Paternoster Resources PLC Announcement by Plutus PowerGen PLC (2767O)

TIDMPRS

RNS Number : 2767O

Paternoster Resources PLC

03 November 2016

3 November 2016

Paternoster Resources plc

("Paternoster" or the "Company")

Plutus PowerGen plc Successfully Commissions First 20MW Flexible Energy Site in the UK

Paternoster is pleased to note the announcement this morning by Plutus PowerGen plc ("PPG"), an investee company of Paternoster, which is set out below.

Nicholas Lee, Chairman, said:

"This is a very significant step in the further development of Plutus PowerGen This is one of our larger investments and, based on the company's current share price, we are currently making almost a 6.5 times multiple return on our original investment"

For more information, please contact:

 
 Paternoster Resources plc: 
 Nicholas Lee, Chairman                 [phone] 
 Nominated Advisor and Joint Broker: 
 Stockdale Securities 
 Antonio Bossi/David Coaten                [phone] 
 Joint Broker: 
 Peterhouse Corporate Finance 
 Lucy Williams                           [phone] 
 
 

Full text of Plutus PowerGen plc announcement:

Plutus PowerGen plc, the AIM listed power company focused on the development, construction and operation of flexible power projects in the UK, is delighted to announce that it has successfully brought its first power generation site in Plymouth into operation. Attune Energy is now operating at full output.

This represents a transformational milestone for the Company, acting as proof-of-concept in respect to PPG's strategy to become a predominant player in the flexible energy generation market, and providing the Company with immediate exposure to its revenue streams, which are:

   --     Short Term Operating Reserve (STOR) 
   --     Firm Frequency Response (FFR) 
   --     TRIAD 
   --     Merchant Power sales 

The Plymouth site also holds a capacity mechanism contract for 15 years starting in 2019 and is pre-qualified for next year's 2017 capacity mechanism contract. Plymouth is one of nine sites held in partnership with Rockpool Investments LLP ('Rockpool'), which has provided EIS funding for their development. Rockpool also currently pays management fees totalling GBP1.35 million per annum to PPG in return for overseeing the construction of the assets and for managing them on an ongoing basis.

Charles Tatnall, Executive Chairman of PPG said, "This is a landmark event for PPG. Now that our first flexible energy facility is operational, we look forward to increasing our sales substantially as we tap into the multiple revenue streams available to us over the coming months. These opportunities exist because National Grid and the Big Six are in need of a consistent source of power which blends with the intermittent supply currently being delivered by renewables. By providing power at times of peak demand, our projects will mitigate the risk of brown or blackouts and as demonstrated by recent announcements that we now have planning permission in place for seven projects, our portfolio is progressing well."

Please see below for further information on the revenue streams available to PPG:

 
 Mechanism         Overview                                       Counterparty 
----------------  ---------------------------------------------  ----------------- 
 STOR              The Short Term Operating Reserve               National Grid 
                    is a mechanism used by National 
                    Grid to balance the UK's power supply 
                    at short notice. The STOR allows 
                    required electricity supply to be 
                    decreased (by incentivising major 
                    consumers to reduce demand) or increased, 
                    by calling on a pool of stand-by 
                    power generators. Under the terms 
                    of two-year contracts, National 
                    Grid pays STOR providers for making 
                    their capacity available, as well 
                    as for delivery of electricity. 
----------------  ---------------------------------------------  ----------------- 
 Firm Frequency    FFR is a service procured by National          National Grid 
  Response (FFR)    Grid to manage system frequency, 
                    the system-wide signal that indicates 
                    whether energy supply exceeds demand 
                    or vice versa. FFR allows a provider 
                    to supply a service to reduce demand 
                    or increase generation, when instructed 
                    by National Grid. FFR is procured 
                    via monthly tender. To take part, 
                    generators must be able to deliver 
                    a minimum of 10MW, and be capable 
                    of responding within 30 seconds 
                    and for sufficient duration. Similar 
                    to STOR, providers are paid for 
                    availability as well as for utilisation. 
                    PPG will compete in the static market, 
                    whereby energy change occurs at 
                    a pre-set frequency and remains 
                    at a set level (as opposed to the 
                    dynamic market, where energy changes 
                    in line with system frequency). 
----------------  ---------------------------------------------  ----------------- 
 Triad             Triad is the scheme under which                Energy Suppliers 
                    the National Grid charges energy 
                    suppliers significant sums according 
                    to their use of the high voltage 
                    transmission network during Triad 
                    periods - the three half-hour periods 
                    of highest demand in a year, identified 
                    after the winter. The principal 
                    means for National Grid to cover 
                    its costs, Triad also serves to 
                    incentivise users to limit consumption 
                    during peak periods, thereby easing 
                    the need for investment in the transmission 
                    system. Through Power Purchase Agreements 
                    ("PPAs"), energy supply companies 
                    pay flexible generators of electricity 
                    to supply power to local distribution 
                    networks during anticipated peak 
                    periods (both for the power generated 
                    and for Triad avoidance), as their 
                    generation reduces demand on the 
                    transmission network. Generators 
                    must operate during each of the 
                    Triad periods to be eligible for 
                    payments. 
----------------  ---------------------------------------------  ----------------- 
 Merchant Power    This is simply sales of generated              Energy Suppliers 
  Sales             power; when operating with an objective 
                    of Triad avoidance, power is sold 
                    under a PPA, typically to a large 
                    UK energy supplier. PPAs are typically 
                    of a 5+ year duration. 
----------------  ---------------------------------------------  ----------------- 
 

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November 03, 2016 09:25 ET (13:25 GMT)