In the field of renewable energies, Actarus Renewables stands out as a visionary and committed player, dedicated to promoting sustainable energy solutions throughout Italy. The latest venture, Project Retina, embodies this commitment by aiming to develop one of Italy’s largest and most diversified portfolios of biogas plants. This ambitious project not only demonstrates significant environmental, social, and governance (ESG) characteristics, but also actively promotes the principles of a circular economy, transforming agricultural waste into valuable energy resources.
Supported by a 15-year government grant from the Italian government, Project Retina is set to create extensive production capacities of biogas, compost, and CO2, tapping into the growing demand for renewable sources in the European energy mix. The strategic importance of the project is further reinforced by its alignment with the sustainability goals of the European Union and its contribution to reducing dependence on non-renewable energy sources.
As Actarus Renewables seeks to finalize the equity consortium for this project in collaboration with the global investment giant Macquarie, Project Retina is poised to set a benchmark in the renewable energy sector, showcasing the potential of biogas as a milestone in Italy’s future energy landscape. This introduction lays the groundwork to explore the diverse landscape of investments, strategic partnerships, and profound impacts on the community of this pioneering project.
Investment Overview
Project Retina represents a significant step forward in Italy’s renewable energy landscape, focusing on building one of the country’s largest and most diversified portfolios of biogas plants. With extensive production capacities not only of biogas but also of compost and CO2, the project is designed to seamlessly integrate into existing agricultural and energy frameworks, maximizing the utility of organic waste materials and making a substantial contribution to sustainable energy production.
The initiative is strongly supported by a 15-year Contract for Difference (CfD) from the Energy Services Management (GSE), backed by the Italian government, guaranteeing stable and predictable cash flows. This incentivization mechanism is part of a broader commitment by Italy and the European Union to increase the share of renewable sources in the energy mix, further incentivized by significant upfront capital injections at the connection of each plant to the grid.
Highlights of the Investment
Actarus Renewables has already secured rights for the development of 19 biogas projects across Italy, with the intention to expand this portfolio with another 10 projects. This scale is not only indicative of the project’s ambitious scope but also enhances its impact and feasibility.
Strategic financial partnerships: To significantly boost the financial profitability of the project, Actarus Renewables is in discussions with Macquarie to finalize the equity consortium. Macquarie’s involvement as a financial sponsor provides the necessary capital to fund the development, combining shareholder loans and preferred shares to support the project’s ambitious goals.
Unparalleled ESG credentials: Project Retina is distinguished by its ESG credentials, aligned with global sustainability goals. The project not only supports the local economy by utilizing regional agricultural waste but also contributes to environmental conservation through integrated waste management and energy production processes.
Substantial support from the government and the community: The project enjoys strong support from local and national government entities, evidenced by favorable regulatory frameworks and financial incentives. This support extends to local communities, benefiting from new job opportunities and enhanced local infrastructure, fostering a positive relationship between the renewable energy sector and regional development.
Market Position and Competitive Advantage: Positioned within a favorable regulatory and economic environment, Project Retina benefits from the advantages of being an early mover in securing incentives and government contracts. The strategic location of the plants optimizes connection to the national grid, maximizing efficiency and yield.
Financial Support
Actarus Renewables has partnered with Macquarie, a renowned global financial giant, to underwrite the ambitious Project Retina, consolidating its financial structure and ensuring access to the necessary capital resources. Macquarie’s role as a co-investor not only provides financial strength but also strategic acumen that is crucial for navigating the complex landscape of investments in renewable energies.
Detailed Financing Structure
Project Retina’s financing model is designed to leverage both equity and debt, providing a solid framework for growth and financial stability:
- Equity Investments: Comprising commitments from both Actarus Renewables and Macquarie, equity investments are structured to provide substantial capital for initial development phases, reducing dependence on debt and aligning long-term interests of the partners.
- Shareholder Loans and Preferred Shares: Macquarie’s provision of shareholder loans and preferred shares injects additional funds into the project, offering flexible financing options that enhance liquidity and enable scalable growth.
This strategic mix of financing not only mitigates risks associated with financing large-scale projects but also optimizes the capital structure to improve project profitability and investment attractiveness.
