Suburban Propane to use acquisition to increase development of RNG projects

Whippany-based company to form partnership with Equilibrium Capital Group after acquiring its renewable natural gas production assets

Suburban Renewable Energy, the wholly owned subsidiary of Whippany-based Suburban Propane Partners, announced last week that it has reached an agreement to acquire a platform of renewable natural gas assets from Equilibrium Capital Group, a leading sustainability-driven asset management firm.

In addition to the purchase of two operational biogas facilities, the parties have formed a partnership to serve as a long-term growth platform for the identification, development and operation of additional RNG projects, including an existing pipeline of identified RNG projects that are in various stages of development.

Suburban Propane officials said the acquisition aligns with Suburban’s ongoing strategic initiatives to invest in the energy transition to cleaner alternatives — and will provide immediate and meaningful scale to Suburban’s existing portfolio of renewable energy investments and assets.

Suburban officials said the purchase price of $190 million for the two operating facilities, along with transaction fees and expenses, will be funded with borrowings of approximately $120 million under Suburban’s revolving credit facility, and the assumption of approximately $80 million of outstanding green bonds with an attractive interest rate.

The RNG platform will include the following assets:

  • A large-scale RNG facility in Stanfield, Arizona, that is currently operating and includes seven anaerobic digesters, manure rights from approximately 55,000 dairy cattle and an interconnect with an interstate pipeline;
  • An operating facility in Columbus, Ohio, that is currently receiving tipping fees from several large food and beverage providers for processing food waste into fertilizer and biogas, and has an active development project to upgrade the biogas into RNG for use in the transportation sector;
  • Option rights for a third RNG facility in the Midwest that is currently being developed by Equilibrium.

The deal also includes the creation of an RNG development company with Equilibrium that will invest in and develop approximately $155 million of future RNG projects, of which Suburban Renewables will own approximately 70% and Equilibrium will own approximately 30% once such projects are fully funded

The RNG platform to be acquired is diversified across feedstocks, geographies and revenue streams, and complements Suburban Renewables’ ongoing activity to construct, own and operate an RNG facility at Adirondack Farms in Peru, New York.

While the acquisition will immediately enhance and increase Suburban Renewables’ presence in RNG production and distribution, the partnership with Equilibrium through the joint venture arrangement will provide visible growth and experienced management in the rapidly developing waste-to-energy economy. RNG can be produced from multiple organic waste streams, including agricultural and food waste, helping to reduce methane emissions, while offering a low-carbon solution as a drop-in replacement for traditional natural gas.

Suburban Propane CEO Michael Stivala hailed the deal.

About Suburban Propane

Suburban Propane Partners, founded in 1928, is a nationwide distributor of propane, renewable energy and related products and services, as well as a marketer of natural gas and electricity and an investor in low-carbon alternatives. The partnership serves the energy needs of approximately 1 million residential, commercial, governmental, industrial and agricultural customers through approximately 700 locations across 42 states.

“This investment meaningfully advances our strategic goal of building out a renewable energy platform to help drive the energy transition to a low-carbon economy,” he said. “We are excited to be partnering with the Equilibrium team, which has a proven track record of sourcing, developing and managing high-quality renewable natural gas producing assets.

“We look forward to building upon and advancing this opportunity as we seek to leverage Equilibrium’s seasoned management team with a well-established network of operators, engineering and construction providers and off-takers, and a strong commitment to sustainable investments.

“The scalable platform complements our existing portfolio of renewable energy assets, either as a stand-alone RNG distributor, or as a pathway to rDME and hydrogen production.”

Equilibrium Capital CEO Dave Chen is pleased with the partnership.

“Biofuels and renewable natural gas are now mainstream commodities in the transition to low-carbon energy and decarbonization of our economy,” he said. “The major challenge will be scaling cost-effective production supplies to meet market demand. Equilibrium is taking our experience investing in, developing and operating scalable RNG production infrastructure, and partnering with Suburban’s market leadership and expertise in gas logistics, trading and user applications, to build assets that drive towards these goals.”