React Energy Share Discussion Threads

[ryan83] 24/1/2014 11:11

Helloooooo lol

[ryan83] 23/1/2014 17:44

right, got another contact now so if any one (colp/trout??) has any questions they want to ask REAC post it here and I'll include it in my email to them :-)

Or if you want to let me know off the board let me know and I'll post a throw email address you can send it to. All of course if you want to. I will send the email to them tommorow evening.

Ta.

[ryan83] 23/1/2014 15:12

a bit about claycross aswell

"Project Viability
The financial viability of the Clay Cross project has been established through some of the projects already implemented by Kedco, such as the
Newry and Enfield. The project is estimated to have a pre-development and capital cost of £40-45 million. Annual revenue from the facility is
projected to be in the region of £12 million. This comprises revenue from the sale of electricity and through support from the UK Government's
scheme for renewable energy (ROC's). Annual Operating and Maintenance costs are anticipated to be in the region of £5 million. The main cost
is the 80,000 tonnes per annum of feedstock required for the process; additional costs include rent and rates, salaries, maintenance and waste
disposal"

[ryan83] 23/1/2014 14:54

It is a CHP plant but cannot find any details regarding a heat offtake?

[troutisout] 23/1/2014 14:49

I've got that, but the electricity is sold to the Northern Irish grid from Newry, but at Enfield they have signed an agreement with Statkraft Markets, whether that changes the price, I don't know?

Also does Newry export heat as well or is that just Enfield?

[ryan83] 23/1/2014 14:49

Trout - have you ever looked at RUR?

[ryan83] 23/1/2014 14:43

and yes it is spelt that way on the website lol "REACT Engery plc "

[ryan83] 23/1/2014 14:42

and that must be recentish as they have bothered to change Kedco to REACT

[ryan83] 23/1/2014 14:41

from the website:-

"The project has been developed through Newry Biomass Limited ("NBL") a 50/50 joint venture between REACT Energy plc and FBD. REACT Engery plc is entitled to 92% of the economic benefit from the project."

fbd = Farmer Business Developments plc

[troutisout] 23/1/2014 14:34

I can't work it out, the Newry site looks to be sold to the Irish grid company, whereas the Enfield site is being sold to what looks to be an intermediary Stratkraft, who I assume then sell it on.

I am sure we will learn more soon.

Trout.

[ryan83] 23/1/2014 14:32

details regarding the heat offtake are yet to be announced, I guess an update on contracts and financial close are due very soon:-

3. Heat offtake agreement
The Company has continued to work with a large multinational, located close to the Enfield Project, to purchase 100% of the heat generated by the Enfield Project. A detailed heat study and pipe route layout has been completed and the Company is in advanced discussions regarding the commercial terms of the offtake agreement

[ryan83] 23/1/2014 14:27

agree Trout, so many aspects to get a grip of!

I see Ireland price / kw is approx $0.114 (euros) - Newry.

[troutisout] 23/1/2014 14:18

Ryan, I think the translation from US to UK might make those figures slightly awry, also it notes that smaller plants cost more to run.

What would REAC get as a price for electricity in Enfield? Also we have a heat offtake as well.

Also, do we know if it will run 24 hours a day? There would definitely be down time for maintenance, etc.

Lots still to look into, could do with a place to list our finds.

Trout.

[ryan83] 23/1/2014 14:08

Also from that PDF link I posted:-

Typical biomass power plant (20 MW)
• 20 MW plant provides electricity to 15-20,000
homes
• New plant construction cost = $60-$80 million
• Processes ~160,000-200,000 tons/yr
(1BDT/MW/hour burn rate)
• Biomass transported up to 50 miles
• Delivered biomass valued at $15– 60/BDT
• Average $ production cost ~ $0.07 -$0.10/kWh
• Current PPA prices in CA $0.11/kWh+

Max for 12MW plant??
24hrs x 365 days = 8,756 hours x 12MW x 1000 (to kw)= 105,120,000 kw max per annum.

