Vitol’s VPI Holding to acquire four CCGT’s in the UK
VPI Holding Ltd (“VPI”) today announces it has agreed to acquire four CCGT’s from Drax Smart Generation Ltd (“Drax”), subject to conditions precedent. On completion, VPI will become one of the leading CCGT operators in the UK, owning a combined portfolio of 3.3GW. Decarbonised gas generation is expected to be an essential part of the UK’s generation mix and this portfolio will be uniquely placed to provide a range of services to the National Grid, facilitating the UK’s pathway to increased renewables deployment. Furthermore, key assets, representing over 2GW of generation capacity, already have advanced CO2 abatement projects in place, leveraging both carbon capture and hydrogen solutions, and are therefore aligned with the Government’s Net Zero targets.
The assets being acquired comprise: Blackburn Mill in Lancashire, Damhead Creek in Kent, Rye House in Hertfordshire and Shoreham in West Sussex. These complement VPI’s existing CHP plant in Immingham, North Lincolnshire, which is working closely with industry on delivering the Humber Zero initiative to significantly reduce the UK’s industrial and power related CO2 emissions. The assets are being acquired at an attractive valuation with over 50% of the purchase price underwritten via awarded capacity market contracts that are being transferred to VPI as part of the transaction. The portfolio benefits from a recent successful outage completed at Damhead Creek and the ability to upgrade Shoreham to one of the most efficient CCGTs in the UK. Also one of the UK’s most cost efficient newbuild CCGT projects (the 1.8GW Damhead Creek II project) for which a deferred consideration has been agreed.
David Brignall, VPI Manager, said; “VPI is committed to being part of the UK’s pathway to Net Zero. For the foreseeable future, renewables will need to be complemented by highly efficient gas generation. These assets, which both enable VPI to provide essential services to the grid across England and are developing their own carbon abatement programmes, will contribute to achieving Net Zero.”
The transaction is expected to complete 31 January 2021.