Sembcorp Industries has agreed to buy flexible generation company UK Power Reserve (UKPR) from the private equity firms Inflexion and Equistone for £216 million.
UKPR currently has a portfolio of more than 1GW of distributed generation assets spread across 32 sites in England and Wales, with 533MW already in operation and a further 480MW in development and construction expected to come online by 2019.
The portfolio largely consists of gas-fuelled reciprocating engines, but also includes 120MW of battery storage as well as a limited number of diesel engines.
Sembcorp provides energy, water and a range of other services at the Wilton International industrial park in Teesside. The company has 210MW of combined heat and power generation capacity from two gas turbines, a biomass plant and an energy-from-waste plant.
It is currently seeking planning approval to build two combined-cycle gas turbines with a total capacity of up to 1.7GW at the site.
Nomi Ahmad, the head of Sembcorp’s UK utilities business, said: “UKPR and Sembcorp’s existing Teesside business will form a strong integrated energy business in the UK, combining centralised services at Wilton with multiple flexible assets across the country along with expertise across the full spectrum of UK energy markets.
“We are committed to supporting the UK’s power needs in line with government policy and the acquisition of UKPR does exactly that, as would our proposed new power station on Teesside, if approved.”
Tim Emrich, who is stepping down as chief executive of UKPR, said: “This is an exciting new chapter for UKPR – Sembcorp’s investment underlines not only the value of the UK’s distributed energy market, but also the strong position that UKPR has built up. The next phase of development is already well underway and integration with Sembcorp opens up huge possibilities for the future.”
Emrich will be replaced by UKPR’s chief commercial officer, Sam Wither, who commented: “Sembcorp’s coming on board as UKPR’s key shareholder is a vote of confidence in our company and team. Moving ahead, UKPR looks forward to growing as part of the Sembcorp group’s integrated energy business in the UK.”
UKPR has been one of the biggest winners of new build contracts in the capacity market so far, securing agreements for 200MW of gas peaking plants in the latest T-4 auction in February. The company is aiming to increase its operational generation and storage capacity to more than 750MW by the end of 2018.