The Skyline Clean Energy Fund (SCEF) has acquired a biogas facility in Lethbridge, Alta. via the purchase of Lethbridge Biogas LP and shares in Lethbridge Biogas General Partner Inc.
The facility, in operation since 2013, is expected to convert 120,000 tonnes of organic waste into renewable natural gas (RNG) annually. In its first year, that organic waste is forecast to translate to 280,000 gigajoules of RNG.
This is equivalent to 78 million kilowatt-hours – which a release states would provide electricity to 12,174 homes for one year.
It marks the first asset outside of Ontario for the Guelph-based SCEF.
Its facilities, which also include a biogas plant in Elmira, Ont., are handling about 184,000 tonnes of organic waste annually.
“We heard about this plant when I was out in Vancouver at the Biogas West Conference and it was described to me as really the ‘Elmira of the west’,” said Matt Kennedy, an associate director at Skyline Energy.
“There were some tough years there, when energy prices were really low, things like renewable natural gas contracts didn’t exist, and (Lethbridge Biogas) wanted to make it work,” Kennedy said. “They really put a lot of effort into the plant and spared no cost in getting it off the ground, which we really liked.”
Skyline Energy and the fund are part of the Skyline Group of Companies, founded in 1999. As of March the group held over $7 billion in assets under management.
Kennedy joined Skyline Energy in 2017, moving over from Skyline Asset Management Inc., which is involved with the group’s real estate assets.
One of four alternative investment vehicles for Skyline — along with Skyline Apartment REIT, Skyline Industrial REIT and Skyline Retail REIT — the SCEF holds over $270 million in assets under management.
The Lethbridge biogas plant acquisition
The Lethbridge acquisition was finalized on May 31, after a six-month diligence process that consisted of several trips to Calgary and Lethbridge to visit the plant. The facility operates under a 20-year RNG contract with FortisBC.
Rob Stein, Skyline Energy’s president, said in a release that SBE LP and Woolwich Bio-En Inc. — managers of the Elmira facility — will “be able to provide oversight and knowledge that will enable future synergies between the two biogas plants.”
According to Kennedy, the fund has a group at Elmira which will oversee both biogas sites, although the Lethbridge facility will retain all of its previous employees.
“There’s always been a push to enter the Alberta and Western Canada market, for sure. This one was a little bit opportunistic, though. It was sort of the right fit at the right time,” Kennedy said. “We’ve been pursuing some solar assets out in Alberta as well, so I decided it was time to make the push and really start moving.”
The Lethbridge plant will largely process animal byproducts like livestock manure. The Elmira facility handles municipal green bin waste.
Skyline Clean Energy Fund and biogas
The SCEF initially expanded into biogas assets due to its familiarity with 20-year feed-in-tariff (FIT) contracts, where the government agrees to purchase the energy for a set price, Kennedy explained. From there, the fund’s confidence with biogas as an asset grew, along with the revenue streams being realized.
“We really see the feedstock supply just increasing and increasing over the years here,” Kennedy said. “So that really was what drove us to get into this industry.”
The fund was attracted to the Lethbridge facility because the plant is already constructed. As Kennedy explained, getting the proper permits to build such a facility could take over two years, along with several years of construction time.
Also promising is the potential for the fund to almost double its capacity at the plant. While the two facilities combined have an annual organic waste capacity of 184,000 tonnes, there’s room at the Lethbridge location to expand that capacity to 240,000 tonnes each year — equivalent to the annual food waste produced by more than 566,000 Canadians.
The fund’s renewable future
The SCEF, established in May 2018, comprises 72 clean energy assets. Aside from the two biogas facilities, it has 70 solar assets totalling 38.356 megawatts in direct current. The fund expects this to generate 55,478 megawatt-hours annually.
Kennedy said for now at least, solar and biogas remain the SCEF’s core strategy going forward. There are no immediate plans to move into other sustainable energy sectors.
“Right now we’ve focused mainly on solar and on biogas. That’s really where our expertise lies,” he said. “We feel there’s a lot of growth potential in both those spaces. Solar is really picking up again in the Ontario market. It’s been booming in Alberta for a few years here now.”
At the same time, Kennedy and the SCEF aren’t restricting themselves to any particular province or feedstock.
“We’re really excited about that and we’re probably gonna stay here for a little while, until we see that next market emerge.”