Investors are welcome to submit additional questions through the enquiry form on the contact page of the website.
What role does flexible energy generation play in the UK’s energy mix today?
Flexible energy is becoming increasingly necessary and prominent in the UK as our energy mix changes to include renewables, which by their very nature provide power intermittently; wind turbines provide power when the wind blows, and solar when the sun shines. Combined with this intermittency, larger carbon intensive sources of generation are being retired, meaning that the supply-demand margin is tightening. Therefore, National Grid and the Big 6 need consistent and reliable sources of generation to balance the grid when intermittent generation is unable to meet the demand and therefore prevent brownout/ blackouts as the UK’s supply margin tightens
The following demonstrates the evolving nature of the UK’s energy market:
Renewable electricity generation was 83.3 TWh in 2015, an increase of 28.9 per cent on the 64.7 TWh in 2014, with bioenergy up by 27.8 per cent and wind generation up 26.4 per cent. Renewables’ share of electricity generation was a record 24.7 per cent in 2015, an increase of 5.6 percentage points on the 19.1 per cent in 2014. Renewable electricity capacity was 30.0 GW at the end of 2015, a 21.9 per cent increase (5.4 GW) on a year earlier.
What are Plutus PowerGen’s (PPG) flexible energy generators run on?
PPG has an MOU with UK based Green Biofuels Limited for the supply of its proprietary renewable fuel 'Green D+' for use across the Company's portfolio. This biofuel is made from waste or end of life oils which are processed into a synthetic mineral diesel. It burns quickly, has low emissions and is smokeless. Noise pollution may be an issue, but please note that land used to develop a project is industrial wasteland – brownfield land. Additionally, projects are only operational for between 100 – 200 hours per year.
What would happen to the waste oil if it wasn’t used for creating biofuels?
There are very limited uses for waste or end of life oils, and the processing of these oils into synthetic diesel is therefore considered renewable by most European countries’ standards. As such, this fuel attracts Renewable Obligation Certificates (ROCs) in the UK. PPG does not claim these ROCs. The process to create Green D+ converts the waste oils into a mineral paraffin.
What are the benefits of diesel flexible energy projects?
Flexible power is only required during periods of peak demand and Plutus’ projects are on standby to deliver energy during critical periods. By remotely switching them on, they can be up and running in 30 seconds. Importantly, the plants are quick and cheap to construct. Given the very limited amount of time that these projects are in use, it could be considered a significant waste of government funds to spend billions on an even greener and more complex power project to solve the problem PPG is already part of solving; especially as the diesel used passes all criteria for a renewable fuel and therefore attracts ROCs.
The fact that PPG’s projects are able to provide the cheapest source of flexible power is also important. By keeping balancing costs low, PPG positively impact the consumer bill with little or no impact on emissions due to the low running hours. If alternative projects to meet the flexible energy demand to balance renewable sources are more expensive to run, then these costs would simply be passed on – directly – to the consumer through the bill. As you can see, this topic is not black and white and there are many sides of the argument to think about.
What is your stance on the ongoing Embedded Generation review currently being undertaken by Ofgem?
Given the absolute fragility of the UK’s evolving energy environment currently, it is unclear why any agency would look to create further uncertainty at this critical point in time nor would it make sense to propose piecemeal solutions – this is supported by National Grid themselves whose CEO recently suggested a full review is required to arrive at the right solution for both industry, consumers and investors. PPG strongly supports the CUSC proposals in front of the industry and OFGEM at the moment which seek to cap embedded costs for three years while this review happens. However, the Company is ideally positioned to cope with the anticipated changes.
What benefits accrue to PPG via the Enterprise Investment Scheme from the plants? How many of the plants are eligible?
The Company has nine projects (180MW) which are receiving funding via EIS. One of these 20MW plants is now operational and the other 160MW are at varying stages of development. These projects were established with funding from Rockpool Investments LLP prior to the Government’s decision in October last year to cut EIS funding for ANY energy generation projects. This decision was not retrospective; it was made largely due to the fact that the UK Government recognised that flexible energy projects such as PPGs are generally asset-backed and benefit from a less risky income streams, therefore mainstream investment can support the projects, removing the need for tax-advantaged investment. Therefore, as publicly stated, the Company did not believe that the amendment to EIS funding would adversely affect the business and this confidence was validated by a recent agreement with a Big 6 utility to fund up to 20% of future assets.
Did PPG, or related companies, got any applications in the 2016 Capacity Market Auction?
A further three 20MW sites with planning, totalling 60MW, were awarded Capacity Mechanism Contracts in December 2016. The Company will be entering its operational site in Plymouth into the Early Year Auction in January 2017 being held for the delivery year 2017/2018.
How many plants are already running and how many have approval but are yet to be built/turned on?
The Company has one 20MW project in operation. A further 6 projects (120MW) have planning permission, with 3 more sites in planning (60MW). One project (20MW) is stalled at planning. PPG has secured rights over a further 80MW which will shortly go into planning, with a further c.700MW of pipeline which require further analysis.
How did the Plymouth site perform" during the past winter?
The Plymouth site is performing very well. Additionally, valuable lessons have been learnt that are assisting in both the execution of the build-out of further sites and which will increase their efficiency once operational.
Are the nine Rockpool sites going ahead as planned? Will asset finance or other funding be available to Plutus?
As previously announced by the company, Rockpool funded sites are being built out as planned and funding is available for the completion of this process.