Market environment

The energy sector is currently in transition to replace greenhouse-gas-intensive business models with more future-oriented alternatives. A cornerstone of this development is decentral energy supply. Combined heat and power plants (CHP) will play an important role here, as they can supply both electricity and heat while at the same time greatly increase energy efficiency. Further, the innovative segment of energy contracting is considered an attractive sub-sector with an estimated annual volume of €7 to €10 billion. Energy cost advantages, environmental and climate protection, and regulatory motives will drive future growth rates. The potential for CHP plants in this transitional phase of the energy revolution is therefore significant and is also supported by German subsidies.

Company

It is a fast-growing company that supplies energy and heat to over 100 locations in Germany. Between 2017 and 2021, the delivered capacity more than tripled to over 50MW. By pursuing an energy-/heating-as-a-service model, the customer only pays for electricity and heat via long-term purchase agreements, while the company bears the capex. In a resource-intensive sector, the company's CHP solution differentiates itself as a sustainable alternative. The modularized approach also allows great scalability, so the organisation is very well set for the future. Going forward, the company is positioning itself as an infrastructure provider covering various energy supply solutions, also in the field of renewable energies.

Investment strategy

The proceeds of the financing will be used for different projects. Around €12 million will be used for a new EEG project that the company already secured. In addition, around €18 million will be used to take over an existing portfolio. The remaining approximately €20 million will be used for future projects. This transaction is asset-based due to the secure and predictable cash flows over the long-term financing period. Moreover, the volatility of energy prices is hedged by means of corresponding price adjustment in offtake agreements. In contrast to traditional methods that display an average energy efficiency level of about 38%, with about 90% energy efficiency the financed technology also positively contributes towards the energy transition. Lastly, an initial indicative assessment has shown that the CHP plants to be financed, which run on biomethane, meet the EU taxonomy criteria.