Khash Mohajerani, co-founder and partner at OrbeNovo Capital, will bring his expert investment perspective to this year’s International Biogas Congress & Expo, which takes place in Brussels on 24-25 June. Here, he tells Bioenergy Insight about OrbeNovo, plans for the investor’s portfolio company EAG Bioenergy, and how the sector could make itself more attractive for investors.
OrbeNovo is a specialist energy investor focused predominantly on mid-market real assets and private equity stage investments in Western Europe. The organisation was founded by Khash – who began his career at Warburg Pincus in the London-based energy team – and Peder Bratt, who was Warburg’s head of energy for Europe, Middle East and Africa until 2022.
The business partners observed that the energy sector, from an investor standpoint, is underserved by specialists.
“You have asset-heavy business plans with long capital cycles, changing regulatory drivers and complexities and you ultimately have physical and economic constraints that you need to bring together,” Khash told Bioenergy Insight.
“And we see there are very few specialist investors in that space. So that’s why we set up the business.”
OrbeNovo approaches the world in two core verticals.
“One is what we call value add infrastructure, or sustainable real assets. So, this is really investing into platforms that are becoming owners and operators of assets, like we've done in the biogas sector today. And the second is what we call mid market “picks and shovels”, which is effectively the equipment, service and technology players that serve the roll out of those sustainable real assets. And we try and create linkages between the two.”
As an example, OrbeNovo are active owners as asset-based investors in biogas, through portfolio company EAG Bioenergy.
OrbeNovo began to look seriously at the biogas and biomethane sector in 2022. It became clear that there were a lot of larger infrastructure-focused investors looking to deploy hundreds of millions of dollars into building predominantly development-led biomethane platforms. But then, when OrbeNovo looked at the UK, it saw a highly fragmented market.
“Of approximately 750 anaerobic digestion sites in the UK, we define around 70% as small, single-site operations. Typically farm-based, with a single owner. So, we realised that there was a consolidation opportunity, because it is such a fragmented industry. That brings a value creation opportunity, by creating scale through buying and developing a portfolio. We also saw there was some financial distress in the sector because a lot of the capital that was provided to build these single sites was inappropriate. It was really expensive capital.”
“We saw an opportunity to consolidate ownership in the lower end of the market, build scale and optimise those assets. But we also recognised that to achieve this and create value, you have to build a best-in-class operating platform and invest in the right technology and human capital to actually run these assets well on a consistent basis. That kind of business building is what we like to think we’re good at. And having that capability is ultimately why we think we can acquire assets from current owners on terms that are attractive for both sides. ”
Khash and Peder met the management team at EAG Bioenergy in 2023, and spent about six months working through an investment thesis with them – and ultimately decided to back them.
OrbeNovo then bought and carved out EAG Limited from a public listed company (PLC) in January last year. Subsequently, the team has executed two further M&A deals and raised a substantial capital commitment dedicated to EAG to fully fund its business plan in the UK and Ireland for the next five years
“With debt and leverage, we’re aiming to deploy £200 million to £250 million of total capital through EAG over the next three years.”
2025 International Biogas Congress & Expo
As a speaker at this year’s event, Khash said his talk is designed to provide a differentiated view from regulations, or what the future of biomethane will be.
“I’m going to focus on the private equity perspective on biogas and biomethane, because there are relatively few private equity players in the space – many have been core infrastructure investors. And so, one thing I'll focus on is thinking about the biogas value chain, right from greenfields to brownfields, to buying operating assets to doing turnarounds, and how we and other private equity investors think about investing across that chain.”
Bioenergy Insight then asked for Khash’s perspective on the biggest hurdles facing investors. He pinpointed regulatory clarity.
“You get what you subsidise,” he said. “You saw it when FiTs [Feed In Tariffs] and RHIs [Renewable Heat Incentives] were introduced, there was a massive uplift in solar PV, a massive uplift in biogas. The regulatory framework around GGSS [Green Gas Support Scheme] is not working particularly well – the uptake has been woeful.”
For Khash, there are a few things that need to be simplified: “I think, more broadly, everyone is asking for more clarity as to what the long-term future for the sector is. From our EAG perspective, there are two important questions. One is, what is going to happen to existing biogas subsidies? The assumption today is that they will expire, and there will be nothing to replace them. If that’s the case, there are some big implications – the vast majority of these assets are unprofitable without subsidies. And if they’re unprofitable, people won’t be able to afford to convert them into biomethane assets.
“So having some clarity around whether biogas subsidies will be extended would be helpful. If the answer is no, will there then be a subsidy in place to encourage the conversion of biogas plants to biomethane?”
One further challenge for Khash is engineering capacity in the market.
“We think there is a lack of high-quality engineering capacity, which is slowing down the development of biomethane plants. So, we think there needs to be ways of getting more qualified engineers into the sector.”
That could be achieved through some of the larger engineering and EPC business devoting resources to the sector. Or it could be supported by government training schemes, helping repurpose skills from electrical or gas engineering to suit the biogas market.
The year ahead
This year promises to be an exciting one for OrbeNovo, as the first asset it acquired – in Northern Ireland – is being converted from a biogas plant to a biomethane facility on a subsidy-free basis.
“You don’t have subsidies in Northern Ireland, so we’re looking to reach FID [Final Investment Decision] on that by the end of this year, so we can bring it online by the end of 2026.
“We’ve got our grid connection approved, we’re going through planning, we have the feedstock. So that one we are very, very excited about, because it should be the first of hopefully many assets that can convert biogas to biomethane.”
“We love this sector, there’s a lot to do here. We think it’s relatively early in its growth trajectory, and we’ve seen industries like this. It’s moving from a relatively early stage, which is fragmented and driven by local players, to scaling up to a much more industrialised and institutionalised market. Consolidation in the market is a result of that, and that’s going to be a great thing.
“As investors, we want to do more here. We’re looking at setting up similar platforms in Western Europe, including Italy, Netherlands, France and potentially Germany and Spain.
“We want do double down and find more ways to deploy capital into the sector,” concluded Khash.
To register to attend the International Biogas Congress & Expo, click here
Speaker interview: OrbeNovo expects its first subsidy-free biomethane plant to go live next year
