RAME24 Mar 2015 17:48
Rame Energy set to capitalise as Chile's wind industry grows
By Giles Gwinnett
March 24 2015, 2:17pm
In the first nine months of last year, the South American country installed 382Mw of wind capacity, more than doubling capacity, as it looks to rely less on fossil fuels
In the first nine months of last year, the South American country installed 382Mw of wind capacity, more than doubling capacity, as it looks to rely less on fossil fuels
Shares in South American power supplier Rame Energy (LON:RAME) shot up over 10% as it expanded the capacity of its wind project agreement in Chile with Santander.
The amount of capacity to be built under the US$69mln framework has been increased by a net 15Mw to 133Mw to incorporate a new 24 Mw wind project, the firm revealed.
The new project lies close to one of the existing planned developments and where it makes economic sense for two plants and the combined project will now have capacity of 54Mw and is scheduled to start construction in the final quarter of this year.
It comes at a time of big growth in the Chilean wind industry. In the first nine months of last year, the South American country installed 382Mw of wind capacity, more than doubling capacity, as it looks to rely less on fossil fuels.
As house broker Northland pointed out in a note to clients on Tuesday: "Rame remains ideally placed to capitalise on this opportunity."
Rame’s framework agreement with Santander is now for five wind powered plants to be installed in Chile by 2016.
One project - the 15Mw Raki/Huajache wind farm - has already been commissioned with first power expected in the coming weeks.
Santander will acquire each project on an agreed price per Mw, provide between 80 and 90% of the required equity capital and structure any debt packages. Rame is responsible for the balance of the equity.
The original framework was for six plants, but Rame said that due to the changes, the 9MW Punta Chome project has been taken out of the Santander agreement and sold to another developer - EREN Développement (EREN).
Rame has a project management contract with EREN worth $2mln between now and project completion, estimated to be in the second quarter of 2016, and it also has an option to take 20% of the project's equity.
Tim Adams, chief executive, said the new agreement was a testament to its relationship with Santander, while he was delighted to have agreed terms with EREN for Punta Chome that reflected Rame’s project management skills.
Analyst David Johnson of Northland said: "Rame has built up a considerable portfolio of potential projects at varying stages of development having operated in Chile as an EPC for a number of years. This portfolio provides a degree of flexibility as Rame builds up its IPP generating activities."
Rame shares added 10.77% to stand at 9p each.
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