Further Investment in Europe and North America

• Finance of geothermal projects through a €25 million senior debt facility
• $10 million preferred equity investment in the upcoming Series C financing round of Turntide Technologies Inc. (“Turntide”); terms signed for provision of a $100 million Project Financing facility to finance future qualifying energy efficiency projects
• c.£19 million of further investments into Onyx, Sparkfund, Tallaght, EVN and Biotown projects

SEEIT, the first UK-listed investment company to invest exclusively in the energy efficiency sector, is pleased to provide an update on recent investment activity. SEEIT’s investment manager is Sustainable Development Capital LLP (“SDCL”).

Investment in Geothermal Projects

SEEIT has signed an agreement to finance a portfolio of geothermal projects owned by Baseload Capital Sweden AB (“Baseload”) through a €25 million senior debt facility (the “Facility”).

The Facility will be used to finance the capex of existing and pipeline projects, with an initial expected draw down of up to €6 million at closing, to re-finance current operational assets and assets in construction or late-stage development. SEEIT will benefit from long-term stable cashflows, through contracted debt repayments over 10 years, with returns linked to the prevailing EURIBOR rate. The Facility will be senior secured over all the underlying project cashflows.

Baseload develops, builds and operates small-scale geothermal projects which utilise existing heat sources, both geothermal and waste heat. Compared to conventional geothermal powerplants the technology uses low-temperature resources that are found at shallower depths making them less operationally complex and less expensive to drill. The modular units are quick to deploy and require a small footprint, reducing both construction risk and construction period. 

The geothermal projects provide power and heat offtake to end users under long-term fixed price take-or-pay contracts with high credit quality offtakers, typically local utilities, municipalities or Commercial and Industrial (“C&I”) counterparties.

Baseload is developing projects in Iceland, Japan, the United States and Taiwan with the current portfolio in Iceland, the United States and Japan.

The investment fits within SEEIT’s Investment Policy, given its energy efficiency characteristics, while adding further diversification to SEEIT’s portfolio. The low-temperature geothermal assets provide renewable baseload power generation direct to local communities, avoiding grid losses and displacing alternative fossil fuel forms of generation, required due to the typical intermittent renewable generation. Captured geothermal fluid from the generation process provides heating to local district heating networks, displacing the use of gas boilers. The associated environmental benefits include a reduction in CO2 emissions relative to traditional generating technology.

Investment in US Energy Efficient Motor Company

SEEIT has signed an agreement to provide a preferred equity investment of $10 million in the upcoming Series C financing round of Turntide. SEEIT and Turntide have also signed a Term Sheet regarding the provision of a project financing facility of up to $100 million, whereby SEEIT will finance the capex of future qualifying energy efficiency projects delivered by Turntide, so that it can deliver infrastructure as a service. 

Turntide is a sustainable technology developer, headquartered in California, which manufactures energy efficient motor systems that do not use rare earth minerals. The innovative, variable-speed motor systems reduce carbon emissions and provide energy cost savings in the commercial real estate, agriculture, and transportation industries. Within its electrification & transport business unit, Turntide also offers a fully scalable electrification system, including batteries, which can be employed by electric vehicle and machine manufacturers.

Turntide’s customers are located predominantly in the United States, Canada, United Kingdom, and continental Europe and include a number of investment grade multinational companies. Due to the wide range of industries utilising Turntide’s products, this investment provides strong diversification across geography and industrial sectors.

The investment aligns well with SEEIT’s Investment Policy as part of its allocation of 3% of gross asset value to developers, managers or operators of energy efficiency projects, given Turntide’s energy efficiency characteristics. It also adds further technological diversification to SEEIT’s portfolio. Electric motors consume approximately 50% of electricity used globally, of which about 50% can be wasted due to inefficiency and ineffective operations. Turntide’s patented motor system can reduce energy consumption by over 60% compared to business as usual and is free of the environmentally damaging rare earth minerals used in other high-efficiency motors utilising permanent magnets.

Further deployment in existing Projects

In addition to these two investments, SEEIT has also completed follow-on investments into existing Projects to support the roll-out of new sites as well as providing construction funding. Since 31^st March, SEEIT has invested c.£19 million into Onyx, Sparkfund, Tallaght, EVN and Biotown.

These investments are funded from the Company’s existing resources and support SEEIT’s guidance on its total returns target as well as its stated progressive dividend policy.

Commenting on the investments, Jonathan Maxwell, CEO of SDCL, said: “SEEIT’s two new investments with Baseload Capital and Turntide will further diversify the portfolio by technology, industry and geography while also providing key infrastructure services in global efforts to achieve net zero.

Turntide has the ability to achieve a significant reduction in global electricity consumption wasted by legacy electric motors in commercial buildings, agriculture and transport. It is also well positioned to play an important role in the electrification of transport. SDCL considers the relationship with Turntide as an exciting long-term partnership and we look forward to working with them on many new projects in the coming years.”

Purvi Sapre, Fund Manager of SEEIT, said: “Baseload Capital provides heat and power generated locally from geothermal sources and is a great example of high efficiency renewable district energy generation. Our investment generates income straight away and, as such, contributes to meeting both SEEIT’s yield and total return targets.”

