Mongoose acquires three co-located solar and battery storage plants from Anesco

Storage technologies (including batteries) are the key to unlocking the full potential of renewable energy generation, due to the intermittent nature of most renewable energy sources.

We have been involved in a number of battery storage transactions, including those at Drayton Manor Farm, a 75 acre site near Stratford-Upon Avon in Warwickshire.

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We acted for Mongoose Energy, a leading asset manager, on what was, at the time, the UK’s first community energy deal involving co-located solar and battery storage (prior to Ofgem’s guidance), comprising acquisition from commercial developer Anesco (and related acquisition financing from Close Brothers and SASC) of three separate operational ground-mounted solar parks (aggregate 15MW) plus three co-located utility scale batteries.

Although we were acting for Mongoose, the transaction was part of the wider process to set up Heart of England Community Energy, the UK’s largest community energy company by assets, which owned the solar farms.

The transaction was Mongoose’s first foray into hybrid solar-battery projects. The battery systems were retrofitted following commissioning of each solar park. Importantly, the structuring of the grid sharing and metering arrangements had to be addressed, to allow the batteries and the solar parks, which were separately owned, to co-exist while using the same substation.

Our role was to conduct legal due diligence on all three sites, located on former Defra land.

We negotiated the SPA with the Sellers, including all related corporate documentation, and also negotiated the financing arrangements, including the senior and mezzanine debt facilities, and all related intercreditor arrangements. Separately, we worked on the long-term O&M contract with Anesco as well as the long-term asset management agreement.

The projects are set to deliver £3 million in local community benefits over the project lifetime. Mongoose Energy have since sold their asset management business to Bright Renewables, and we continue to work with the team (for which see our page dedicated to community energy).

Leapfrog finances utility scale solar and battery storage plants

In 2016, we originally advised Leapfrog Bridge Finance Limited on their bridge loan, which enabled a “community interest company” (Verdant Community Energy CIC) to own two adjacent utility scale solar parks.

This was the UK’s largest community solar project at the time (9.3MW including a shared grid connection arrangement with an adjacent commercial solar park). The 2016 financing was an innovative 100% debt (0% equity) bridging loan to enable the acquisition of Verdant Community Energy CIC, by community-focused developer and asset manager Communities for Renewables (CfR), from Gamma Energy.

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In December 2017, we then advised Leapfrog on the refinancing and restructuring of the debt, with Leapfrog’s facility being repaid in part by Triodos Bank (as incoming senior lender) with the remaining Leapfrog debt restructured as mezzanine debt.

Finally, in 2018, an innovative (and largest at the time) 18-year community investment bond offer (circa £4 million with 5% inflation linked bonds) was launched to local retail investors, underwritten by Triodos Bank and Big Society Capital. The result was to refinance Leapfrog in full.

Our role was to conduct the full legal due diligence on the project, and we prepared and negotiated the finance documentation throughout the various iterations of the project from 2016 until 2018. We ensured the community-focused approach was maintained at all times (across the senior, mezzanine and shareholder documentation) to guarantee surplus cashflows for the local community.

The projects are innovative in that they have a guaranteed return for the local community, ahead of equity distributions, and the potential to generate approximately £3 million of income for local community organisations and projects over the next 20 years, an achievement all parties involved can be proud of – thanks primarily to the vision and commitment of everyone involved who made this project happen, and the power of the sun!

A link to Leapfrog’s website is here: www.pureleapfrog.org

First utility scale solar farm in Jordan

Another of our firsts, the Lux Nova team built on the work we did on the Tafila Wind Farm, advising Samer Judeh (part of the Tafila consortium) and Jordan private equity fund, Foursan, on the first utility scale solar farm (10 MW) to become operational in Jordan.

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Leveraging our in-country experience having developed the precedent Jordanian PPA on the Tafila project, we were able to guide negotiations with the government off-taker on power purchase and grid connection to swift conclusion. Part of a series of projects in Jordan debt financed by the International Finance Corporation (IFC), given our previous in-country experience we were also able to set direction for the other IFC funded projects in relation to the project finance elements.

The full turnkey design build operate and maintenance (DBOM) Contract was developed by us based upon FIDIC gold and concluded quickly, with the identity of the debt funders in mind and leveraging our knowledge of what was “bankable” in the jurisdiction. Enerray S.P.A, of Italy, are the construction contractors, supplying, installing, operating and maintaining the solar panels.

We continued to advise the Shamsuna project team on issues arising on contract management and equity interests, maintaining an integral advisor role as the life of the project progressed until its recent sale.

Community Owned Renewable Energy and Environmental Finance acquire portfolio of community solar projects

We are incredibly proud of our common journey with Community Owned Renewable Energy LLP (“CORE”), CORE’s asset manager, Environmental Finance (“EF”) and the community-owned asset management business Bright Renewables (“Bright”), financed by CORE.

