Pension fund invests £40m for stake in Sleaford straw-burning power plant

Leeds-based Border to Coast Pensions Partnership, one of the largest UK pension pools, has invested the cash in Sleaford Renewable Energy Plant, a 38MW straw-fired biomass plant which has been in commercial operation since 2014.

The transaction marks Border to Coast’s first co-investment and has been made with Greencoat Capital LLP, one of the UK’s largest investors in resource efficient and renewable energy.

The pension fund has taken a minority stake in the combined heat and power plant.

Sleaford Renewable Energy Plant uses a blend of locally sourced straw and sustainable woodchip to generate renewable power and heat, capable of generating electricity for 65,000 homes, saving 50,000 tonnes of CO2 per year.

Located within the ‘Grain Belt’ in Lincolnshire, the plant provides a reliable route to market for straw, an agricultural by-product which can represent an additional income source for local farmers. The plant also provides free heat to public buildings in Sleaford town centre, including the swimming pool, William Alvey primary school and the district council offices.

Border to Coast Chief Investment Officer, Daniel Booth, said: “Sleaford Renewable Energy Plant is our first co-investment and marks a significant step forward for Border to Coast as an active alternative investor, reflecting the appetite of Partner Funds seeking predictable, secure income cash flows from renewable infrastructure assets.

“Projects like Sleaford will have a real impact in tackling climate change and underscores our, and our Partner Funds’, commitment to long-term sustainable investment while generating sustainable long-term investment returns.”

Minal Patel, Partner at Greencoat, said: “Sleaford is a high-quality asset delivering predictable cashflows and significant inflation protection over the long term, helping our clients meet their liabilities. It also plays an important role in the local area, supplying sustainable heat to local community facilities and providing arable farmers with a reliable offtake for their excess straw.”

Greencoat Capital acquired Sleaford Renewable Energy Plant in June 2020 using cash from its renewables fund, with commitments from UK corporate and local government pension schemes, as well as co-investments from Border to Coast and RPMI Railpen (‘Railpen’), the investment manager for the £30bn Railways Pension Scheme.