Meridiam enters US biogas market in $35m Idaho digester acquisition

French infrastructure investment firm Meridiam has participated in the $35 million acquisition of an Idaho anaerobic digester, which marks its first biogas project in North America.

“This project is on the very small end of what we do but because we did it as a pure equity transaction, it made sense to enter the market,” Meridiam partner and senior investment director Elisabeth Hivon told Agri Investor of the purchase, which was announced in mid-July.

The deal saw Meridiam act as leading partner of San Francisco-headquartered anaerobic digester project designer Sevana Bioenergy. Hivon declined to disclose the size of each firm’s stake.

She explained that Meridiam – which operates a portfolio of 18 biogas facilities supplied by farming communities in Europe – had been approached by Sevana to partner on an upgrade of the facility in Idaho.

The asset is located in the city of Twin Falls and since 2011 has been used to process manure sourced from a 12,000-head local dairy operation through anaerobic digestion. The facility produces renewable electricity that is currently delivered into the electricity grid under a power purchase agreement with Idaho Power.

Plans call for an upgrade to begin during the third quarter, which will equip the facility to produce renewable natural gas capable of meeting standards in California and federal transportation fuel markets. Construction is expected to be completed in approximately 18 months.

In addition to the sustainability benefits of creating RNG from dairy waste, Hivon said the digestion process employed at Twin Falls also produces effluent water rich in nitrogen and potassium that can be used as a soil enhancer and fibers that are used as bedding material for cows.

“You have a really perfect example of circular economy; we take the material, process it, create value out of it and then the byproduct gets returned to the farmer,” added Hivon.

Meridiam’s investment drew from its $1.2 billion North America Fund III, which senior investment director Wesley Koo described to Agri Investor as an offshoot of the firm’s Europe-focused energy transition fund that includes digester investments in Germany, Spain, Poland and elsewhere.

Koo – a London-based executive who previously led the establishment of an alternative investment capability in that city for the Korea National Pension Service – said European LPs are very familiar with digester projects, and often look to pursue co-investments that afford them more influence over environmental, social and governance-focused considerations.

For LPs in North American and Asian markets that are generally less advanced in their pursuit of sustainability, he added, demand for sustainable projects such as anaerobic digesters is growing and related to broader national debates about the future of energy and electricity markets.

“Investors would like to diversify, especially their exposure in the infra space within the North American market, so this biodigester project is quite interesting to them. It is complimentary to their legacy energy portfolio,” Koo explained.

Though the Idaho project is small compared with the toll roads, airports and energy assets infrastructure investors are accustomed to, he added, anaerobic digesters could nonetheless eventually be bundled into a platform capable of attracting larger investors.

Hivon said bio digesters like the one in Twin Falls will likely remain the focus of Meridiam’s agriculture-related investments in North America, adding that the firm is also interested in biomass and water efficiency projects.