Ellomay Capital has teamed up with Ludan Energy Overseas (Ludan), a wholly-owned subsidiary of Ludan Engineering to invest in waste-to-energy (specifically gasification and bio-gas (anaerobic digestion)) projects in the Netherlands.
Ludan's affiliates currently own certain rights in a few biogas plants, and were involved in the design and/or construction of fourteen biogas projects in the Netherlands and Spain.
Pursuant to the Agreement, subject to the fulfillment of certain conditions (including the financial closing of each project and receipt of a valid Sustainable Energy Production Incentive subsidy from the Dutch authorities), the Company will acquire at least 51% of each project company and Ludan will own the remaining 49% (each project that meets the conditions is referred to as an "Approved Project").
In the event additional entities will invest in an Approved Project, their holdings will not dilute the Company's 51% share.
The amount invested by the Company in each Approved Project will be comprised of: (i) the Company's share of the equity based on its holdings in the Approved Project and (ii) an additional amount up to an aggregate investment that will reflect a pre-determined minimal internal rate of return to the Company, up to a certain maximum percentage of the aggregate equity investment. Ludan will provide the remaining required equity.
The expected overall cost of the projects is approximately EUR 200 million (including project financing).
The operation period for each of the projects is expected to be approximately twelve years. Ludan, by itself or through its affiliates, will act as the engineering, procurement and construction ("EPC") contractor and as the operation and maintenance ("O&M") contractor for the Bio Gas projects, based on specific agreements. In addition, Ludan will be entitled to receive a development fee for each project following financial closing in different amounts depending on the projects' type and size.
The Agreement includes customary limitations on transfer of holdings in the project companies, termination provisions and minority rights. The Agreement may be terminated, inter alia, in the event the parties will not reach an understanding as to the contents of the EPC and O&M contracts within sixty days following the financial closing of the first project.
Ran Fridrich, CEO of Ellomay noted that "We are excited about this new opportunity and our entry into the Netherlands renewable energy market and the Waste-to-Energy market. The Netherlands' waste-to-energy market is expected to grow rapidly, as the Dutch government started taking actions to increase the renewable energy usage in order to reduce dependency on traditional fossil fuels.
"As part of this initiative, actions are taken to significantly increase green gas installations in the Netherlands by 2020, which will also assist the Dutch authorities with mitigating the environmental side effects of the growing Dutch milk industry. This new opportunity is in line with Ellomay's operating objective to expand its operations in the renewable and clean energy market and exploit attractive investment opportunities."