Meet the Developer: Monnow Valley Biomass
In the next couple of weeks two new projects are coming to site, one of which is a new technology for us — and maybe you, too.
Monnow Valley Biomass is, we hope, the first of a number of biomass projects with developers Biomass Partners. We thought you might like to get to know the people behind the project before it launches, so we interviewed Colin Bennett, co-founder and Managing Director, for our Meet the Developer blog series.
You’ll find out how his projects work, his previous experience with crowdfunding, and what he’s predicting for COP21.
1. The three directors come from very different backgrounds. Who brings what to the business?
With 35 years experience in manufacturing industries, I run the sales and business management side — such as business plans, fund raising, Ofgem liaison and strategy.
Ben comes from a background in project managing major property renovations. With this expertise, he’s in charge of all operation issues, such as equipment and supplier selection, project management, and supplier and contractor performance.
Karen’s accounting and entrepreneurial background sees her accounts and business administration skills in constant use. Plus, she’s long been keen to participate in the renewables industry.
2. When did you first begin working with biomass, and why?
I’ve been interested in renewable energy since I was a teenager living in Germany. Back then, in the 60s, the Germans were installing district heat systems for multiple houses and flats.
When I became aware that biomass heating was going to be deployed in the UK along with district heating as part of the drive to sourcing 15% of all UK energy from renewables by 2020, my interest was piqued. The push came when Ben Grant, who I’d known for more than 10 years, approached me about establishing a biomass installation business. It wasn’t long before we had a business plan and got going.
3. How do your projects work — what do you do, what does your customer do, how do investors earn a return?
We work with businesses that qualify for the government’s 20-year Renewable Heat Incentive (RHI) subsidy. We buy and own the installation in its entirety — the client only has to pay us a deposit for the first 6 months of heating costs.
Once the installation is complete and commissioned, we operate and manage it for the whole 20-year period. Our customers can rely on us for maintenance and fuel purchasing. We charge them for heat, and as the owners we receive the RHI payments. Over time, we share a proportion of this with our customers.
Investors can see that the income generated from RHI is sufficient to cover a good rate of return for them. There are also few costs on the business after the installation is paid for, which gives some reassurance that their repayments will continue for the full lifetime of the Debenture.
4. What is the one thing you would like people to understand about biomass?
Maybe a more general rule of thumb, but don’t purchase based on price alone!
Lots of potential customers realise they don’t fully understand biomass heating systems, as they’re totally different to oil and gas fuelled systems. Nevertheless, we see lots of businesses make a decision based solely on price and then find the installed system doesn’t perform as promised and cannot be easily or cheaply reconfigured. Find a supplier whose interest in your system efficiency and reliability goes beyond the first 12 months warranty period.
5. What part of Biomass Partners’ work are you most proud of?
It really appeals to us, as a team, that all our sites are taking out of service old, inefficient fossil fuelled heating systems and replacing them with cleaner, nearly carbon neutral biomass systems while also improving their heating system overall.
6. You have some previous experience with crowdfunding. What form did this take?
We raised a small amount of capital via a crowdfunding site called Thin Cats to enable us to fund our first two installations. I think crowdfunding is helping to fill the gap left when the international banking system withdrew from the SME marketplace en masse in 2007/8 and, as such, is providing a valuable service.
In the end, we decided not to go with Thin Cats again for two reasons: firstly, because you can only raise funds for short term repayment, whereas our income stream is 20 years from RHI.
Secondly, they wanted us to secure the loan with the assets — i.e. the biomass systems — however this isn’t easy to do since once an installation is complete it becomes integral to the hotel, care home, etc. So in order to secure the loan, we had to pledge an independent property as security.
7. Based on your previous experience, why Abundance and why now?
Abundance — because they look through the asset backing issue (see above) to the guaranteed income stream and they are also giving purchasers of Debentures the opportunity to invest a little or a lot in renewables. Providing this exercise is a success, it may be possible to repeat it and it could well become a growth driver of our business.
Now — because we have completed two complex installations with a third finishing in the next few weeks and can therefore demonstrate that our business model works and that we have a high level of competency in the field of biomass installations.
8. The COP 21 talks will soon begin in Paris. What do you expect to be agreed, and what would you like to see agreed?
I expect the outcome will be a very loose agreement, which will claim that global warming will be reduced to a figure that will save the planet.
I think the UK in particular will have trouble defending their recent moves reducing subsidies on wind and solar and, as a consequence, will have difficulty being relevant in the talks.
I would like to see the large emitters, such as China and India, stop defending their positions by saying that because the UK and the US emitted far too much carbon in the last century they should be allowed to do the same in this one.
9. Where do you see Biomass Partners in 10 years time?
We are partnering with our customers for 20 years and therefore I expect that we will have built a portfolio of biomass and CHP systems and be busy managing them.
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Quoted returns are no guarantee of future returns and past performance is not a guide to future performance. Specific risks will apply in relation to each investment. Please consider all risks before investing and read the Offer Document or Factsheet for each investment. The investments on Abundance include debentures or bonds and peer to peer loans — Abundance’s service in relation to loans is not covered by the Financial Services Compensation Scheme (FSCS).
