Eqtec buys decommissioned waste-to-energy plant in Italy

Waste-to-energy gasification technology company Eqtec announced the acquisition and planned recommissioning of a 1MWe waste-to-energy plant in Italy on Monday.

The AIM-traded firm said the plant, originally commissioned in 2015, was built around its proprietary and patented ‘Advanced Gasification Technology’.

It said it would lead a consortium to repower, own and operate the biomass-to-energy plant in Castiglione d'Orcia, Tuscany, and once operational, it intended to transform straw and forestry wood waste from local farms and forests into green electricity and heat for use in the local community.

The plant was the first of two such facilities with Eqtec technology that was decommissioned by previous owner-operators in recent years, and that the company had targeted for repowering to full operation.

It said it intended the plant to become the first of its 'Market Development Centres’ (MDC), which would “showcase” its technology in a fully operational and commercial setting.

Eqtec said it would make further announcements about its planned acquisition of a facility in Croatia in due course.

Looking at the financial details, Eqtec said it would lead a consortium joined by three other partners, being an Irish family office, an Italian family office and MetalNRG, to participate in a special purpose vehicle called ‘EQTEC Italia MDC’, investing a total of €2.1m (£1.81m) for an initial 80% equity interest.

The parties had signed a heads of terms investment agreement for the funding of the special purpose vehicle, with financial close due “imminently”, subject to execution of the final form agreement by the parties.

Eqtec said it would hold the remaining 20% equity in the special purpose vehicle, adding that it estimated the plant would generate an unlevered internal rate of return of 20%, and annual EBITDA of more than €0.75m.

The acquisition of the plant had been completed by Eqtec, with the plant due to be fully recommissioned and operational by the second quarter of 2022.

Connection to Italy's national grid was already in place, with the project set to benefit from the country's favourable tariffs for electricity produced from waste biomass until the end of 2027.

It was expected to produce about 1MW green electricity from one tonne of straw pellets and wood chips annually, and would be upgraded to process a greater diversity of biomass feedstocks over time.

The contract value of Eqtec’s technology sales for the plant was expected to be €1.75m in technology and engineering upgrades.

In addition to being co-owner, operator and technology supplier to the plant, Eqtec said it was set to be contracted as the operations and maintenance contractor for the plant following its recommissioning.

The contract value was expected to be around €0.22m per annum, while the engineering, procurement and construction contractor would be its Italian delivery partner COSMI.

“I am very pleased that Eqtec will lead the effort with our partners to re-commission and revive this biomass-to-energy plant in Italy, providing power and heat to the area and demonstrating sustainable, commercial success with Eqtec advanced gasification,” said chief executive officer David Palumbo.

“Additionally, I am delighted to see us secure this with a well-balanced consortium of experienced partners and this is an approach we hope can be achieved for other projects in our pipeline.”

Palumbo said he was “pleased” about the local nature of the plant and the company’s future role there as co-owner and operator.

“Eqtec is committed to ensuring our projects have a positive local impact, from sourcing, treating and converting local waste through to the generation of clean energy in the local area, all powered by Eqtec technology.

“We will continue to support local businesses, employing local people and sustainably delivering value for local communities in all the markets we operate.”

At 1550 BST, shares in Eqtec were flat at 1.65p.