A £61 million financing deal for the Snetterton biomass power plant in Norfolk is set to bring more institutional capital into the UK’s renewable energy sector, with Standard Life using a new structure designed to meet insurers’ long-term investment requirements
The transaction was led by Octopus Capital and represents the first use of a new infrastructure financing structure developed by Standard Life, the UK life insurance and retirement specialist that manages £317 billion in assets, Bioenergy Insight reported.
The financing structure is designed around the UK’s matching adjustment, a feature of the Solvency II regime that allows insurers to recognise part of the spread earned on eligible assets when valuing certain long-term insurance liabilities.
For infrastructure investors, the mechanism can make projects with long-term and predictable cash flows more attractive to institutional investors such as insurers.
Manuel Dusina, head of real assets at Standard Life, said the transaction showed how new financing structures could help pension and insurance capital access infrastructure investments.
“By combining real estate and infrastructure expertise, we have developed an innovative project infrastructure financing structure that provides the long-term, predictable cashflows our customers need while supporting sustainable investment in essential UK infrastructure,” Dusina said.
Standard Life plans to use the financing structure for other investment opportunities, potentially expanding the role of institutional capital in biomass and renewable infrastructure.
The transaction highlights the role of regulatory frameworks and long-term financing in supporting biomass power projects in the UK. Snetterton is among several biomass-to-power facilities operating in the country and forms part of the renewable energy investment landscape alongside gas-fired generation.
