Renewable Energy Generation Ltd
28 September 2007
28 September 2007
Renewable Energy Generation Ltd
("REG", "the Company" or "the Group")
Completion of share purchases in
Living Power Limited and Living Fuels Limited
Renewable Energy Generation (AIM: RWE), the developer, owner and operator of
renewable energy projects, announces it has completed its purchase of Living
Power Limited ("Living Power") and Living Fuels Limited ("Living Fuels") in
pursuit of the opportunity to utilise used cooking oil ("UCO") to fuel diesel
generators in the UK. The rapid cash flow profile of this business complements
the investment cycle for our core wind energy business.
REG has acquired an 80% interest in Living Power and a 20% interest in Living
Fuels. Both businesses were established two years ago. The total consideration
for both transactions is £1.1 million.
Generation of power from used cooking oil in the UK benefits from strong
financial and policy support throughout the supply chain.
Living Fuels aggregates UCO, using a proprietary process to clean the oil to a
quality where it can be used to fuel diesel engines. Living Fuels has been
rapidly expanding its oil collection and processing facilities. Its supply
contracts are typically with large corporate clients, seeking a long-term
solution for the environmentally sound disposal of large volumes of oil.
Living Fuels is securing longer term off-take contracts in excess of five years.
Living Power generates electricity from diesel engines fuelled by UCO. Living
Power has an immediate pipeline of projects in excess of 10MW and expects
substantial further growth in the next two years. Capital costs are relatively
low at less than £300,000/MW and the technology used comprises "off the shelf"
diesel engines. Thus technology risk is relatively low whilst the dispersed
nature of the generation means operational risk is also reduced. REG's UCO
projects will have high utilisation, typically generating for some 7,500 hours
per year and the electricity produced qualifies for Renewable Obligation
Certificates. We expect the first projects to be completed in the first half of
2008 from when they will make a significant contribution to REG Group earnings.
REG will sell electricity generated from its UCO projects to Smartest Energy,
part of the Marubeni Group of Japan. As with REG's UK wind projects, ROCs
generated will be sold on an opportunistic basis to take advantage of current
high pricing.
Once operating, surplus cash provided by the UCO generation business will be
used in the continued expansion of REG's UK wind business where a number of
projects are either in procurement or likely to enter procurement over the next
few months.
Andrew Whalley, Chief Executive Officer said:
"This is a tremendous opportunity which REG has been quick to capitalise upon.
It will complement our fast growing UK wind business allowing us to leverage the
same skill sets deployed by our UK team. We have a lot of interest from large
companies and municipalities wishing to deploy this generation technology and
see a very bright future for the business."
Enquiries
Renewable Energy Generation
Andrew Whalley, Chief Executive Officer +44 (0) 1483 400 425
Bell Pottinger Corporate & Financial
Nick Lambert / Amy Rajendran +44 (0) 20 7861 3232
This information is provided by RNS
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