25th Jul 2007 07:00
Renewable Energy Generation Ltd25 July 2007 Renewable Energy Generation ("REG", "the Company" or "the Group") Renewable Energy Generation (AIM: RWE), the developer of renewable energyprojects, announces a pre-close period update on activities in Canada and theUK. The Company will issue its preliminary results for the year ended 30 June2007 on 13 September 2007. Highlights • REG's Canadian subsidiary, AIM PowerGen Corporation (APG) bids tobuild, own and operate two wind projects in Manitoba with a total capacity of198 Megawatts (MW) • On-site construction begins on four wind projects at Lake Erie with atotal capacity of 39.6MW under Ontario's Standard Offer Program (SOP). Threemore SOP projects with a total capacity of 29.7MW are to be built by APG inOntario over the next 18 months • On-site construction begins in September 2007 on a new wind project inCornwall • REG's UK subsidiary, Cornwall Light & Power (CLP) is developingopportunities in two biomass projects using different fuels at two differentsites • REG projected to become cash flow positive on an operational basis andafter dividend payments in Quarter 1 2008 REG Chief Executive Officer Andrew Whalley said: "We are delighted to be working with GE Energy on the Manitoba Requests ForProposals (RFP) bid. GE's wind turbine technology has performed well and thecompany is the leading supplier of wind turbines in North America. Both projectshave strong and consistent wind speeds, strong community support and minimalenvironmental impact. We have also announced today Crop Oil to Power entering our renewables portfoliovia CLP's agreement to provide funding for the growth of an established supplypipeline of used cooking oils. This oil will be cleaned utilising an establishedprocess and will then be used to generate power thus qualifying for RenewableObligation Certificates. The capital commitment from REG is relatively small inthe context of our wind business, but this project should contribute to Groupearnings next year. The potential for Crop Oil to Power is significant and boththis and biomass will complement our established wind business in the UK." When our first four SOP projects in Canada come on line at the end of this yearREG will become cash flow positive on an operational basis and after dividendpayments in Quarter 1 2008. As the Company's cash flows build and stabilise sowe will put in place a flexible debt facility. This will further facilitate thebuild out of our project pipelines both in the UK and Canada and will also lowerour overall cost of capital, important when bidding in competitive RFPs." Manitoba bid APG has bid for two 99MW projects in Manitoba. The bid was submitted to ManitobaHydro Wind Power on July 17 2007. Altogether the Manitoba Hydro RFP representsup to 300MW of new wind power, potentially quadrupling the amount of wind powerin the province. The two 99MW projects bid by APG are Oakland Wind Farm near Brandon and DominionCity Wind Farm near Winnipeg. APG is bidding in with a partner and bothCompanies would, if selected, jointly contribute equity to the projects. Bothprojects would use GE Energy 1.5MW turbines with a planned service date of late2009. These are the same turbines as used on another APG project, the 99MW ErieShores wind farm, which went into operation in June 2006. Erie Shores was GEEnergy's first 100MW scale wind farm in Canada. GE Energy has become the top provider of wind turbines in North America, and theGE 1.5MW turbine which REG will use if selected has a very high reputation forreliability, with more than 6,000 installed worldwide. Ontario SOP program Over the next 18 months, APG is to construct 69.3MW of wind power at seven sitesin Ontario at a total cost of approximately £76 million. Each of these projectswill have a capacity of 9.9MW. They form part of Ontario's Standard OfferProgram (SOP) which helps the province meet its renewable energy targets. The power for these SOP projects will be generated by forty two 1.65MW turbinespurchased from Vestas Canada. The first twenty four turbines are due to bedelivered this year in October and November to four sites on the shores of LakeErie where on-site construction, including roads, foundations andinfrastructure, has already commenced. The remaining eighteen turbines willfollow in 2008, and all seven projects are scheduled for completion withineighteen months. New project in Cornwall On-site construction starts in September 2007 on a new 1.7MW wind project atRoscrow Barton near Penryn in Cornwall. The project will be powered by twoVestas V52 turbines which are due to be delivered in December 2007, and is dueto become operational in February 2008. Continued expansion into biomass and introduction of Crop Oil to Power into theCLP renewables portfolio CLP is to develop a biomass project in South Wales in partnership with MerthyrIndustrial Services Ltd (MIS). Power will be generated and supplied to the localdistribution network, and there is potential for surplus heat to be supplied toneighbouring businesses. In addition to biomass CLP has reached an agreement to fund an establishedsupply pipeline of used cooking oils ("UCO") which already has agreements inplace with a number of local authorities, caterers and restaurant chains. CLPintends to generate power from the UCO which will be first cleaned using anestablished process. Like biomass, REG expects to expand this project by developing a number of unitson large industrial, commercial and development sites. Both biomass and UCO will leverage off the existing wind project monitoringfacilities in place at CLP. The capital commitment from REG to these projects issmall in the context of its established wind business but the projects shouldcontribute significantly to Group earnings next year. REG Income The first four SOP projects in Ontario will come on line early in 2008 when theincome from them together with that from our existing wind projects in the UKand Poland should mean that REG will achieve positive cash flow on anoperational basis after dividends. This is an important milestone for theCompany. The construction of three further SOP projects in Canada towards theend of 2008, the development of new wind projects in the UK and a growingcontribution from biomass and Crop Oil to Power will further enhance anddiversify REG's platform for growth. ENDS Enquiries REG Power Management LtdAndrew Whalley +44 (0) 1483 400 425 Bell Pottinger Corporate & FinancialNick Lambert / Amy Rajendran / Antonia Coad +44 (0) 20 7861-3232 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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