Unprecedented Investment Merits
Project Retina offers distinctive investment advantages that make it a compelling proposition in the thriving renewable energy market:
- Guaranteed revenue streams: Project revenues are secured through long-term Contract for Difference (CfD) agreements with the Italian government, guaranteeing biogas prices and providing stable financial outlook.
- Income source diversification: By generating additional revenues from the sale of by-products such as organic compost and captured CO2, the project diversifies its income, improving financial resilience against market fluctuations.
Comprehensive Risk Management
Project Retina incorporates a sophisticated risk management framework that enhances its investment profile:
- Raw material security: Strategic agreements with local agricultural producers ensure reliable and cost-effective supply of raw materials, a crucial input for biogas production. These agreements are designed to last for the duration of CfD contracts, ensuring operational continuity.
- Technological reliability: The project utilizes proven and cutting-edge technology for biogas production, minimizing technical risks and ensuring compliance with stringent environmental regulations.
- Regulatory and governmental support: The Italian government’s supportive stance on renewable energies, manifested in financial incentives and favorable regulatory policies, provides a conducive environment for the success of Project Retina.
Market and Competitive Landscape
Project Retina operates within a dynamic and rapidly growing sector in the European renewable energy market. Italy, with its ambitious national goals and favorable regulatory context, is poised to significantly increase its biogas production. The European Union has recognized biogas as a key component of its strategy to reduce dependence on fossil fuels and improve energy security. With substantial investments in the biogas sector, supported by EU initiatives like the REPowerEU plan, Project Retina is strategically positioned to capitalize on these developments.
The Biogas Market in Italy and Europe
Biogas production in Italy is set to expand significantly, supported by favorable government policies and the availability of agricultural raw materials. The country’s existing framework, including incentives for biogas integration into the natural gas grid, provides a solid foundation for projects like Retina. In Europe, the demand for biogas is expected to grow, driven by its compatibility with existing gas infrastructure and its role in reducing greenhouse gas emissions.
Strategic Advantages of Project Retina
Project Retina’s competitive advantage derives from several key factors:
- First-mover advantage: Having secured early government incentives and established contracts, Project Retina has a competitive edge over potential market competitors.
- Strategic positioning: The projects are strategically located near agricultural centers, ensuring a steady supply of raw materials and efficient logistics for connection to the national grid.
- Strong government and regulatory support: With the Italian government’s commitment to renewable energies, including specific subsidies and incentives for biogas, Project Retina benefits from a lower risk profile and greater profit prospects.
- Innovative technology and operational efficiency: By using proven technologies and innovative practices, the project ensures operational efficiency and reliability, crucial for long-term sustainability and compliance with regulatory standards.
Project Impact and Community Benefits
The impact of Project Retina goes beyond energy production, making a significant contribution to local communities and the overall Italian economy. The development of biogas plants is expected to create numerous jobs, both directly and indirectly, through the construction phase and ongoing operations. By converting agricultural waste into energy, the project also helps local farmers manage waste more effectively, turning a potential cost and environmental risk into a revenue stream.
Additionally, Project Retina contributes to local economies by increasing tax revenue and supporting local businesses involved in the construction and maintenance of the plants. The environmental benefits are equally significant, as the project helps reduce greenhouse gas emissions and promotes sustainable agricultural practices by returning organic compost to the soil.
Regulatory and Operational Framework
Project Retina operates within a robust and favorable regulatory framework in Italy, crucial for the development and success of renewable energy projects. The Italian government has established various incentives and policies to foster the growth of the biogas sector, aligning with broader EU goals for sustainability and energy security.
Detailed Regulatory Support
- Contract for Difference (CfD): Project Retina benefits from a CfD agreement that guarantees a fixed selling price for biogas produced for 15 years. This government-backed mechanism insulates the project from market price fluctuations, providing financial stability and predictability.
- Capital contributions: The Italian government offers capital contributions covering significant portions of the initial costs associated with biogas plant construction. This reduces the initial financial burden and improves the overall feasibility of the project.
Legislative Framework
- Renewable energy directives: Italy’s alignment with EU directives ensures that Project Retina adheres to rigorous standards for renewable energy production, including sustainability criteria for biomass and emission reduction.
