Farmgen powers ahead with £2.1m Co-op loan
GREEN energy business Farmgen has secured a £2.1m loan from the Co-operative Bank to help cover the cost of a new plant in Lancashire.
It has started work on anaerobic digestion (AD) tanks at Carr Farm, near Warton, which will be fed with crops from nearby fields to create enough biogas to generate nearly 1MW worth of electricity – enough for 1,000 homes.
The Government has already launched a scheme that guarantees payments for electricity generated from renewable sources.
In addition, Marks & Spencer has signed a five-year contract to buy the energy generated from the plant at a fixed price as it strives to procure more renewable electricity from small-scale energy sources.
Ed Cattigan, chief operating officer at Blackpool-based Farmgen, said: “This arrangement is the first of its kind for an AD plant in the UK. The Co-op was chosen as the bank has previous experience in this type of deal for wind farms and this philosophy was utilised in the brokering of the loan.
“To have secured such a deal with the Co-op Bank is testament to how robust our offering to the market is and the growing belief in what AD plants can deliver in the UK.”
Farmgen was founded earlier this year by Simon Rigby, former chief executive of Leeds-based utilities company Spice plc. Mr Rigby stepped down from his role at Spice in February but retained a 9% stake that was valued at £22m when private equity firm Cinven agreed its £250m takeover in September.
The company has several other sites in the pipeline in Cumbria, Lancashire, Yorkshire and the Midlands. Construction of a second plant in Silloth, Cumbria is set to begin later this year.
The farm in Warton will remain under the ownership of Simon’s brother Jonathan Rigby, who is moving away from dairy farming to produce the necessary crops. The electricity generated will then be sold back to the National Grid by Farmgen.
Manchester-based solicitors Heatons advised Farmgen on the Co-op deal. Partner James Flynn said: “Farmgen’s overarching plan is to set up AD plants on farms across the UK.
“For us, the energy sector is a big growth market for our business and so it is great to be involved in a project that is the first of its kind.”
