Plutus PowerGen PLC Update (4458G)
May 30 2017 - 1:01AM
UK Regulatory
TIDMPPG
RNS Number : 4458G
Plutus PowerGen PLC
30 May 2017
Plutus PowerGen Plc / Ticker: PPG / Index: AIM
30 May 2017
PLUTUS POWERGEN PLC ("PPG" or the "Company")
Trading Update
Plutus Powergen Plc, the AIM listed power-company focussed on
the development and operation of flexible energy generation
('FlexGen') projects in the UK, is pleased to provide a trading
update on its operations.
The Company's business model remains focussed on the
construction of FlexGen projects across the country. The energy
environment in the UK is tightening rapidly and PPG is focussed on
mitigating the current and forecast risk of an energy deficit
through the development of a portfolio of 20MW power sites, which
can be switched on at a moment's notice at times of peak
demand.
PPG's inaugural 20MW FlexGen project, based in Plymouth, has
traded above budget since it commenced operations in November 2016.
The Board notes that on Wednesday 17 May 2017 power prices in the
UK peaked above GBP1,500 per MW hour due to outage and generation
imbalances, and recognise this volatility will be seen in the
markets more regularly going forward. PPG 's sites are ideally
positioned to take advantage of this as they can be operational
within 30 seconds. A further eight 20MW projects are in various
stages of development. PPG and Rockpool Investments LLP are
arranging the finance for all nine projects with a combination of
debt and equity. PPG has a 45% stake in each project and management
contracts, which will total GBP150,000 per site per annum. Some
100MW's of these projects are in construction at present and it is
expected that they will be available to supply electricity during
the winter of 2017/2018.
With regards to the current OFGEM regulatory review, initiated
in March 2017 when OFGEM published a "minded-to" decision, the
Board await the conclusion of that review which is likely to be
published after the general election. If implemented, as published,
this would reduce the TRIAD benefit received by small embedded
generators, such as PPG's projects, to close to zero from the
winter of 2020/21. It is expected that OFGEM will announce a full
review of the whole charging system and it is likely that TRIAD
will either be frozen or reduced over the period of the review.
On the surface, this has been perceived as damaging to the
prospects of PPG. However, due to the sites having multiple revenue
streams, including reactive power sales, STOR and FFR, the Board
have examined each of PPG's operational and financial models to
exclude TRIAD from its renewable green diesel powered sites and
proposed gas sites. While the gas sites are around 100% more
expensive to construct than the renewable green diesel sites, the
Board believe the financial returns, even excluding TRIAD if
ultimately abolished, remain highly attractive and offer a
potential IRR per project in excess of 20%.
With respect to the outcome of DEFRA's consultation on new lower
emissions limits, the Company understands that this has also been
delayed by the general election. However, PPG is confident that it
will be able to comply with the proposed new rules, without any
material impact on investor returns compared with the returns
expected when Plutus Energy was first reversed into PPG.
Overall, the structural changes in the business and the
reduction in TRIAD have put negative pressure on PPG's share price
performance. However, all parties, be it the Board, Rockpool or
financial advisors, believe the business case remains extremely
compelling and that the future value of the business is attractive.
Therefore, the Company remains committed to executing its
development strategy in tandem with its partners.
Going forward, the Company has a pipeline of FlexGen gas
projects totalling 150MW, which it will seek to retain an 80% plus
interest in. The Company is focused on constructing a minimum of
four gas powered projects per annum as they offer significant
advantages, both environmental and financial, over renewable green
diesel engines. However, the Company may consider other projects in
certain circumstances, utilising strong relationships with key
partners both in the finance and energy markets.
PPG Chairman Charles Tatnall said, "Following a re-work of our
modelling, and considering OFGEM's proposal, we believe we still
have an extremely robust and attractive business model. The market
for flexible energy generation is clear to see and we have the team
and are in well-developed discussions regarding the financial
backing to deliver our projects and therefore our stated strategy.
It is also important to emphasise that PPG continues to seek to
fund the construction and development of its power generation sites
through non-dilutive means. As such we continue to view the future
with confidence."
**ENDS**
For further information, please visit www.plutuspowergen.com, or
contact:
Charles Tatnall Plutus PowerGen Plc Tel: +44 (0) 20
3705 8350
Phil Stephens Plutus PowerGen Plc Tel: +44 (0) 20
3705 8352
Andrew Craig Cantor Fitzgerald Tel: +44 (0) 20
Europe 7894 7000
Richard Salmond Cantor Fitzgerald Tel: +44 (0) 20
Europe 7894 7000
Isabel de St Brides Partners Tel: +44 (0) 20
Salis Limited 7236 1177
Olivia Vita St Brides Partners Tel: +44 (0) 20
Limited 7236 1177
Notes to Editors
Plutus PowerGen Plc is an AIM listed company focused on the
development, construction and operation of flexible stand-by power
generation sites in the UK. At present, the market dynamics for
flexible power generation are positive due to the continued
downward pressure on capacity available to National Grid to balance
supply and demand, leading to their announcements about possible
power shortages over the next few years.
Flexible power generators such as PPG offer a viable and timely
solution to the power capacity shortfall in the UK. To this end,
PPG is initially focusing on delivering 200MW of capacity by the
end of 2017 and currently has a project pipeline of potential
development sites with 700MW of power generation capacity.
This information is provided by RNS
The company news service from the London Stock Exchange
END
TSTKQLFLDEFFBBB
(END) Dow Jones Newswires
May 30, 2017 02:01 ET (06:01 GMT)
Plutus Powergen (LSE:PPG)
Historical Stock Chart
From Apr 2024 to May 2024
Plutus Powergen (LSE:PPG)
Historical Stock Chart
From May 2023 to May 2024