Operational Update

RNS Number : 5359X

SIMEC Atlantis Energy Limited

13 August 2018

 

The information contained in this announcement is inside information under the Market Abuse Regulation (EU) No 596 / 2014. The person responsible for arranging the release of this announcement on behalf of Atlantis is Tim Cornelius, Chief Executive Officer of SIMEC Atlantis Energy.

SIMEC Atlantis Energy provides an operational update on the ground breaking 220MW conversion of the Uskmouth power station from coal to 100% waste derived power generation

SIMEC Atlantis Energy ("SAE"), a diversified sustainable energy generation company, is delighted to provide an operational update for its flagship 220MW conversion project in Uskmouth, Wales. Post conversion, the station will export 220MW of baseload power to the grid using an end-of-waste energy pellet with an average calorific value of 20 mega joules per kg. The conversion is expected to take 18 months post completion of front end engineering and design ("FEED") with a target of first production in Q4 2020 and the converted station will have an operational life of 20 years.

Successful milling trials have been conducted on the N+P Subcoal® pellets using vertical spindle roller mills in Germany. Subcoal® pellets, which are made from a combination of biogenic waste and non-recyclable plastic, will replace coal-fired generation at SAE's Uskmouth facility in Wales. The promising results of the milling trials will inform the final design of the combustion system which will be retrofitted to the existing power station.

Since SAE completed the acquisition of Uskmouth Power Station on 15 June 2018, the following progress has been made on the conversion project:

·      Ernie Rowe, previously conversion manager at Drax, has commenced as Head of Conversion at Uskmouth

·    FEED contract tender has been issued to the market with a final contract decision expected in the coming weeks

·    Pre-FEED combustion testing and computational fluid dynamic modelling has been undertaken by RJM  Consultants to determine fuel combustion characteristics which includes optimum fuel particle size

·     Planning and site environmental permit work for the conversion is progressing well, this includes working  closely with Dutch fuel pellet supplier N+P Group for the design and build of pellet production facilities at the Uskmouth project site

·      Planning is progressing to upgrade local road access and rail line spurs into the project site

In addition, SAE believes that the conversion of the Uskmouth power station from coal to waste derived Subcoal® fuels can act as a prototype for a pipeline of future conversions globally. The Company is already in discussions with plant owners and operators in Europe, Australia, Asia and the USA with respect to future conversions to extend the economic life of power generation facilities, maintaining employment, keeping baseload on the grid and addressing the issue of non-recyclable plastics whilst reducing landfill.

Ernie Rowe, Head of Conversion at Uskmouth, commented:

 "This is a world leading project which we will be working to deliver on time and within projected budget. We are looking forward to announcing the award of the FEED contract and following FEED, we will be tendering for the EPC contract ahead of what is anticipated to be an 18 month construction process. This project is of huge international interest; with governments and utilities around the world being forced to close down coal-fired power stations, this conversion will offer a new alternative to decommissioning."

Tim Cornelius, Chief Executive of SAE, commented:

 "The Uskmouth conversion project has a 20 year power purchase agreement and a 20 year fuel supply agreement in place and will have a lower levelized cost of generation which will allow us to deliver high margins on power sales. This should be a very profitable project for the SAE Group once it is operational in 2020.

"This project will be the catalyst for further conversions throughout Europe as SAE seeks to establish itself as a leading independent sustainable energy generation company. Cash flow generated from high margin projects such as Uskmouth will allow us to fund growth through carefully selected and executed acquisitions in addition to our existing portfolio of in-house developments and organic growth opportunities."

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Enquiries:

SIMEC Atlantis Energy	via FTI Consulting
Tim Cornelius, Chief Executive Officer
Andrew Dagley, Chief Financial Officer
Cantor Fitzgerald Europe (NOMAD and Joint Broker to Atlantis)	[phone]
Rick Thompson Richard Salmond
Macquarie Capital (Europe) Limited (Joint Broker to Atlantis)	[phone]
Rob Mansley Nick Stamp
FTI Consulting	[phone]
Ben Brewerton Alex Beagley James Styles

Additional Information:

Coal-fired power stations are facing closure in a number of countries across the globe. French President Emmanuel Macron has pledged to shut all of his country's coal-fired power plants by 2021. The Netherlands has announced that it will ban the use of coal for electricity generation from 2030 onwards. Austria is planning to close all coal-fired power plants by 2025. Germany is expected to lay out a plan in 2019 that will also force all coal-fired power plants to close by 2025. At a recent UN climate change summit, the launch of a new alliance of 19 nations committed to phasing out coal rapidly was hailed as a political watershed.

This regulatory shift opens up a significant opportunity for SAE to be at the forefront of converting coal-fired power stations to low emission, low cost generators that will deal with each nation's non-recyclable paper and plastic problem. SAE is encouraging all governments and developers not already engaged in discussions with SIMEC Atlantis Energy plc to contact us to initiate discussions on the transition of their coal fired assets to a replacement fuel.

SAE expects the long run marginal cost of generation from a converted plant to be lower than most other sources of renewable generation and we will be targeting more than 2GW of conversions to be completed by 2025. Each conversion is expected to take around 24 months, depending on permitting and consenting in each jurisdiction as well as the condition and technical specifications of the station itself.  

 

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