AUSTRALIAN group Energy Developments has hired RBC Capital Markets to auction its £200m UK landfill-gas business.

The company, known as EDL, expects the sale to be hotly contested by utilities and financial buyers keen to increase the proportion of power generation that comes from renewable resources.

Infinis, the renewable-energy group owned by Guy Hands’s buyout group, Terra Firma, is expected to be interested, as are Macquarie, the Australian infrastructure investor, Viridis Clean Energy Group, HG Capital and utilities.

EDL has 60MW of landfill gas generation in Britain, plus another 60MW in France and Greece. Landfill-gas power generation works by burning methane created by decomposing waste to produce electricity.

RBC is expected to send out an information memorandum within the next few weeks.

Landfill gas is the single biggest source in Britain of renewable obligation credits (ROCs), the government green-energy incentive scheme that is one of the most generous in Europe.

The proportion of power required to be produced from renewable sources is increasing every year. If generators do not hit targets - 9.1% this year - they have to make payments to the ROC fund to make up the difference. The cash is redistributed to those generators that meet and exceed targets.

The ROC scheme can be highly lucrative for renewable-power generators. Novera Energy, another big landfill-gas producer, attracted bids from Terra Firma and 3i earlier this year.

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