Renewable Energy M&A: UK-based investment firm Amber Infrastructure acquires a 50% stake in three RNG projects in Canada and the US for $545mn

The firm acquired the stake from Canadian renewable natural gas (RNG) company Green Impact Partners (GIP). The acquisition covers the company’s flagship project - the $1.2bn Future Energy Park in Alberta - as well as two assets in the US, Iowa RNG, and GreenGas Colorado. The purchase price is structured as $485mn for a 50% stake in the Future Energy Park and Iowa RNG, with $60mn for a 50% stake in GreenGas Colorado. The Future Energy Park, one of the largest RNG plants in North America, is a 3.5 million MMBtu/year project that is expected to generate $300mn in annual EBITDA, starting in 2026. Meanwhile, commercial operation of the $130mn Iowa RNG project is expected in the second half of 2024, with an estimated production of 350,000 MMBtu/year. The $90mn GreenGas Colorado facility is currently being commissioned, with production anticipated to reach 360,000 MMBtu by the end of the year. The Iowa RNG and GreenGas Colorado projects are expected to generate $19mn and $21mn in annual EBITDA, respectively. 

GIP’s business model is based on the sale of RNG to utilities, supplemented with the trading of clean fuel/carbon credits generated in the production process. GIP estimates that 70% of its EBITDA will come from fixed-price, long-term off-take contracts, while the remaining would come from merchant sales and the sale of carbon credits. The company is banking on regulatory tailwinds, such as the Low Carbon Fuel Standard (LCFS), which is currently in effect in California, Oregon, and British Columbia. Canada also approved the Canadian Clean Fuel Standard (CFS) in Jun '22, under which compliance obligations would be effective starting in 2023. The new regime is expected to create a carbon credit market in Canada.

Enerdatics observes that the Amber Infrastructure deal marks the largest RNG investment in Canada, by value. As per our estimates, North America witnessed more than $7bn of RNG deals in 2022, led by the United States. The surge in interest in the RNG space is believed to be driven by the supportive regulatory environment, as part of continent-wide efforts to decarbonize gas-fired power generation and transport. Investors are seen to acquire assets and development platforms at staggeringly high multiples, such as oil major bp’s $4.1bn takeover of Archaea Energy at 46X last-twelve-months EBITDA. Other significant investments include NextEra’s $1.14bn acquisition of an RNG portfolio from Energy Power Partners, and private equity firm BlackRock’s purchase of Vanguard Renewables for $700mn.

The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.