Investment opportunity

  • High-yielding investment in energy sector, financing of further development of cogeneration power plant complex.
  • 16,2% planned annual return.
  • Investment principal buyback is available at 5% penalty rate.

Project description

Tukums DH is a Latvian power producing company that operates a cogeneration power plant located in Tukums region since 2012. This is an effective, environmental-friendly project that uses modern equipment and renewable energy source (woodchips) for production of thermal and electric power.

The plant consists of two independent stations, each producing both thermal and electric power. Technical characteristics of the stations are specified below:

 

1st station

  • 0,725 MWe - electric power generating capacity
  • 3,2 MWt - thermal power generating capacity
  • Boiler equipment producer - AGRO Forst&Energietechnik GMBH
  • ORC (Organic Ranking Cycle) equipment producer – Turboden S.r.l.

2nd station

  • 0,98 MWe – electric power generating capacity
  • 4,5 MWt – thermal power generating capacity
  • Boiler equipment producer – Kohlbach Group
  • ORC equipment producer – Turboden S.r.l.

Tukums DH is a successful venture due to its strategically beneficial location, effective equipment, and existing long-term contracts for consumption of electric and thermal energy, including an agreement with local municipality that is concluded until 2025. At the same time, the company has price-efficient supply of raw woodchips because of big number of local woodworking companies and relatively high competition on the market.

According to effective Latvian legislation in sphere of support of “small” (<10 MW) power producing plants, Tukums DH is receiving governmental subsidy (and will be receiving it until 2026).

Tukums DH is looking to attract an amount of EUR 950,000 for the time period of 11 months. The primary target of this financing is factoring-type addition to working capital of the company, used for effective cash flow management and purchase of raw woodchips when the prices are at the bottom of the slope, as the market for woodchips in the Baltic region is traditionally very seasonal and lack of supply is observed at certain moments.

Besides that, Tukums DH is going to further explore the opportunity of constructing a new agricultural or industrial-type object on the land plot, adjacent to the power plant. The initial project of building a grain dryer was simulated after several price-offers from producers of respective equipment were received and negotiations with suppliers of grain conducted. Currently, a number of alternative options is being studied in order to choose the project with the highest ROI and strongest demand curve.

 

Market

Latvian electricity market is quite self-sustainable with local energy plants generating approximately 102% of total internal consumption (average figure for the year 2017).

The energy production is distributed among three main types of energy plants:

  • Hydroelectric power plants
  • Thermoelectric power plants
  • “Small” (<10 MW) power plants, using renewable energy sources

The demand for electricity is not projected to decrease in the nearest future.

 

Sample repayment schedule

Envestio participant’s investment - EUR 1 000.00
Payments:

  • 11.03.2019 - EUR 12.43
  • 11.04.2019 - EUR 13.76
  • 11.05.2019 - EUR 13.32
  • 11.06.2019 - EUR 13.76
  • 11.07.2019 - EUR 13.32
  • 11.08.2019 - EUR 13.76
  • 11.09.2019 - EUR 13.76
  • 11.10.2019 - EUR 13.32
  • 11.11.2019 - EUR 13.76
  • 11.12.2019 - EUR 13.32
  • 11.01.2020 - EUR 1013.76

Total expected return: EUR 1 148.27

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Loan information

Loan IDEN018084
Project start date11.02.2019
BorrowerSIA “Tukums DH”, Reg. Nr. 40103280665, Latvia
Funding Target€ 950 000
Loan PurposeAddition to Tukums DH working capital, necessary for purchase of raw woodchips and further development of cogeneration power plant complex
Loan Period11 months
Interest Rate16.2% per annum
Repayment of Loan PrincipalIn full at the end of the Loan Period
Investment principal buyback availableYes, 5% penalty rate
Payment of Interest PaymentsMonthly, on a specific date
Financing typeSecured debt
Guarantee from the Project’s ownerCommercial pledge in favor of Envestio Collateral Agent, Personal guarantees

 

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