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Further to its announcement on 7 February 2022, SEEIT confirms that it has completed the acquisition of an 80% equity interest in a high-efficiency and operational biomass cogeneration plant, Sociedade de Iniciativa e Aproveitamentos Florestais – Energia, S.A. (“SIAF” or the “Project”), in Mangualde, Portugal from Capwatt S.A (“Capwatt”), for approximately €22 million. Furthermore, SEEIT has delivered an additional €15 million to SIAF to part pay down its existing project finance green bond facility.

SIAF generates heat and power from sustainably sourced biomass. It supplies critical onsite heat to an industrial facility manufacturing medium-density fibreboard (“MDF”) owned by Sonae Arauco PT (“SAPT”) on a take-or-pay basis and it generates electricity which benefits from the Portuguese Feed-in-Tariff to the grid. The Project is expected to benefit from at least a further 23 years of stable, inflation linked, contracted cashflows with no demand risk, providing good visibility of returns for SEEIT.

The acquisition has been funded from existing cash reserves. The remaining balance of SIAF’s project finance green bond facility will be equivalent to approximately €20 million.

In addition to the acquisition of the Project, SEEIT and Capwatt have signed a Heads of Terms to focus on the joint development and acquisition of energy efficiency projects across Iberia.

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SEEIT is pleased to announce that it has invested approximately $21 million in an operational portfolio of LED lighting projects across 42 states in the United States, together with a 50% interest in Future Energy Solutions Lighting Holdings LLLP (“FES”), the business that developed the projects. SEEIT’s investment incorporates a shareholder loan, with a priority entitlement to cash flows from the business, ahead of equity distributions, until the loan principal has been repaid.

FES provides energy efficient lighting solutions to enterprises across the US, in exchange for fixed monthly payments, using an innovative Lighting as a Service model. Services include designing, delivering, installing, and maintaining LED lighting for counterparties to save on energy and maintenance costs as part of a long- term partnership with our customers.

FES’s operational portfolio consists of over 1,000 customers from a variety of sectors, including schools, hotels, retail outlets, car parks, car dealerships, supermarkets, and casual dining, among others. The customer base consists mostly of small and medium sized enterprises. FES has an established management team, with an extensive pipeline of opportunities in the US supported by a sales force with a strong track record.

The investment aligns well with SEEIT’s investment policy, given its strong energy efficiency characteristics, while adding further diversification to SEEIT’s portfolio. LED lighting systems typically produce 100,000+ hours of illumination and consume up to 90% less energy than traditional incandescent light bulbs, leading to greatly reduced energy expenditures for users. The associated environmental benefits include a significant reduction in CO2 emissions relative to traditional lighting technology, as well as longer lighting life span of the bulbs, leading to lower overall waste. The transaction adds to the Company’s existing investments in LED lighting, including Santander UK lighting, Moy Park lighting and projects within Spark US Energy Efficiency. In parallel to this investment, SEEIT has also been granted a right of first refusal to fund a £150 million plus pipeline of European projects with an affiliate of FES through a bilateral negotiation.

The investment is funded from the Company’s existing resources and supports SEEIT’s guidance on total returns target as well as its stated progressive dividend policy.

Commenting on the investment, Jonathan Maxwell, CEO of Sustainable Development Capital LLP, said: “Switching to LED lighting is one of the simplest and most readily available changes that can be made to reduce CO2 emissions. Lighting accounts for nearly 5% of global CO2 emissions. LED lighting can achieve energy savings of up to 90% in comparison to traditional lighting, benefitting the environment and reducing costs for business. We expect the ‘Lighting as a Service’ market to grow considerably in the coming years, in both the US and Europe, and this presents a very attractive investment opportunity for SEEIT that meets its yield and returns targets.”

Commenting on the investment, Peter Hawksworth, CEO of Future Energy Solutions, said: “Partnering with SEEIT in the USA and Europe, allows FES to grow across all our areas of expertise and use the Lighting as a Service model to influence and achieve positive change in business sectors, where our customers can make significant and instant savings alongside a reduction in carbon footprint and simplify their operational performance.”

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SEEIT is pleased to announce that it has agreed to invest approximately $31 million in a large-scale green gas-to-grid project in Indiana, US.  The investment involves the acquisition of an operating renewable power facility in Reynolds, and further investment in the expansion of the facility to enable the project to produce green gas. SEEIT’s investment will be in the form of senior and subordinated debt.

The anaerobic digestion (“AD”) facility has been operating since 2012. It currently converts cattle manure and food waste into 6 MW of renewable power and sells this power under an 8 year take-or-pay fixed price Power Purchase Agreement (“PPA”) to NIPSCO, an investment grade public utility.

A portion of the investment will go towards increasing the capacity of the existing AD facility as well as installing a commercially proven gas upgrading facility to enable the project to inject green gas into the gas grid (“RNG”), which is to be sold under long-term offtake agreements. The existing plant will continue to operate during the expansion, providing an underlying cashflow until the expansion is completed in 2023.

