Press Release 28 July 2008
Renewable Energy Generation Limited
("REG" or the "Group")
Extension of Power Purchase Agreement
Renewable Energy Generation Limited (AIM: RWE), the international renewable energy group, today announces that it has extended until March 2011 the power purchase agreement ("PPA") in place on its UK wind farms which expires in March 2009.
As with REG's current arrangements, the PPA is with Smartest Energy, a subsidiary of the Marubeni Corporation, and covers electrical output including Levy Exemption Certificates, Triads and REGOs. The PPA does not include Renewable Obligation Certificates ("ROCs") generated by the wind farms which REG will continue to sell on an opportunistic basis to take advantage of high and rising prices.
The PPA extension covers 21.3MW of wind generation including the new projects at Whittlesey and Ramsey and runs from 1 April 2009 to 31 March 2011. REG will receive around £75/MWh on a volume weighted basis over this period, substantially higher than the current contracted price of £45/MWh, which applies to most of the projects and was struck in 2007.
Andrew Whalley, Chief Executive Officer of REG, said:
"Our wind farms are equity financed in the UK and this affords us the flexibility to forward sell output to take advantage of high prices when they occur. With oil at around $130 per barrel we believe it is right to extend our existing PPA arrangements for a further two years to take advantage of robust current pricing. Whereas we are forward selling the electrical output to capture high prices in a volatile market, we believe that ROC prices are likely to remain firm and thus we will continue to sell these on an opportunistic basis. Assuming that current ROC pricing remains stable at around £55/MWh, we should achieve almost £135/MWh for our output from March 2009.
"REG presently has wind projects in the planning process that will be constructed over the next twelve months which will be free to take advantage of any further increase in market pricing at the time they become operational".
ENDS
Contacts:
Renewable Energy Generation Limited Tel: +44 (0)14 8340 0444
Andrew Whalley, Chief Executive Officer
David Crockford, Finance Director
Numis Securities Limited (Nomad for REG) Tel: +44 (0)20 7260 1000
Nominated Advisor: Jag Mundi / Anthony Richardson
Corporate Broking: Charles Farquhar
Hogarth Partnership Tel: +44 (0)20 7357 9477
Julian Walker, Sarah MacLeod, Vicky Watkins
Notes to Editors:
Renewable Energy Generation Ltd (REG) is a world-leading renewable energy group. The Group's main business is the development, construction and operation of wind farms in the UK and Canada. It also generates power from refined used cooking oil in the UK.
The Cornwall Light & Power Co. Ltd: based in Cornwall, UK, it currently operates five wind projects in Cornwall, County Durham, Cumbria and Gwynedd, with a total capacity of 17.7MW and has a development pipeline of around 200MW.
AIM PowerGen Corporation: based in Toronto, Canada, AIM PowerGen Corporation is one of Canada's largest independent wind developers and has a pipeline of over 5500MW of potential wind projects across seven provinces.
REG Bio-Power UK Ltd: based in Norfolk, UK, it operates electricity generation plant fuelled by refined used cooking oil.
Headquartered in Guernsey, REG was admitted to trading on AIM, a market operated by the London Stock Exchange, in May 2005 (AIM:RWE).
www.renewableenergygeneration.co.uk