24th Aug 2005 18:05
Renewable Energy Generation Ltd24 August 2005 24 August 2005 Renewable Energy Generation Limited Investment in Tymien Wind Project and conclusion of Power Purchase Agreement forGoonhilly Downs Wind Farm Tymien Wind Project Renewable Energy Generation Limited ("REG"), the AIM listed investor inrenewable energy generation projects, today announces that it has entered intoan agreement with Invenergy Wind LLC ("Invenergy Wind") of the US to make aninvestment of some £7.875m into the Tymien Wind Project ("Tymien") in Poland.The consideration for this purchase is being funded from REG's existing capitalresources. Tymien, located approximately 40 km from the Baltic Coast, has a plannedrenewable generation capacity of 50 MW and is Poland's largest wind project todate. It is being developed by EEZ Sp. Z o.o. ("EEZ") of Poland and is expectedto begin commercial production by the spring of 2006. Tymien will utilise 25Vestas V80 2MW turbines which have a proven track record of production. REG will make its investment in Tymien with Invenergy Wind via a US limitedliability company that has agreed to acquire a majority stake in EEZ. Under theagreement with Invenergy Wind, REG will be entitled to share in the returnsreceived from the investment in EEZ until a 15% target Internal Rate of Returnhas been achieved, following which REG will receive an ongoing residual cashreturn. This investment will be in-line with REG's policy of investing in EUaccession countries where it believes there is potential for more attractivereturns than in mainstream EU countries. In addition, through its agreement with Invenergy Wind, REG will have thepotential to invest in other wind projects in Poland, which are anticipated toconstitute approximately 140 MW of wind under development. EEZ was initially formed as a subsidiary of Energia Eco Sp. Z o.o. ("EnergiaEco"), which has been successfully developing renewable energy projects inPoland since 2000.Invenergy Wind is an affiliate of Invenergy LLC ("Invenergy"), based in Chicago,USA - a leading energy development company, whose activities include building,owning and operating large scale thermal and wind energy generating facilitiesin North America and Europe. Formed in 2001, Invenergy has an experienced seniormanagement team, with an average experience of approximately 20 years in diverseareas of the energy market, including development, engineering, construction,finance, operations, asset management, energy trading and contracting. The Tymien Wind Project will be the second investment made by REG and the firstin Eastern Europe. Power Purchase Agreement for Goonhilly Further to the announcement on 23 June 2005, REG also today announces that anagreement has been concluded with Smartest Energy, a wholly owned subsidiary ofMarubeni Corporation of Japan, on the power output from its Goonhilly Downs WindFarm. Under this agreement, power from the project, including climate changelevy exemption certificates and peak demand benefits but excluding any renewableobligation certificates ("ROCs"), will be sold to Smartest Energy under fixedterms. This agreement commences on 1 October 2005 and runs to the end of March2008. REG will sell the ROCs produced by Goonhilly into the marketplace on a spotbasis. The market for ROCs is relatively buoyant at present and REG believesthat this is likely to continue as the production of renewable energy in the UKlags behind government targets. The prices obtained for Goonhilly's energy output under this new agreement aresignificantly higher than those used in the investment analysis when the projectwas purchased. This confirms the view of REG that renewable energy is anincreasingly valuable product. As well as providing additional revenue tofacilitate other investment opportunities both in the UK and in Eastern Europe,the fixed price nature of the contract gives REG the opportunity to explore thepotential for improvements that may be made to increase the output ofenvironmentally friendly electricity production from the site. Contacts Andrew WhalleyEastgate Power Management - 07717 508 562 Bruce WoodmanCornwall Light & Power - 01326 572 720 Hugh FieldCollins Stewart - 0207 523 8325 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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