LONDON (Alliance News) - Infinis Energy PLC Thursday said it had a "strong" first quarter after it generated more energy in the period and costs and prices met expectations and said it is on course to hit is full year expectations.
However, the company is racing to complete its onshore wind projects to qualify for government subsidies and is also facing uncertainty and lower earnings from the government's decision to scrap the Climate Change Levy that has previously benefited the renewable energy industry.
The renewable energy company said it generated 586 gigawatt hours of power in the first quarter, up from 572 gigawatt hours a year earlier.
"Day ahead pricing and operating costs were in line with expectations. We have maintained our focus on operational performance with high engine reliability in our landfill gas business of 96% and wind availability also at 96% over the period," said Infinis.
The landfill gas business "continues to deliver a solid output", exporting 435 gigawatt hours in the first quarter ended June 30, however this was down from 463 gigawatt hours a year earlier due to a combination of the natural decline in landfill gas, drier weather conditions and planned full grid outages at two of our larger sites initiated by the local network operators which lasted for 11 days, it said.
The proportion of electricity generated by the gas business under the Renewable Obligation subsidy, which is currently under review by the UK government, was 93% compared to 84% a year earlier at an average selling price of GBP93.51 per megawatt hour, up from GBP89.09 a year earlier.
The onshore wind business exported the remaining 152 gigwatt hours in the quarter, which was all under the Renewable Obligation subsidy. That was up 46% from the entire onshore wind generation in 2014 as prices experienced a small lift to GBP88.59 per megawatt hour from GBP88.06.
The review of the Renewables Obligation by the UK government will not affect its current operations, but means the company must race to complete its development projects.
The A'Chruach wind farm, which will have a capacity of 43 megawatt hours is "progressing according to plan". All 21 turbine bases are complete and, in addition, all site access roads are complete. Turbines will be erected over the Summer with final commissioning still expected by March 2016.
The Galawhistle project is also being constructed, currently focused on infrastructure and the company is at the "advanced stages" of procurement and financing for its wind farm projects at Sisters and North Steads , formerly known as Blue Sky, with financial close expected in early Autumn 2015.
Infinis said for these projects to qualify under the grace period before the Renewables Obligation is scrapped for onshore wind they must be constructed and operational by the end of March 2017.
"We are highly confident that A'Chruach, Galawhistle, Sisters and North Steads meet the grace period criteria and therefore qualify as Renewable Obligation projects," it said.
On top of the changes to the Renewable Obligation, the government is also scrapping the Climate Change Levy "previously enjoyed by renewable generation". Infinis has already warned these changes will result in its earnings before interest, tax, deprecation and amortisation being around GBP7.5 million lower in the current financial year, and GBP10 to GBP11 million lower in the following year.
Currently, tax is not paid on renewable electricity supplied to businesses and the public sector under renewable source contracts, regardless of whether it is generated in the UK or abroad.
"The removal of exemption from the Climate Change Levy was disappointing and was unexpected by the Industry. We continue to make representations at the highest levels of Government. The Board is reflecting on how these policy changes will affect the future strategy of the group in delivering shareholder value and it is our intention to provide an update to the market by the time of our interim results," it said in a statement.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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