Orlen takes over a biogas plant in Szepietowo: another step in building a biogas portfolio

Orlen is buying 70.15% of the shares in CHP Energia, the owner of an agricultural biogas plant in Szepietowo in the Podlaskie Voivodeship. The sale agreement was signed on 18 March 2021, and the information appeared a day later. It is the second transaction by the group on the agricultural biogas market, after the biogas plant in Konopnica, which Orlen Południe took over in December 2020.

What Orlen bought

The installation has a capacity of 1.2 MWe and was registered in 2015. Its construction cost about PLN 16.5 million, of which PLN 5.09 million came from an EU grant under the Regional Operational Programme of the Podlaskie Voivodeship for 2007–2013. The conclusion of the transaction was made conditional on the National Support Centre for Agriculture (Krajowy Ośrodek Wsparcia Rolnictwa, KOWR) not exercising its right of first refusal over a plot of about 0.68 ha adjacent to the installation; the plot was to be sold together with the shares.

The biogas plant in Szepietowo is another facility in the pilot acquisition programme in which the group is testing paths of entry into the biogas market. The first element was Konopnica (1.99 MWe, with a plan to convert it into a biomethane plant producing about 7 million m³ per year).

Orlen's strategy in biogas

Orlen is pursuing several lines of action in parallel:

• acquisitions of operating installations that can be adapted for biomethane production;
• completing unfinished projects, such as the biogas plant in Głąbowo in the Ryn municipality;
• building its own biogas plants on farms supervised by KOWR – in line with the letter of intent of July 2020, in which H. Cegielski-Poznań, KOWR and the Poznań University of Life Sciences take part; the farms could in time be bought by Orlen Południe or leased from KOWR.

The construction contractor would be H. Cegielski-Poznań under a licence for the Polish Dynamic Biogas patent. The group argues that this solution will be technologically ahead of the competition.

Significance of the transaction

For the biogas market in Poland, acquisitions by a large fuel company mean several things at once. For owners of small and medium-sized biogas plants, a potential buyer appears, which may increase the market value of installations, especially those with a good location and grid connection. For technology suppliers – growing demand for modernisations and upgrading installations. For farmers – increased interest in substrate supplies and digestate offtake.

At the same time, the question of regulation remains open: moving from cogeneration to biomethane requires changes in law, and until then the acquired installations continue to produce electricity and heat under the existing support schemes.

What next

The next steps are obtaining corporate approvals, finalising the purchase and developing a concept for the conversion. For the industry it will be important whether similar transactions follow in other regions and whether the group decides to standardise projects.

Disclaimer

Information about the transaction comes from company communications and press reports, and the final terms, including the price, have not been disclosed. It is therefore hard to assess how the valuation compares with the market value of other biogas plants.