Renewable Energy Generation Ltd
25 July 2007
Renewable Energy Generation
("REG", "the Company" or "the Group")
Renewable Energy Generation (AIM: RWE), the developer of renewable energy
projects, announces a pre-close period update on activities in Canada and the
UK. The Company will issue its preliminary results for the year ended 30 June
2007 on 13 September 2007.
Highlights
REG's Canadian subsidiary, AIM PowerGen Corporation (APG) bids to
build, own and operate two wind projects in Manitoba with a total capacity of
198 Megawatts (MW)
On-site construction begins on four wind projects at Lake Erie with a
total capacity of 39.6MW under Ontario's Standard Offer Program (SOP). Three
more SOP projects with a total capacity of 29.7MW are to be built by APG in
Ontario over the next 18 months
On-site construction begins in September 2007 on a new wind project in
Cornwall
REG's UK subsidiary, Cornwall Light & Power (CLP) is developing
opportunities in two biomass projects using different fuels at two different
sites
REG projected to become cash flow positive on an operational basis and
after dividend payments in Quarter 1 2008
REG Chief Executive Officer Andrew Whalley said:
"We are delighted to be working with GE Energy on the Manitoba Requests For
Proposals (RFP) bid. GE's wind turbine technology has performed well and the
company is the leading supplier of wind turbines in North America. Both projects
have strong and consistent wind speeds, strong community support and minimal
environmental impact.
We have also announced today Crop Oil to Power entering our renewables portfolio
via CLP's agreement to provide funding for the growth of an established supply
pipeline of used cooking oils. This oil will be cleaned utilising an established
process and will then be used to generate power thus qualifying for Renewable
Obligation Certificates. The capital commitment from REG is relatively small in
the context of our wind business, but this project should contribute to Group
earnings next year. The potential for Crop Oil to Power is significant and both
this and biomass will complement our established wind business in the UK."
When our first four SOP projects in Canada come on line at the end of this year
REG will become cash flow positive on an operational basis and after dividend
payments in Quarter 1 2008. As the Company's cash flows build and stabilise so
we will put in place a flexible debt facility. This will further facilitate the
build out of our project pipelines both in the UK and Canada and will also lower
our overall cost of capital, important when bidding in competitive RFPs."
Manitoba bid
APG has bid for two 99MW projects in Manitoba. The bid was submitted to Manitoba
Hydro Wind Power on July 17 2007. Altogether the Manitoba Hydro RFP represents
up to 300MW of new wind power, potentially quadrupling the amount of wind power
in the province.
The two 99MW projects bid by APG are Oakland Wind Farm near Brandon and Dominion
City Wind Farm near Winnipeg. APG is bidding in with a partner and both
Companies would, if selected, jointly contribute equity to the projects. Both
projects would use GE Energy 1.5MW turbines with a planned service date of late
2009. These are the same turbines as used on another APG project, the 99MW Erie
Shores wind farm, which went into operation in June 2006. Erie Shores was GE
Energy's first 100MW scale wind farm in Canada.
GE Energy has become the top provider of wind turbines in North America, and the
GE 1.5MW turbine which REG will use if selected has a very high reputation for
reliability, with more than 6,000 installed worldwide.
Ontario SOP program
Over the next 18 months, APG is to construct 69.3MW of wind power at seven sites
in Ontario at a total cost of approximately £76 million. Each of these projects
will have a capacity of 9.9MW. They form part of Ontario's Standard Offer
Program (SOP) which helps the province meet its renewable energy targets.
The power for these SOP projects will be generated by forty two 1.65MW turbines
purchased from Vestas Canada. The first twenty four turbines are due to be
delivered this year in October and November to four sites on the shores of Lake
Erie where on-site construction, including roads, foundations and
infrastructure, has already commenced. The remaining eighteen turbines will
follow in 2008, and all seven projects are scheduled for completion within
eighteen months.
New project in Cornwall
On-site construction starts in September 2007 on a new 1.7MW wind project at
Roscrow Barton near Penryn in Cornwall. The project will be powered by two
Vestas V52 turbines which are due to be delivered in December 2007, and is due
to become operational in February 2008.
Continued expansion into biomass and introduction of Crop Oil to Power into the
CLP renewables portfolio
CLP is to develop a biomass project in South Wales in partnership with Merthyr
Industrial Services Ltd (MIS). Power will be generated and supplied to the local
distribution network, and there is potential for surplus heat to be supplied to
neighbouring businesses.
In addition to biomass CLP has reached an agreement to fund an established
supply pipeline of used cooking oils ("UCO") which already has agreements in
place with a number of local authorities, caterers and restaurant chains. CLP
intends to generate power from the UCO which will be first cleaned using an
established process.
Like biomass, REG expects to expand this project by developing a number of units
on large industrial, commercial and development sites.
Both biomass and UCO will leverage off the existing wind project monitoring
facilities in place at CLP. The capital commitment from REG to these projects is
small in the context of its established wind business but the projects should
contribute significantly to Group earnings next year.
REG Income
The first four SOP projects in Ontario will come on line early in 2008 when the
income from them together with that from our existing wind projects in the UK
and Poland should mean that REG will achieve positive cash flow on an
operational basis after dividends. This is an important milestone for the
Company. The construction of three further SOP projects in Canada towards the
end of 2008, the development of new wind projects in the UK and a growing
contribution from biomass and Crop Oil to Power will further enhance and
diversify REG's platform for growth.
ENDS
Enquiries
REG Power Management Ltd
Andrew Whalley +44 (0) 1483 400 425
Bell Pottinger Corporate & Financial
Nick Lambert / Amy Rajendran / Antonia Coad +44 (0) 20 7861-3232
This information is provided by RNS
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