KfW IPEX Bank GmbH, the export credit unit of Germany’s development lender KfW Group, and Svenska Handelsbanken AB will loan 200 million euros ($244 million) to a U.K. project to create energy from waste.
The loan will help finance construction of the 250 million- euro project in Plymouth, southern England, according to a statement today from KfW IPEX, based in Frankfurt am Main.
MVV Energie AG (MVV1) is building the facility, which will provide as much as 22.5 megawatts of heat energy and 23.3 megawatts of electricity to the Royal Navy base at Devonport, which is the largest naval base in western Europe. It will burn about 265,000 tons of household and commercial waste a year.
The U.K. government aims to use 25 percent of municipal waste in England for energy by 2020, up from 11 percent in 2007, as it seeks to comply with a European Union directive limiting waste to landfill, according to the Environment Agency’s website.
KfW IPEX and Stockholm-based Svenska Handelsbanken contributed equal shares to the loan for the public-private sector venture, which is overseen by the South West Devon Waste Partnership, a group of three regional authorities.
“It’s a long term loan,” said Marcus Jentsch, head of finance and investor relations at MVV Energie. A further 50 million euros will be raised through equity, he said.
Jentsch said the loan would be partially replaced by European Investment Bank funding when it expired, which would be before the end of MVV Energie’s 25-year tenure of the plant.
“They will simply substitute parts of the loan,” he said. “They have very attractive rates, so commercially it makes sense.”
The EIB will invest up to 110 million pounds, according to its website.
Construction began earlier this year, and the plant is due to be operational in 2014.
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