The project is operated by Bio Town Ag, an experienced operator in the sector with a successful track record in developing, constructing and operating AD and RNG projects. The project is owned by Bio Town Biogas and First Farmers Bank & Trust and Opal Fuels (a Fortistar company) will be co-lenders in the transaction.

The investment in the facility will increase the supply of green gas within the gas grid, thus directly reducing greenhouse gas emissions arising from the existing supply and consumption of energy, in line with the Company’s strategy and investment policy. The operational and planned investment in the facility will continue to help deliver cheaper, cleaner and more reliable energy solutions to the end user.

The investment supports SEEIT’s total returns target as well as its progressive dividend policy.

The acquisition will be funded from the Company’s revolving credit facilities.

Commenting on the acquisition, Jonathan Maxwell, CEO of Sustainable Development Capital LLP, said: “We are very pleased to have added a green gas production facility in the US to our portfolio. This is a market that we have been watching closely for some time and this acquisition will further diversify SEEIT’s portfolio by technology, counterparty, and project stage; as well as supporting SEEIT’s dividend policy.  We look forward to the opportunity to expand the facility and increase the supply of green gas within the gas grid, helping to reduce greenhouse gas emissions and enhancing returns for our shareholders.”

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SEEIT has agreed to acquire a 100% equity interest in a commercial district energy system, RED-Rochester, LLC, (”RED”) from a fund managed by an affiliate of Stonepeak Infrastructure Partners for an equity cash consideration of approximately $177 million.

RED is one of North America’s largest district energy systems with 117 MW of steam turbine generators plus boilers, chillers and other equipment that provide exclusive utility services to commercial and industrial customers within the 1,200 acre Eastman Business Park, located in Rochester, New York. The park’s origins date back to 1891 when Kodak started manufacturing film and paper in four newly constructed buildings and is now host to a diversified base of commercial and industrial businesses including manufacturing, chemicals, pharmaceuticals and food and beverages.

As the exclusive provider of utility services to the park, RED offers 16 on-site services including electricity, steam, chilled water, wastewater, compressed air, nitrogen, lake water treatment, industrial water distribution and high purity water distribution. This “plug-and-play” set of utility services is a key attraction of the park, providing simple integration for new customers and allowing existing customers to expand their operations.

RED has over 100 commercial and industrial customers, typically contracted on a 20-year fixed-term basis with automatic five or ten year renewals, linked to their tenancy on the Eastman Business Park. The contracts provide stable and predictable cash flows with substantial mitigation against volatility in demand. Some two thirds of the value of RED’s offtake contracts are derived from investment grade or equivalent counterparties⁽¹⁾. RED’s cost base is relatively fixed, providing good visibility of cashflows.

Since 2016, RED has delivered 40+ energy efficiency projects across its operations that have resulted in annual savings of over $4 million and carbon savings of over 50%. Additionally, the Investment Manager has identified a further pipeline of potentially accretive energy efficiency initiatives that it believes can deliver additional cost and carbon savings.

The acquisition will be funded from existing cash reserves and RCF facilities, which includes the capital raised by SEEIT in the equity fundraising in February. RED’s existing project debt finance facilities, which are equivalent to c.$83 million, will remain in place. Completion of the acquisition is expected after satisfactory conclusion of customary regulatory conditions and consents.

The investment is expected to achieve SEEIT’s total returns objectives and to further support its progressive dividend policy.

Commenting on the acquisition, Jonathan Maxwell CEO and Founder of Sustainable Development Capital LLP, said:

“SEEIT is acquiring an operational and established district energy system that provides a range of essential and efficient energy services and utilities to a diversified customer base on one of the largest business parks in the United States of America. We expect the project to make positive contributions to SEEIT’s earnings and cash flow. At the same time, the project offers the potential for growth over the medium to long term through the addition of new customers and the implementation of accretive energy efficiency measures.”

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SEEIT is pleased to announce that it has signed an agreement with bp pulse, the UK’s largest operator of public electric vehicle charging points.

The agreement represents a significant step forward in the roll out of national EV charging infrastructure, expected to result in the development and construction by The EV Network of a significant number of rapid and ‘ultra-fast’ EV charging locations.

Development and construction is expected to start immediately, with the first sites targeted to be operational by mid to end of 2021.

This national EV station roll out for bp pulse will include state of the art ‘hubs’ of between six to twelve chargers, as well as the next generation of ‘e-forecourts’ with up to 24 ultra-fast charge points (300KW) with on-site solar PV and battery storage systems. The e-forecourts will have both retail and convenience facilities for the drivers while they are waiting for their cars to be charged.

EVN plans to develop a further c.400 EV charging sites, and SEEIT has the right of first refusal to  provide an additional c.£150 million in the next 24-36 months.

Commenting on the investment, Jonathan Maxwell, CEO of SDCL, said: “Electric vehicle sales in the UK are at an inflection point, making the immediate scaling up of high quality, rapid and widely available EV charging infrastructure of critical importance. This investment, in partnership with the Electric Vehicle Network, is a significant commitment to EV charging infrastructure in the UK and we look forward to supporting and enabling the market for sustainable and low carbon transport, helping to reduce pollution and greenhouse gas emissions.”

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