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We have acted for CORE and EF since 2017. Initially, we advised on the fund management agreement, and structured the equity investment of Power to Change and Big Society Capital, to capitalise CORE, while also negotiating an arms-length debt facility with Big Society Capital. Together, these financial instruments provide CORE with liquid funds to enable CORE to acquire ground-mounted solar parks in England and Wales from commercial developers and operators (including funds). The strategic aim is to then transition each asset into long term community ownership over time.

The Fund has recently (March 2019) completed a number of additional acquisitions, bringing the total portfolio size to approximately 35MW, with more on the horizon. Our work on each of the acquisitions included full asset due diligence, negotiation of the share purchase agreements, putting in place the financing arrangements and, where necessary, refinancing existing bank debt. Approximately half the portfolio is already in community ownership, and this proportion is set to increase steadily.

CORE and EF are incredibly driven to achieve the best possible outcome for the communities that the assets serve, and we really enjoy being part of this common effort to harness the positive impact of renewable energy. Not only for the environment, but for local people, too.

An article can be found here.

Since early 2019, Bright Renewables have joined this like-minded group, with start-up funding from CORE. Bright offers professional asset management services to CORE’s subsidiaries as well as non-affiliated projects, and it is owned by the communities that it serves. This means that all profits ultimately go back into the community – an excellent way of reinforcing the circular economy and maximising the benefit to the communities.

An article about Bright can be found here.

Most recently, we assisted Bright in its dispute with a construction contractor, thereby helping realise a significant additional amount that will now be available for the benefit of the community.

Our work with CORE, EF and Bright is incredibly satisfying and we look forward to the next part of the journey!

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“The Lux Nova team have been our legal advisers ever since we set out on the journey of creating the CORE fund and acquiring its first assets in 2017. Since then, we have built an excellent working relationship and a joint sense of purpose. Louisa and Nikola fully understand and support our mission to create value for local communities – assisting us with innovative structuring solutions that enhance the deliverability of our projects, fair pricing and quick work of high quality. We look forward to continuing our journey with them.”

— Richard Speak, Founder of Environmental Finance Limited and CORE

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Largest publicly owned ESCO from India acquires CHP market leader EDINA

Acting on this project has been a very rewarding journey for us and our clients. We were retained in 2017 to act for EPAL (the joint venture vehicle between English developer EnergyPro and EESL, established in 2009 and currently the world’s largest publicly owned super ESCO and one of the most highly regarded innovative finance companies).

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Given India’s extensive need for energy efficient power generation, EESL expanded its business model to include an earmarked £150 million investment programme of strategic acquisitions in Europe and beyond, to help diversify its portfolio. EPAL’s first UK acquisition was a portfolio of energy efficiency performance contracts developed by Anesco. They then went on to acquire a battery storage project in Ontario, Canada. The £55 million acquisition of Edina (the market leading provider of energy efficient CHP engines in the UK, with a presence in Dublin, Lisburn and Stockport) followed in 2018.

The aim was to grow the Edina business into a global leader and creating a platform to scale up the combined heat and power market (and adoption of tri-generation technology) in India, further transforming the energy landscape in India, enhancing its energy security and achieving significant reductions in its current carbon footprint. An interview with EESL’s Managing Director, Saurabh Kumar, is here, explaining EESL’s impressive progress and transformative agenda even prior to the Edina acquisition, with another interview here, following the acquisition.

The Edina acquisition is the largest and strategically most significant international direct investment by EESL to date.

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The transaction involved creating the JV and investment arrangements between EESL and EneryPro, followed by full due diligence of the Edina business – a journey that took us from Colorado all the way to New Zealand, via Dublin, Lisburn, Stockport, London, Switzerland, Germany and India – unfortunately only from the safety of our desks.

We negotiated the share purchase agreement, as well as the full suite of acquisition financing arrangements with the senior and mezzanine funders, including all intercreditor arrangements between the numerous existing and new funders to Edina. And when a change in India’s investment legislation was introduced half-way through the transaction, we took the lead in restructuring the financing accordingly.

We supported EPAL and its shareholders every step of the way, with strategic board-level advice as well as all day-to-day negotiations, to ensure the success of the transaction. But when the documents were signed in 2018, the real journey of Edina, now under new ownership, had only begun. Since then, we continue to advise Edina and EPAL on their legal needs, as well as offering a sounding board to management, on their continued journey to leveraging their investments, including making Edina the global market leader.

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Neelima jain, ceo, epal, and a Director at Edina

“The acquisition is an important development in bringing together the efforts of two companies that have achieved distinguishing competencies in their respective energy efficiency markets. This partnership has far-reaching implications on the global energy sustainability scenario, and for promoting low-carbon growth by industries in Europe and Asia. With CHP technology’s contribution to the UK energy portfolio expected to double between 2015 and 2020, UK is a promising market for EESL to grow its own capabilities in the trigeneration sector.”

— Neelima Jain, CEO, EPAL, and a Director at Edina

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