The sale is part of the Scottish energy company's goal to secure at least £2bn from selling its non-core assets by autumn 2021
SSE owns a 50% stake in the 75MW Ferrybridge Multifuel 1 plant. (Credit: SSE)
SSE has agreed to divest its stake of 50% in the Ferrybridge and Skelton Grange waste-to-energy assets in England to European Diversified Infrastructure Fund III for £995m in an all-cash deal.
The holding companies for the multifuel assets located in West Yorkshire are energy-from-waste ventures Multifuel Energy (MEL1) and Multifuel Energy 2 (MEL2).
The buyer is an infrastructure fund managed by First Sentier Investors, an Australian asset management company.
Both MEL1 and MEL2 are 50:50 joint ventures between SSE and waste management company Wheelabrator Technologies.
MEL1 is the owner of the operational 75MW Ferrybridge Multifuel 1 and 75MW Ferrybridge Multifuel 2 facilities, while MEL2 is the owner of the Skelton Grange Multifuel development project.
Skelton Grange, which is expected to begin commercial operations in 2025, will have 45MW capacity. It will be designed to process nearly 400,000 tonnes of waste annually.
A financial close for the Skelton Grange waste-to-energy plant is due to be reached around April 2021.
The two Ferrybridge Multifuel facilities are capable of processing a total of nearly 14,00,000 tonnes of waste every year. Ferrybridge Multifuel 1 has been in operations since 2015 while Ferrybridge Multifuel 2 began commercial operations last year.
Why SSE is selling the multifuel assets
The transaction is expected to help the Scottish energy company to help towards its goal in securing at least £2bn from selling its non-core assets by autumn 2021.
SSE finance director Gregor Alexander said: “While these multifuel assets have been successful ventures for SSE, they are non-core investments and we are pleased to have agreed a sale that delivers significant value for shareholders while sharpening our strategic focus on our core low-carbon businesses.”
As part of the same strategy, SSE had agreed to the sale of a 25.1% stake in the Walney Offshore Wind Farm to Greencoat UK Wind for £350m. In another deal, the Scottish firm agreed to sell a 33% stake in meter asset provider MapleCo to Equitix for about £90m.
SSE expects to use the proceeds of the sales under the £2bn divestment strategy to implement its plans to invest £7.5bn in low-carbon energy infrastructure in the coming five years. The proceeds will also help the company bring down its net debt.
The deal, which is subject to antitrust approval from the European Commission, is expected to be wrapped up by late 2020.