Zenith Energy Secures Italian Biogas Facility Acquisition, Launching Biomethane Production Expansion

Zenith Energy Advances Into Italian Biomethane Market With Strategic Acquisition

Listed on the London Stock Exchange under ticker -ZEN, Zenith Energy Ltd has announced plans to enter Italy's biomethane sector by acquiring a fully permitted biogas development company. This initiative represents Zenith’s second renewable energy division in Italy, complementing its existing solar development portfolio. Operating in Italy since 2013 via its subsidiary Canoel Italia S.p.A., Zenith brings proven experience in natural gas and electricity production to the biogas market. CEO Andrea Cattaneo highlighted that this acquisition establishes a foundation for building a diversified biogas and biomethane business in Italy.

The acquisition aligns with Zenith’s strategy of securing high-quality development assets at attractive valuations and creating value through financing, construction, and operation. Leveraging its existing Italian market presence, regulatory expertise, and project finance capabilities, Zenith is well-positioned to execute this strategy. The target company’s fully permitted status and completed engineering minimize development risks and timelines, enabling Zenith to focus on financing, construction, and operational execution. The company plans to apply the successful methodologies from its solar development business to the biomethane sector.

Project Details and Financial Outlook at Full Capacity

The acquired Italian biogas facility is designed to produce about 3 million cubic metres of methane annually, injected into the national gas network operated by Snam Rete. Revenues will be generated through biomethane sales at Italian gas prices, supported by a 15-year government incentive scheme. The project has secured all necessary permits, licenses, and engineering approvals, positioning it at an advanced development stage. Revenue streams derive from biomethane sales into Italy’s established gas grid, exposing the project directly to market prices and demand.

Financial forecasts estimate annual revenues of approximately 5 million and EBITDA of 2.5 million at full operational capacity, reflecting a 50% EBITDA margin. This strong margin is attributed to the project's robust economics and long-term government-backed incentives, including capital subsidies covering up to 40% of eligible expenditures. These financials demonstrate the project’s ability to service debt and deliver investor returns post-commissioning, facilitating access to project financing.

Feedstock Supply Security and Risk Mitigation via Regional Authority Contract

A pivotal element reducing operational risk is the long-term feedstock supply contract with a major Italian regional authority, guaranteeing a feedstock mix of roughly 50% municipal waste and 50% agro-industrial waste. This agreement addresses the primary operational risk in biogas projects—securing reliable, long-term waste feedstock. The stable supply ensures consistent facility operation and supports revenue projections.

The feedstock contract also enhances project financing prospects, as lenders require documented long-term feedstock availability. Diversification between municipal and agro-industrial waste further mitigates supplier risk, reflecting best practices in biogas development. Zenith’s acquisition fills a previous operational expertise gap in producing and marketing gas into the Italian network.

Supportive Italian Policies and Biomethane Production Goals

Italy’s National Energy and Climate Plan (PNIEC) sets a binding biomethane production target of 5.7 billion cubic metres annually by 2030. Current production levels are significantly below this target, necessitating a doubling of output in the coming years. This creates a sustained investment opportunity for companies like Zenith with the capital and expertise to scale biomethane capacity. Zenith intends to leverage this opportunity by developing a diversified Italian biogas and biomethane portfolio, beginning with this acquisition.

Italy offers one of Europe’s most supportive policy environments for biomethane, including a 40% capital cost subsidy and a 15-year revenue incentive providing a 20% uplift on methane sales. These incentives enhance project returns and revenue visibility, reducing investment risk and attracting project financing. Italy’s biogas sector currently operates about 2,400 plants with an installed capacity of approximately 1.5 GW, mainly in the north, providing a strong industrial base and supply chain ecosystem.

Acquisition Schedule, Financing Plans, and Construction Timeline

The acquisition follows a clear timeline with green project financing targeted by the end of Q3 2026, acquisition completion and construction commencement in Q4 2026, and operational startup expected in Q3 2027. The project’s advanced development status, including completed permitting and engineering, supports this accelerated schedule, minimizing construction risks and expediting revenue generation.

Zenith plans to fund the acquisition and project development through non-dilutive green project financing, consistent with its solar portfolio strategy. This financing approach leverages asset cash flows, long-term contracts, and government incentives to secure capital at favorable terms, minimizing shareholder dilution. Zenith’s project finance expertise and established financing relationships position it well to secure suitable capital structures.

Purchase Price, Valuation Approach, and Due Diligence

The acquisition price is capped at EUR 1.6 million, with final consideration subject to confirmatory due diligence. This disciplined valuation approach allows Zenith to acquire assets at attractive prices while mitigating downside risk. The cap limits exposure during technical and commercial validation phases. Details such as the target company’s identity, project location, and vendor information will remain confidential until acquisition completion to prevent competitive bidding risks. Full disclosure will be provided post-transaction.

Zenith’s Operational Expertise in Italian Energy Markets and Gas Infrastructure

Operating in Italy since 2013, Zenith brings extensive experience producing and selling natural gas through its subsidiary Canoel Italia S.p.A. This operational background provides a competitive edge in managing regulatory compliance, technical requirements, and commercial frameworks for gas injection and sales. Zenith’s established relationships with network operators, regulators, and gas buyers facilitate efficient project development and commercialization.

The company is uniquely positioned to deliver the operational expertise, sector knowledge, and financing capabilities necessary to realize the project’s full potential. Zenith’s proven track record in Italy supports project financing and commercial negotiations, reinforcing confidence among stakeholders.

Italian Biogas Sector Evolution and Biomethane Market Shift

Italy’s biogas sector has transitioned from renewable electricity generation under feed-in tariffs toward biomethane production for gas network injection. Approximately 2,400 plants operate with about 1.5 GW capacity, mostly in northern Italy. This shift aligns with evolving policies favoring renewable gas and the maturation of renewable electricity markets. It creates opportunities for operators to retrofit or develop biomethane-focused facilities.

Biomethane supports Italy’s energy transition by substituting natural gas in heating, industry, and transport, aiding decarbonization of hard-to-electrify sectors. The PNIEC’s 2030 biomethane target requires doubling current production, attracting significant infrastructure investment. Zenith’s establishment of a biogas and biomethane division reflects confidence in the sector’s long-term growth and value creation potential.

Strategic Portfolio Diversification and Competitive Positioning in Italian Renewables

This acquisition diversifies Zenith’s Italian renewable energy portfolio beyond solar, creating a second major division focused on biogas and biomethane. The company plans to replicate its successful solar asset acquisition, financing, construction, and operation model in the biogas sector. This strategy enables expansion across complementary renewable technologies, reducing sector concentration risk and optimizing capital deployment.

Zenith’s established Italian market presence, operational experience, and financing relationships provide a strong foundation for efficient portfolio growth. Management views this transaction as the first step toward building a diversified Italian biogas and biomethane portfolio, leveraging synergies with existing energy production capabilities and confidence in executing at scale.