Globally, the biofuels industry has been witnessing a major boom since 2021, driven primarily by increasing demand for biogas, energy-from-waste, renewable natural gas (RNG), and sustainable aviation fuels (SAF) in the transport and power generation sectors. The adoption of fuels and electricity produced from organic waste is also helping with efficient waste management and disposal, a growing issue in virtually every developed and developing country. As per Enerdatics’ research, there has been more than $25bn worth of corporate takeovers, asset acquisitions, and strategic partnerships in the biofuels space globally, since the start of 2021. While the US dominates the observed rise in deal value and volume, biofuel assets in the UK have quietly come to the forefront as the highest-valued onshore renewable energy source in the country.
The Enerdatics research team has analyzed the characteristics and driving forces of this phenomenon, and summarized its research in the enclosed slide, the highlights of which are:
– The UK-biofuels sector witnessed the highest surge in year-on-year deal activity in 2021, with transaction volume more than doubling
– Bio-fuel deals take the top 3 spots in the 5 highest valued transactions, by enterprise value ($M)/MW metrics, for renewable generating assets in the UK, 2019-YTD 2022
– EV metrics for biofuels deals in the UK significantly exceed those observed for other onshore renewables, with waste-to-energy plants fetching the highest premiums, primarily due to the highest load factor of all the renewable technologies, at 56.6 (as per 2021 data published by the UK government) and virtually no intermittency
– The UK accounts for 80% of the highest valued bio-fuels deals across the world, with most of the buyers being private equity firms and privately funded companies
– The UK government has incentivized the development of Anaerobic Digestion (AD) plants by way of Feed-in-Tariffs (FiTs), a Renewable Heat Incentive (RHI), and a Renewable Transport Fuel Obligation (RTFO)
– In Nov’21, Ofgem launched the Green Gas Support Scheme and the Green Gas Levy. With the heating of industry, businesses, and homes being responsible for a third of the UK’s GHG emissions, the Scheme aims to decarbonize gas-fired power with green gas.
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.
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