TEG Group, the Chorley-based AIM-listed green technology company, is part of the winning consortium picked by three North Wales councils to handle organic food waste for up to 20 years.
The joint venture with Nottinghamshire-based firm Alkane Energy has won a contract expected to generate revenues of £2m a year. TEG will own 70% and Alkane 30% of the JV.
The client is a consortium of Denbighshire, Conwy and Flintshire councils, known as the North East Wales Hub. This contract is the first of the Welsh Government's sponsored organic waste projects.
TEG and Alkane will create a joint venture company, to be called NEAT Biogas, which will build and operate a new 20,000 tonne-a-year anaerobic digestion plant to process the food waste supplied by the councils together with additional third party food waste.
A council-owned former abattoir site in Rhuallt, on the Denbighshire-Flintshire has been reserved for the AD plant. The build cost will be around £8m and contractors will be appointed following financial close of the TEG deal.
The financial terms of the deal are expected to be completed by the end of 2011. The contract will run for an initial 15 years with an option to extend for a further five years.
The contract guarantees a supply of food waste to the facility for approximately 60% of its capacity.
The facility will be an AD plant processing food wastes to produce 1MW electricity – sufficient to power 2,000 homes – and a digestate product, for use as a fertiliser in agricultural applications.
It is anticipated that the AD facility will start operations in the first half of 2013.