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EON-Backed GT Energy Expects to Get Funds for U.K. Site in Weeks
Jan. 25 (Bloomberg) — GT Energy, an EON SE-backed Irish geothermal developer, expects to complete a fundraising for a plant to heat homes in northwest England in coming weeks.
It’s raising about 2.6 million pounds ($4 million), partly for a 17 million pound facility in Manchester being developed with EON, Managing Director Padraig Hanly said by e-mail. The project will be 50:50 funded with debt and equity, he said.
“We expect to close out in the coming weeks,” Hanly said. “There is a good appetite for investing in projects. We’re progressing the investment process with a number of investors and expect to reach financial close towards the end of the year” for the whole project. Potential investors aren’t only in the U.K. and include infrastructure and venture funds, he said.
Heating makes up about 47 percent of U.K. carbon-dioxide emissions and the nation plans to get 12 percent of its heat from renewable sources by 2020. Operations such as Dublin-based GT’s are able to get premium payments for their output for 20 years under the U.K.’s Renewable Heat Incentive. GT signed an accord with EON in July to jointly explore geothermal energy.
“RHI support is welcome and is at the level recommended by industry,” Hanly said. “That said, the industry needs legislation to be put in place to create a licensing regime similar to oil and gas. If we can get over the link, we would expect to see European geothermal investors enter the U.K.”
The government has indicated a licensing regime won’t be set up until the first geothermal plant is built, he said.
Planning consent for the Manchester plant, with thermal capacity of about 10 megawatts, is expected to be decided in April, Hanly said. GT received “very positive” feedback from local residents, and construction should start early next year and full operations in the middle of 2015, he said.
GT is talking with local councils showing “significant” interest in geothermal in the U.K., Hanly said. The Manchester site is part of the deal with EON that GT signed to deliver as much as 140 million pounds of U.K. geothermal projects.
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