LONDON, UK: Downing Renewables & Infrastructure Trust plc [DORE] has signed an agreement to acquire Mersey Reactive Power, a UK-based, fully operational 200 MVAr shunt reactor for a cash consideration of c.£11.0 million.
Completion is subject to Ofgem approval. This investment will be made using the Company’s £40 million revolving credit facility and is forecast to be accretive to the Company’s returns.
This grid services asset became operational in May 2022 and was the first project to go live as part of the National Grid’s Stability Pathfinder initiative.
The project, which has an expected asset life of 40 years, supports Great Britain’s electricity system in voltage management, providing increased network resilience, reducing costs to consumers and lowering carbon emissions.
Mersey Reactive Power has an initial fixed priced, inflation-linked, availability-based contract with National Grid ESO until 2031.
Traditionally, reactive power services have been provided by large fossil fuel plants, but as we transition to low and zero carbon energy sources and large coal and gas generators are wound down, new sources and providers of reactive power are needed.
The Mersey Reactive Power solution, based in Frodsham, Merseyside, comprises a shunt reactor which absorbs reactive power to increase the efficiency of the network and manage high voltage levels.
The acquisition will provide a new, long-term, revenue stream for DORE, one that is not derived from the sale of power on the wholesale markets.
It demonstrates the Company’s continued commitment to pursuing a highly diversified investment strategy.
DORE will continue to seek similar opportunities in the grid services sector, constructing a portfolio designed to increase the stability of revenues and consistency of income to shareholders.
Tom Williams, Partner, Head of Energy & Infrastructure at Downing LLP, said: “The opportunity to further diversify DORE’s portfolio and provide essential grid services in the UK is one that we could not overlook, and we are excited by our pipeline of potential opportunities in this sector of the energy market. Voltage management and grid stability are critical to the future success of decarbonisation. This attractive acquisition, when taken with other recent acquisitions by the Company, increases the Company’s long-term fixed revenues in the UK, helping to provide our investors with diversified and stable returns.”
DORE acquires two hydropower plants in Sweden for £5.1 million