Severn Trent, owners of Severn Trent Water and Hafren Dyfrdwy, has announced the acquisition by subsidiary Severn Trent Green Power of Andigestion Ltd, which operates two food waste anaerobic digestion plants in Devon and Gloucestershire, in its latest trading update.

The acquisition is subject to regulatory clearance by the Competition and Markets Authority. Until then, ST Green Power and Andigestion will remain strictly as two separate companies.

Severn Trent Green Power is part of Severn Trent Business Services, the Group’s non-regulated business which offers a range of services to municipal and industrial clients.

The acquisition will bring an additional 45 GWh of energy generation output every year, increasing Green Power's output by 16%. and giving the firm new reach into Southwest England covering major cities like Bristol, Gloucester and Exeter.

Green Power owns a diverse portfolio of renewable energy production facilities including 33 Solar parks, six wind turbines, eight hydro-electric turbines, nine Anaerobic Digestion (AD) and five composting facilities. Coupled with the energy the firm generates from its AD facilities, it produces enough renewable energy to power 80,000 homes.

In 2020 Green Power exported around 260 GWH of renewable energy in the form of electricity and gas to grid, making its AD facilities the largest producers of renewable energy from food waste in the UK.

Christer Stoyell, Managing Director of Green Power, said:

“Having delivered double-digit growth in renewable energy generation since 2020, today’s announcement marks the start of a very exciting next chapter for all of us at Green Power. Following CMA clearance, we look forward to welcoming our new Andigestion colleagues and working with them to develop new growth opportunities and provide our award-winning services to even more households and businesses – powering the UK towards a cleaner and more sustainable future.”

Peter Prior, Executive Chairman at Summerleaze Group, owners of Andigestion Ltd, added:

“The Summerleaze Group has been at the forefront of the development of the UK's anaerobic digestion industry since 2005. Since then, with the help of its dedicated team of employees, Andigestion has grown into a profitable business which the directors now consider would benefit from being incorporated into a wider renewable energy portfolio, of which it will form a valuable part. We believe that Severn Trent Green Power is ideally placed to deliver that.”

Severn Trent Green Power said the acquisition will help bolster the energy resilience of parent company Severn Trent, and will play a key role in delivering its Triple Carbon Pledge (net zero emissions, 100% energy from renewable sources, and 100% electric fleet) by 2030.

EY Corporate Finance acted as sole financial adviser to Severn Trent for the acquisition.

“Confident we will achieve 4-star status in Environment Agency's 2022 Environmental Performance Assessment”

Commenting on Severn Trent ‘s regulated business, the trading update says:

“For the second year running we are proud to have been recognised by Ofwat in its most recent assessment as the only Water and Sewerage Company in the leading category for both performance and financial resilience.

“We have continued to deliver a strong service for our customers despite the driest summer on record and a challenging winter. In addition, we are on track to financially support 315,000 of our most vulnerable customers by the end of the AMP.

“Based on our initial view, we are confident we will achieve 4-star status in the Environment Agency's 2022 Environmental Performance Assessment. This would be the fourth consecutive year we achieve the highest rating.”

Robust financial performance and enhanced energy resilience

Severn Trent said there have been no material changes to current year business performance or outlook since the interim results announcement on 22 November 2022 and its guidance for FY22/23 remains unchanged.

The company self-generates the equivalent of over 50% of its energy consumption, resulting in “a natural economic hedge which significantly reduces the impact of higher power prices on shareholder returns.” Over the last six months the utility has locked in prices for its remaining exposure for FY23/24.

Capital and Commercial Services Director at Severn Trent to take up role as Chief Financial Officer from July 2023

Severn Trent Plc has also announced that James Bowling has decided to retire as Chief Financial Officer (CFO) and Executive Director of the Company in July 2023. Helen Miles, currently Capital and Commercial Services Director at Severn Trent as well as the CFO of Welsh regulated Company Hafren Dyfrdwy, has been selected to succeed him as CFO.

She will be appointed an Executive Director of the Company on 1 April 2023 and will have the title CFO Designate. James Bowling will remain an Executive Director of the Company and Severn Trent's Chief Financial Officer until the AGM on 6 July 2023, at which point Helen Miles will take on the responsibility.

Dr. James Jesic, Director of Customer Operations, will take over Helen's responsibilities as Capital and Commercial Services Director and a search is currently underway to select his successor. He will continue as Managing Director of Hafren Dyfrdwy.

Severn Trent's annual full year results presentation will be on 24 May 2023. Following the submission of its PR24 Business Plan, Severn Trent is planning to host a Capital Markets Day to bring its AMP8 plans to life on 12 October 2023.