.

The most advanced is the proposed £150 million Earl’s Gate combined heat and power plant at Grangemouth.

The plant received planning permission in January and a memorandum of understanding has now been signed with the Green Investment Bank (GIB) to develop the scheme further.

It is expected Earl’s Gate will reach financial close before the end of this year, at which point GIB is expected to take a 50% equity stake in the project.

The firm said “excellent progress” had been made on the scheme, with the plant benefiting from the ability to sell into an existing private heat and power network. It said Earl’s Gate was expected to be one of the most efficient facilities of its kind in the UK.

“The board expects the Earl’s Gate project to generate significant longterm returns and value,” Hargreaves said in a statement to investors.

“In the short term, the successful financial closure of the project should generate a modest development premium and offer an opportunity for the group to co-invest alongside a highly credible and successful third party investor.”

The second local energy-from-waste scheme to be taken forward by Brockwell is centred around the former Westfield open cast coal mine in Fife.

The wider redevelopment vision for the complex envisages the installation of a solar energy park and the creation of new industrial units.

Investment at Earl’s Gate and Westfield has the potential to create hundreds of construction jobs and a number of full-time posts once the sites are up and running.

Hargreaves chairman David Morgan said setting up the new subsidiary company was the best way to take forward the group’s energy portfolio.

“Exciting progress continues to be made in developing value in our energy projects,” Mr Morgan said.

“The formation of Brockwell Energy creates an opportunity to raise the specialist capital and create the partnerships necessary to enable the group to extract maximum value across the entire portfolio of energy projects whilst allowing the group to control the level of any investment and to focus on cash generation and the continuing simplification and development of the group.”

The new venture company will be headed by former Welsh Power Group non-executive chairman Alex Lambie, who has been appointed as chief executive officer.

He will be supported by Hargreaves’ chief financial officer Iain Cockburn, who will join Brockwell as CFO on a permanent basis once a successor in his current role has been recruited.

Mr Lambie said the new business had the chance to create significant value as it progressed.

“Since first engaging with Hargreaves to advise on the development of its energy projects, I have been struck by the quality of the project portfolio and the drive and professionalism of the team that has been assembled within the group to develop and manage these projects,” Mr Lambie said.

“Together, the projects and the team offer the opportunity to create significant value from the current project portfolio and provide a strong platform to develop a larger business focused on the development and delivery of energy projects across a balanced portfolio of technologies.

“I am delighted to be tasked with leading the team and excited by the opportunities that lie ahead.”

The group said the build-out of the projects now under the Brockwell banner will require “substantial capital.”

The balance sheet value associated to the energy portfolio is £4.1m, with that figure set to rise to £8.3m by November 30 as a result of ongoing pre-development costs related to Earl’s Gate.

However, Hargreaves group chief executive Gordon Banham was upbeat about the long-term prospects for Brockwell, saying: “I look forward to the value and cash that Brockwell can help the group to realise from its property and energy investments.”

Picture: Aerial Photography Solutions. The former open cast coal mining site at Westfield, near Kinglassie, in Fife is one of the development sites that has been passed to Brockwell Energy.