Business Model

Plutus PowerGen’s multi-revenue stream model is founded upon the roll-out of 20MW power generation sites, funded through a combination of equity and asset finance via dedicated subsidiaries.

Plutus PowerGen’s flexible energy generation sites use established, reliable technology based on containerised generators, fired with biofuel. The Company is currently in the process of advancing its gas portfolio, evaluating and advancing planning on a number of sites. Treated as embedded generation, the unmanned gensets supply the local low voltage distribution network, reaching full output within 150 seconds of being switched on remotely.

Each plant has a maximum generating capacity of 20MW. This is optimal for two reasons:

  • The planning thresholds – and therefore construction timescales – are reduced; and
  • The emissions fall below a European threshold, thereby reducing compliance costs and risk

Non-dilutive finance model

By setting up a dedicated entity for each site as part of its bottom up investment strategy, Plutus PowerGen limits medium-term dilution to existing shareholders.

Plutus PowerGen has structured the company to allow for multiple funders on a project level, which reduces dilution to shareholders.

Multiple Revenue Streams

STOR

Power of Revenue:
Power sales

Counterparty:
National Grid

Overview:
The Short Term Operating Reserve is a mechanism used by National Grid to balance the UK’s power supply at short notice. The STOR allows the required electricity supply to be decreased (by incentivising major consumers to reduce demand) or increased, by calling on a pool of stand-by power generators. Under the terms of two-year contracts, National Grid pays STOR providers for making their capacity available, as well as for delivery of electricity.

Firm Frequency Response (FFR)

Power of Revenue:
Power sales

Counterparty:
National Grid

Overview:
FFR is a service procured by National Grid to manage system frequency, the system-wide signal that indicates whether energy supply exceeds demand or vice versa. FFR allows a provider to supply a service to reduce demand or increase generation, when instructed by National Grid. FFR is procured via monthly tender. To take part, generators must be able to deliver a minimum of 10MW, and be capable of responding within 30 seconds and for sufficient duration. Similar to STOR, providers are paid for availability as well as for utilisation. Plutus PowerGen will compete in the static market, whereby energy change occurs at a pre-set frequency and remains at a set level (as opposed to the dynamic market, where energy changes in line with system frequency).

Triad

Power of Revenue:
Power sales

Counterparty:
Energy suppliers

Overview:
Triad is the scheme under which the National Grid charges energy suppliers significant sums according to their use of the high voltage transmission network during Triad periods - the three half-hour periods of highest demand in a year, identified after the winter. The principal means for National Grid to cover its costs, Triad also serves to incentivise users to limit consumption during peak periods, thereby easing the need for investment in the transmission system. Through the PPA, energy supply companies pay flexible generators of electricity to supply power to local distribution networks during anticipated peak periods (both for the power generated and for Triad avoidance), as their generation reduces demand on the transmission network. Generators must operate during each of the Triad periods to be eligible for payments.

Power Purchase Agreements (PPA)

Power of Revenue:
Power sales

Counterparty:
Energy suppliers

Overview:
This is simply sales of generated power; when operating with an objective of Triad avoidance, power is sold under a PPA, typically to a large UK energy supplier. PPAs are typically of a 5+ year duration.

Capacity Markets

Power of Revenue:
Power sales

Counterparty:
UK Government (via National Grid)

Overview:
To ensure long-term security of supply, the Capacity Market provides financial incentives to bring forward new investment while maximising existing generation capabilities. The structure of CM ensures technology neutrality, meaning that the lowest cost technologies that will guarantee capacity will be awarded 1, 3 and 15-year contracts, depending on the level of capex incurred. These capacity contracts are procured through a reverse auction, run by National Grid. Generators who are successful in the auction will benefit from a regular, predictable and index-linked revenue stream for every hour they are available. The capacity obligation means providers must be available to deliver energy when needed or face penalties.

Management Contracts

Power of Revenue:
Other

Counterparty:
Plutus PowerGen Investment Companies

Overview:
Plutus PowerGen has a management contract with each Rockpool investor-funded site. Under the terms of these contracts, Plutus PowerGen manages the asset from identifying the site, obtains planning permission to manage the connection, construction and operation of the plant.