Investors are starting to view bioenergy as a key element in sustainable energy portfolios. Renewable natural gas has the potential to reduce reliance on fossil fuels, while also providing solutions to waste problems.
Attracted by high energy prices and regulatory support – especially as Europe transitions away from reliance on Russian gas imports – a range of investors have been making acquisitions to enter the sector.
IFM Investors diversify with green gas
In January, Melbourne-headquartered IFM Investors ventured into renewable gas by acquiring a majority stake in South Carolina oil and natural gas company GreenGasUSA.
The company’s technology captures, purifies and transports biogas from organic waste streams to use as pipeline-quality RNG.
IFM executed the move through its Net Zero Infrastructure Fund, an open-end vehicle with an initial $3 billion target.
Goldman Sachs commits to European biomethane
In February, Goldman Sachs Asset Management pledged more than €1 billion to European biomethane projects over four years through its newly formed company Verdalia Bioenergy.
Beginning with the acquisition of a portfolio of five projects in Spain, the company will focus on acquiring, developing and operating biomethane plants across Europe.
Goldman Sachs said the investment would contribute to Europe’s plans for decarbonization. “We believe that biomethane is today one of the most compelling segments in the energy transition for infrastructure investors,” said Matteo Botto Poala, managing director of Goldman Sachs’ infrastructure business.
The first projects in the acquired portfolio had a combined capacity of about 150GWh/year.
Also in February, Miami-based private equity firm I Squared Capital acquired a majority stake in the 450-mile Whistler Pipeline via its $15 billion Global Infrastructure Fund III.
The natural gas pipeline stretches across Texas from the Permian Basin to Agua Dulce.
An expansion approved last year will see it increase its current capacity of 2 billion cubic feet per day to 2.5 billion by year-end, catering to rising demand for natural gas in the Gulf Coast and Mexico.
For the acquisition, I Squared bought up shares from Stonepeak, First Infrastructure Capital, Ridgemont Equity Partners, West Texas Gas and the pipeline’s management team at WhiteWater.
CIP’s green power play
The acquisition of Anaergia’s Envo Biogas plant took place through CIP’s Advanced Bioenergy Fund I, which closed in October on €750 million, shy of its €1 billion target.
The plant processes organic waste to produce renewable natural gas and biogenic carbon dioxide for green e-methanol.
“We are very pleased to have made our first investment into a large-scale and modern biogas project in Denmark, creating not just green energy, but also jobs and investments in the local community,” said Thomas Dalsgaard, partner with CIP.
Partners Group expands bioenergy portfolio
In June, global private markets firm Partners Group acquired a 60MW portfolio of 35 biogas plants and 10 biomethane plants from Germany’s Energielenker Group for an undisclosed sum.
Partners Group intends to rebrand the portfolio and expand the project pipeline to take advantage of the EU’s energy security and diversification strategy.
Partners Group’s European co-head of private infrastructure, David Daum, said the investment would profit from the market starting to view biogas and biomethane as mainstream energy sources.
“The cyclical nature of renewables combined with the phase-out of fossil fuels will likely increase demand for baseload power as well as flexible electricity generation,” he said.
“Biogas and biomethane are ideal alternative fuel sources, as established natural gas infrastructure can be used without requiring any additional capex.”