SSE, the listed energy supplier, has agreed a £1 billion deal to sell its stake in a number of energy-from-waste ventures in West Yorkshire. The company is set to sell sell its 50% share in Multifuel Energy Ltd (MEL1) and Multifuel Energy 2 Ltd (MEL2) to European Diversified Infrastructure Fund III, an infrastructure fund managed by First Sentier Investors, for a total cash consideration of £995 million.
MEL1 and MEL2 are 50-50 joint ventures between SSE and Wheelabrator Technologies. They comprise the operational Ferrybridge Multifuel 1 and Ferrybridge Multifuel 2 facilities (MEL1), as well as the Skelton Grange Multifuel development project (MEL2).
The two Ferrybridge Multifuel facilities each have an installed capacity of 75MW and are capable of processing about 725,000 tonnes and 675,000 tonnes of waste every year, respectively.
The proposed Skelton Grange Multifuel facility is due to reach financial close around April 2021 and commence commercial operations in 2025. It will have an installed capacity of 45MW and be capable of processing about 400,000 tonnes of waste annually.
The transaction is expected to complete by late 2020, subject to antitrust approval by the European Commission.
“This sale marks a major step in our plans to secure at least £2bn from disposals by autumn 2021, with just over £1.4bn now delivered. While these multifuel assets have been successful ventures for SSE, they are non-core investments and we are pleased to have agreed a sale that delivers significant value for shareholders while sharpening our strategic focus on our core low-carbon businesses,” said Gregor Alexander, finance director at SSE.
“Our disposal programme demonstrates how the company can create value from our assets and supports our plans to invest £7.5bn over the next five years in the low-carbon infrastructure needed to stimulate a green economic recovery and help the UK transition to a net-zero future.”
SSE previously identified its interests in MEL1 and MEL2 as an early priority for sale as part of a strategy to secure at least £2bn from disposals of non-core assets by autumn 2021.
The latest deal follows on from the sale of SSE’s 25.1 per cent non-operating stake in Walney Offshore Wind Farm to Greencoat UK Wind for £350m and the agreement to sell its 33 per cent equity interest in meter asset provider MapleCo to Equitix, under which SSE will receive net proceeds of about £90m on closing.