Case Study - Green Frog Power
| Country: | United Kingdom |
|---|---|
| Business area: | Environmental Infrastructure |
| Sector: | Grid Balancing Services |
| Project value: | £75m |
| Investment date: | June 2011 |
| Completion date: | Early 2013 (expected) |
| Realisation date: | To be determined |
To develop 200MW of standby power under long-term contracts to National Grid Plc.
In October 2010 InfraRed began discussions with Green Frog Power (“GFP”) about opportunities to build standby generation capacity that would help balance the supply and demand for power in the UK. This was in response to long-term contracts which National Grid Plc, who are responsible for balancing the grid, had recently introduced to encourage investment. Short Term Operating Reserve (or “STOR”) is increasingly needed to meet the demand imposed by the intermittency of a rising volume of wind generation.
Heads of Terms were signed in February 2011 and, after detailed due diligence, InfraRed made an initial equity investment in the business in June 2011. In August 2011 InfraRed and GFP raised £60m of project financing from RBS, to build out 14 sites in the UK with a total capacity of more than 200MW, and InfraRed increased its investment in the form of junior debt.
Under the STOR contracts with National Grid, GFP is paid an availability fee for providing standby generation capacity, and an utilisation fee in the event it is required to generate at short notice to meet temporary generation shortfalls. The availability revenues provide a secure, long-term, inflation-linked earnings stream.
