Stobart Group has signed a 14-year contract worth £110m to supply waste wood fuel for a biomass plant near Margam, South Wales.
The long-term supply agreement with Glennmont Partners is Stobart’s largest ever supply contract by volume.
The transport arm of Stobart Energy will deliver 250 loads of recycled waste wood to the 40MW Margam plant each week and supply 250,000 tonnes per year. Over the 14-year period, this equates to 3.5 million tonnes.
The facility is expected to be built over a two-year period, with commissioning scheduled for early 2017 and operations to commence in March 2017.
The plant was developed and will be managed by renewable energy company ECO2, which uses Danish technology.
European investment firm Glennmont Partners purchased the Margam Green Energy Project from ECO2 and Western Logs Group in a £160m deal last week.
The purchase and further construction of the plant is supported by debt arranged by Deutsche Bank with the support of Eksport Kredit Fonden, the Danish export credit agency.
Richard Butcher, chief executive at Stobart Energy and Infrastructure, said: “This agreement secures an attractive supply contract for the Group and will contribute significantly to our target of supplying two million tonnes of fuel per annum into the UK biomass market by 2017-18. We supply one million tonnes per annum at present.
“Coupled with the recent successful financial closure on the Group’s Widnes Biomass Project, this agreement confirms we are firmly on track to achieve our strategic aims in this sector and reinforces our position as the number one supplier of biomass in the UK.”
A company statement said Stobart is planning to invest in minority stakes in sustainable biomass and anaerobic digestion plants over the next two years.