In the UK, road transport is thought to be responsible for 27% of total greenhouse gas emissions, with HGVs creating 16% of this – a figure that can be reduced dramatically by switching away from traditional fuels. Compared with diesel, HGV fleets that run on biomethane produce 85% less CO2 emissions, and so it is little surprise that brands such as Tesco, DHL and Amazon are making the switch to gas. At the other end, smaller operators that are in the supply chains of these larger brands are also having to reduce emissions.

“We put gas on trucks in two forms,” says Rob Wood, Gasrec CEO since, 2013. “Either you compress it, or you liquefy it. And the reason you do either of those is to increase the amount of energy you can put on to the truck in a limited amount of space.” 

In a world where electric cars grab headlines, however, the innovation by truck manufacturers to develop fleets that run on gas has been somewhat overlooked. But it’s an evolution that is proving no less essential to emissions reduction, as well as Gasrec’s plans. 

“What we were really waiting for were the vehicle manufacturers to introduce dedicated gas vehicles coming directly off their production lines,” explains Rob. “These give everyone more confidence in the fact they had a manufacturer’s warranty. The fact they have better performance guarantees, attached to the fact that they shared most of the proponents with a diesel truck, made them a far more attractive proposition.” 

With a staff of 38 (a figure that has doubled during the pandemic) Gasrec’s offerings are split along three broad lines: 

• Designing and building bespoke gas refuelling facilities, whether private or publicly accessible

• Station operation and maintenance, including upgrades and expansions

• Supplying gas – whether from fossil or biomethane sources – directly to stations

From “local family-owned operators that tend to run out of a single location” to “bigger supermarkets and logistics companies”, Rob explains, Gasrec’s customer base is varied. Currently it runs 10 stations, and is supplying gas to a further 19. It has partnered with Sainsbury’s, Ocado and UPS to fuel their fleets, and in 2021 BP chose to invest and acquired a 29% stake in the company. 

But while the demand may come from different sources, the challenge for the business, founded in 2003, has remained the same: finding a partner to help realise its capital-intensive ambitions. “It’s all about making best use of all the funding available,” says Rob. “So as we’re building dedicated stations, where we have a firm commitment on the part of our customer to take gas, and pay fees, we found it was the perfect structure for debt financing. We’d been looking around for a financing partner for some time that can work with us.” 

Debt financing is an arrangement where a business borrows money for a capital expenditure or investment and repays the lenders over a period of time, reducing the principal borrowed and paying interest on what is owed. While not suitable for every situation, debt financing allows a business to invest while protecting its own equity and maintaining its operating capital.

To this end, the business started its relationship with Lombard in 2021, and what started as a relatively straightforward agreement for station finance has grown into a relationship that better serves Gasrec’s business strategy.

Rob says: “That relationship has now gone into tanker financing. When the liquified gas comes to the UK we put it on to vehicles still in liquefied form. So the other very specialist part of what we do alongside the stations is moving the gas in -160C liquid form from ships on to road tankers to supply our sites. And because it’s specialised you can’t go to Joe Bloggs and get another tanker. You have to build those specifically for your purpose. So we’re increasing the size of our fleet – it needs to be funded.”

The other advantage, he explains, is that as a lender that understands Gasrec’s business and ambitions, asking Lombard for finance is now a more streamlined process. 

“We don’t really want to go to the market every time we have a new project to finance. We prefer to have a suite of agreements that can just be replicated every time a similar project comes up. And that was really the basis of the initial conversation with Lombard, to have a cookie-cutter type of approach so that the same structure could be repeated.”

And that copy-and-paste process is one that the Gasrec board sees as essential to fuelling its ultimate ambitions for the next five years: with Lombard’s help, it hopes to operate 25 dedicated stations, in addition to a network of 20 to 25 open-access stations by 2025.

“What we really crave is a relationship, not just an individual lending product. And we have that in Lombard.”