SDCL Energy Efficiency Income Trust (SEEIT) has agreed to acquire an 80 percent equity interest in a biomass cogeneration plant, Sociedade de Iniciativa e Aproveitamentos Florestais (SIAF) – Energia, in Mangualde, Portugal from Capwatt S.A (“Capwatt”), for approximately €22 million.

SIAF generates heat and power from sustainably sourced biomass, it also supplies critical onsite heat to an industrial facility manufacturing medium-density fibreboard owned by Sonae Arauco PT.

The investment is funded from the company’s existing cash resources. SIAF’s existing project finance green bond facility, which is equivalent to approximately €41 million, remains in place. Completion of the acquisition is expected in the coming weeks after satisfactory conclusion of customary lender consents and completion documentation.

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.

SEEIT has also acquired the interest of a minority shareholder of the Puente Genil projects (“Puente Genil”) in Oliva Spanish Cogeneration for consideration of €12 million. Puente Genil comprises three of the nine projects in Oliva Spanish Cogeneration. SEEIT now has sole ownership of eight of the nine projects, with an offtaker retaining a minority interest in the other. The acquisition follows SEEIT’s original investment in the 125 MW cogeneration portfolio in September 2019 and will enable it to support growth initiatives across these assets.

Jonathan Maxwell, chief executive of Sustainable Development Capital LLP, said: “SIAF is SEEIT’s first investment in Portugal and demonstrates our commitment to growing our presence in Iberia and supporting our ambition for increasing geographic diversification. Similar to our investment in Oliva Spanish Cogeneration, the SIAF investment provides critical onsite heat generated from waste sources. Both these investments are great examples of the circular economy at work, whilst contributing to meeting SEEIT’s yield and returns targets.”