Margin of $0.04, x 105,120,000 = $4.2m profit

If REAC figures are correct regarding 12MW
To generate £12m rev = 0.114pence sale price / kwhr
TO generate £7m EBIDTA = 0.666pence margin / kwhr
therefore costs = 0.048 pence / kwhr


Also regarding project costs

NEWRY

"The project cost Stg£14.7m to construct which was provided through shareholder equity of Stg£6.8m and a project finance loan of Stg£7.9m from Ulster Bank Ireland Limited, a subsidiary of the Royal Bank of Scotland plc."

ENFIELD

"The project has been developed through Enfield Biomass Limited ("EBL") , which is currently 100% owned by Kedco plc. Over Stg£2m invested in the project to date."

So £16.7m spent as at end Jan 2013.

[troutisout] 23/1/2014 13:08

The spend figures aren't that wide of the figures above, Newry first stage would be valued by Deloitte at €8m and Enfield finished would be €48m.

Trout.

[troutisout] 23/1/2014 13:08

The spend figures aren't that wide of the figures above, Newry first stage would be valued by Deloitte at €8m and Enfield finished would be €48m.

Trout.

[troutisout] 23/1/2014 13:05

Yes the spend figure is another way of valuing it and I am not sure which is the best. Definitely the figures I am using are old and also for solar compared with Biomass, as such they seem to come up quite conservative, but then as an investor I would prefer to be as cautious as possible on the valuations as I have no real expertise in renewables field.
I have taken these valuations to be on the asset value and does not include the income stream from running these assets. So your ebidta figures would also add a value to the company's valuation.

Trout.

[ryan83] 23/1/2014 12:52

Cheers trout been looking for a valuation formula lol.

Remember Enfield spend stands at £15m to date, can't remember the Newry figure!

[troutisout] 23/1/2014 12:48

ryan83,
I said that I have been looking into the valuations of renewables projects and have struggled to find much on biomass projects, but have read this and thought I would dig it out again to discuss, it is from 2010 (and in euros)and deals in solar and wind generation, I would think biomass rates as high if not higher than solar, due to the lesser reliance on the weather and a more stable fuel source.



Now I don't pretend to understand all the equations, but from what I can see they give a basic valuation for assets as follows,

Wind - late stage - under construction - installed.
€/MW.....0.4m...........0.8m...............1.2m

Solar - late stage/under construction - installed.
€/MW..............0.2m.....................4m

There is no valuation given for early stage and pre-planning projects.

From this and looking at recent info we have,

Newry 2MW = €8m + €0.4m
Newry 4MW = €16m

Depending on whether the 2nd phase is now generating, we have two possibilities as above, however remember we only hold a 50% equity in Newry assets.

Puckanes 0.8MW = €0.96m

Altilow 0.5MW = €0.3m

Moneygorm 0.5MW = €0.3m

I have split the difference between late stage and under construction as they should soon be under construction.

Enfield 12MW = €2.4m

Again expect a 50% equity holding.

Looking at the above and depending on Newry's status we have between €7m and €10.7m in assets as they stand.

As can be seen the upside can be increased dramatically when these projects come online and can be valued as such (Enfield would be huge €48m/2 when installed).
Also we have to take into effect the income being generated from these assets, Newry return to the company is over 90% of revenues.

We also need to take into account outstanding loans and debts, the fact that additional capital is likely to be needed and raised.

There is a growing portfolio and these also must have some residual value even though they are early stage.

This year will be very busy and if they can keep to targets then the shift in value will be noticeable.

DYOR,

Trout.

[ryan83] 23/1/2014 12:42

Nice little read about biomass chp plants

Note $60 per BDT at 60k tonnes = £2.2m

[colp54] 23/1/2014 08:52

Nothing yet. Could get something over the next few days I guess if the share price stays >30p.

[ryan83] 23/1/2014 08:48

colp maybe who knows eh. GL either way :-)

ps - anything come of the emails to Janine?

[colp54] 23/1/2014 08:47

Quiet again this morning.Still after a few more but will probably wait to see if any of yesterday's trades were impulse buys and sell up tomorrow afternoon as it hasn't bagged.

[ryan83] 23/1/2014 08:23

morning all!

[ryan83] 22/1/2014 14:51

yep added earlier at 30p and now at 31.8-2p area. GL!