Renewable Energy Generation published a trading statement this morning in which it said that the UK Government’s decision to change the subsidy regime for onshore wind had hit its business hard. The proposed changes to the Renewables Obligation scheme will not be binding until they receive Royal Assent (due sometime next year) and this is creating uncertainty. They also say the retroactive removal of Levy Exemption Certificates for renewable energy generators and removal of support for large scale solar schemes, is impacting the industry’s cost of capital and is additionally creating some difficulty in securing long term finance for certain projects.
They are progressing procurement of four new UK onshore wind projects totalling 26MW: Mynydd Portref (12MW); Rodbaston (4MW); Brackagh Quarry (6MW); and French Farm (4MW) and discussions are ongoing with potential funders for these projects. The total combined annual output of these new projects, once operational, will be approximately 65,000MWh, increasing Renewable Energy Generation’s total annual wind power output to 155,000MWh. The projects are unaffected by the early closure of the RO for onshore wind. With respect to the Company’s recently consented wind sites at Mynydd Brombil, Abergorki and Pen Bryn Oer, they are awaiting further clarity from Government regarding support for these projects.
They have decided to write off at least £7m of capitalised development costs relating to projects that may not now get planning permission and / or funding. This will leave £6.5m of capitalised development costs on their balance sheet but these relate to projects that they still think have development potential. Renewable Energy Generation say the EBITDA on the rest of the business and profits on expected disposals should still come in at £1.3m, in line with market expectations.
They have curtailed investment in onshore wind and solar development and so have implemented a redundancy plan that they think will save them £1.3m a year.
WIND : Renewable Energy Generation hit by subsidy changes