£11m deal for pioneering Merseyside power management plant

An £11m cash deal has been agreed to acquire Mersey Reactive Power, a shunt reactor which helps manage electricity supply for the Merseyside region. Completion is subject to Ofgem approval.

London-based DORE – Downing Renewables & Infrastructure Trust – has sealed the deal with Leamington Spa-based Mersey Reactive Power, which will be made using DORE’s £40m revolving credit facility.

Mersey Reactive Power is a fully operational 200 MVAr shunt reactor became operational in May 2022 and was the first project to go live as part of the National Grid’s Stability Pathfinder initiative.

The project, which has an expected asset life of 40 years, supports Great Britain’s electricity system in voltage management, providing increased network resilience, reducing costs to consumers and lowering carbon emissions.

Mersey Reactive Power has an initial fixed priced, inflation-linked, availability-based contract with National Grid ESO until 2031.

Traditionally, reactive power services have been provided by large fossil fuel plants, but as the UK transitions to low and zero carbon energy sources and large coal and gas generators are wound down, new sources and providers of reactive power are needed.

The Mersey Reactive Power solution, based in Frodsham, Merseyside, comprises a shunt reactor which absorbs reactive power to increase the efficiency of the network and manage high voltage levels.

DORE says the acquisition will provide a new, long term, revenue stream, one that is not derived from the sale of power on the wholesale markets.

It said it demonstrates the company’s continued commitment to pursuing a highly diversified investment strategy. DORE said it will continue to seek similar opportunities in the grid services sector, constructing a portfolio designed to increase the stability of revenues and consistency of income to shareholders.

Tom Williams, partner, head of energy and infrastructure at Downing, said: “The opportunity to further diversify DORE’s portfolio and provide essential grid services in the UK is one that we could not overlook, and we are excited by our pipeline of potential opportunities in this sector of the energy market.

“Voltage management and grid stability are critical to the future success of decarbonisation. This attractive acquisition, when taken with other recent acquisitions by the company, increases the company’s long term fixed revenues in the UK, helping to provide our investors with diversified and stable returns.”

Downing is a sustainable investment manager established in London in 1986.

It manages £1.9bn-worth of assets, on behalf of retail and institutional investors, that are invested into, or owned by, businesses making a positive impact by, for example, caring for the elderly, improving healthcare, building homes or producing clean energy.

Downing’s renewable energy platform was purpose-built to provide institutional investors with best-in-class access to wind, solar, hydro and battery investments.

Focusing on the UK and Northern Europe, Downing employs more than 40 staff in a fully integrated team providing investment, asset management, project development and project delivery services.

At December 31, 2022, it had £760m of assets under management in core renewables.