Market environment
Biogas is produced by decomposing plant or animal materials with the help of bacteria while excluding oxygen (anaerobic). From biogas, electricity and heat can be produced directly on site in a combined heat and power plant or the biogas can be upgraded to natural gas quality and fed into the natural gas grid. The fermentation residues resulting from the decomposition can usually be used as fertiliser in agriculture. The generation of electricity from biogas is subsidised by the Renewable Energy Sources Act (EEG). In the interest of the German Government's climate policy objectives and to strengthen security of supply, the feed-in of biogas from domestically produced biomass is to be facilitated. The Gas Grid Access Ordinance (GasNZV) provides the legal framework for the instruments of support for biogas feed-in.
Issuer
Eco Erneuerbare Energien GmbH builds turnkey biogas plants that are specialised in the recycling of waste (Waste2Energy). In the past 4 years the company has developed a strong market in Asia (China, South Korea). The growth strategy consists of 2 pillars:
Export of turnkey biogas plant components produced in Germany to China / South Korea
Average contract value of a biogas plant: EUR 2 million
Employees of Eco Erneuerbare Energien GmbH will build and operate the plants. Following successful commissioning ownership of the plant will be transfered to the operator. The entire process requires approx. 6 months.
Financing requirements: Revolving credit line, bank guarantees (Avale) usually cover advance and interim payments.
Equity Participations in Asian Waste2Energy projects
Since project development is a volatile business, Eco Erneuerbare Energien GmbH intends to acquire majority stakes in selected local projects where the company will also act as operator. These equity participations will generate stable cash flows. Given their broad presence in the region Eco Erneuerbare Energien GmbH has access to interesting projects.
Financing requirements: Equity participations shall partly be financed by a mezzanine loan which is planned to be refinanced by local banks after 3 years.