- National Recovery and Resilience Plan (PNRR): The project is further supported by the Italian PNRR, which includes specific provisions for investments in renewable energies and infrastructure improvements, facilitating smoother project execution and operational efficiency.
Strategic Raw Material Management
Project Retina’s operational framework is designed to maximize efficiency and ensure long-term sustainability:
- Engineering, Procurement, and Construction (EPC) Contracts: The project relies on high-quality EPC contractors with proven experience for the construction of biogas plants. These contracts are structured to include performance guarantees and timelines, reducing construction risks and ensuring quality standards.
- Operations and Maintenance (O&M) Agreements: Long-term O&M agreements are in place to ensure efficient and continuous plant operation. These agreements typically include performance metrics to maintain high operational standards and minimize downtime.
Raw material procurement and off-take agreements
- Secure raw material procurement: Long-term agreements with local agricultural producers ensure a steady and reliable supply of biomass. These agreements are essential to maintaining production levels and achieving economic sustainability.
- Guaranteed off-take agreements: In addition to the biogas CfD, Project Retina has secured off-take agreements for secondary products such as organic compost and captured CO2. These agreements provide additional revenue streams and further stabilize the project’s financial model.
Conclusion
Project Retina stands as a beacon of innovation and sustainability in the renewable energy sector, driven by the strategic partnership between Actarus Renewables and Macquarie. This project not only exemplifies the potential of biogas as a key player in Italy’s energy transition but also sets a precedent for future renewable energy projects on a global scale.
Catalyst for change: By converting agricultural waste into clean energy, Project Retina addresses multiple challenges, including waste management, energy security, and environmental sustainability. The project’s impact extends beyond the energy sector, fostering economic growth and community development in rural areas.
Strategic alignment with global goals: Project Retina aligns with international environmental goals and EU directives, contributing to Italy’s commitments under the Paris Agreement and the EU’s Green Deal. This alignment ensures that the project is not only feasible in today’s market but also positioned for future growth as global energy policies evolve towards more sustainable practices.
A model for future projects: The comprehensive approach adopted by Actarus Renewables, combining regulatory support, financial strength, and operational excellence, serves as a model for developing renewable energy projects worldwide. Project Retina demonstrates how strategic investments in renewable technologies and collaborations can effectively harness local resources to impact global sustainability.
A glimpse into the future: As Project Retina nears completion and begins operations, it will continue to attract the attention of investors, policymakers, and environmental groups interested in replicable models of success in the renewable energy sphere. The lessons learned and successes achieved will undoubtedly influence future projects, advancing the agenda for a cleaner and more sustainable energy future.
Run Capital Partners
Run Capital Partners (RCP) has strategically structured a securitization compartment through H-Securitisation S.A., enhancing the accessibility of Project Retina for professional investors. This initiative enables funding of investments in Project Retina through tradable securities, offering greater liquidity and expanding the pool of potential investors.
The compartment is structured by H-Securitisation S.A., a securitization vehicle operating under Luxembourg law. Linked to the investment returns made in the project, these bonds are structured as unsecured bonds of the issuer and will mature on December 31, 2030, in line with the long-term nature of renewable energy projects, providing stability and potential for substantial returns.
The proceeds from the bond issuance are intended for investment in Class B Limited Partner Interests of Retina S.C.A., an investment vehicle based in Luxembourg. This setup ensures that investments are channeled towards the development, ownership, and management of biogas plants across Italy, reflecting a strategy focused on sustainable energy projects.
In compliance with European regulations, the bonds are not available for sale to retail investors in the EEA and the UK, targeting exclusively professional clients and eligible counterparties. This ensures adherence to stringent regulatory standards and reduces the risk of non-compliance with investor protection laws.
This securitization by RCP not only lowers entry barriers for professional investors interested in sustainable energy but also increases the liquidity of their investments. By linking the notes directly to the performance of Project Retina, RCP provides investors with a transparent and direct path to contribute to and benefit from Italy’s transition to renewable energy sources, highlighting RCP’s commitment to innovative financing solutions in the renewable energy sector, promoting significant environmental and economic benefits.
