Inspirit Energy Regulatory News (INSP)

31 May 2016

Inspirit Energy Holdings Plc

("Inspirit" or "the Company")

UK Government consultation regarding the Feed in Tariff scheme for microCHP technologies

Inspirit Energy Holdings plc, the AIM listed developer of micro combined heat and power boilers, notes the publication on 26th May 2016 by the Department of Energy and Climate Change ("DECC") of a combined consultation regarding the feed in tariff scheme for anaerobic digestion and microCHP technologies following its announcement in December 2015 to issue such a consultation 'early in 2016'. (https://www.gov.uk/government/consultations/review-of-support-for-anaerobic-digestion-and-micro-combined-heat-and-power-under-the-feed-in-tariffs-scheme).

Inspirit notes that the consultation is open for responses by all interested parties until 7 July 2016 and confirms that it will submitting its own response. Inspirit believes the Feed In Tariff scheme can help with the development of a thriving and diverse mCHP market in the UK for smaller residential applications and will be responding accordingly. Inspirit is hopeful that a structure can be created where multiple participants in the market emerge providing the widest consumer choice.

Whilst targeted stimulation of the market through support, such as a Feed In Tariff scheme, is always welcome, Inspirit would like to remind shareholders that its flagship Inspirit Charger 3.0 product will be targeted initially at the commercial market where it will provide an attractive return on investment. With a 3kW electrical output the Inspirit Charger 3.0 has never sought to rely on, nor has ever been eligible for, the feed in tariff scheme. The new consultation does not therefore impact Inspirit's core business strategy.

Inspirit has previously announced its intention to launch the Inspirit Charger 2.0 alongside the Inspirit Charger 3.0. Both appliances are suitable for large homes with high heat demand and the 2kW unit will be eligible for the feed in tariff scheme, where one of the requirements is a maximum electrical output of 2.0kW. The Inspirit Charger 2.0 is a derivative of the Inspirit Charger 3.0 and therefore requires only very limited additional investment by the Company to bring it to market.

The DECC consultation proposes a limit of 3.6MW of installed capacity under the feed in tariff scheme up until the end of March 2019. Inspirit considers this to be an incentive for customers interested in the Inspirit Charger 2.0 to register their interest as soon as possible via its website, so as to take advantage of this limited availability whilst it lasts.

John Gunn, Executive Chairman and CEO of Inspirit, commented,

"Clearly George Osborne's fiscal responsibility ‎will deal a heavy blow to those mCHP developers whose appliances are sub 2kW electrical output and who rely on the feed in tariff to make their case to customers. The flagship Inspirit Charger is 3kW electrical and 15kW thermal has therefore always been outside of the scope of the feed in tariff. We have never relied on the feed in tariff to demonstrate our superior payback as the feed in tariff is only applicable for appliances of 2kW and below.

"I have always been quite critical of developers that have relied on the tariff to argue their long-term business case where it has always been known that it is limited in its availability. The consultation shows this availability could be reduced even further and this will negatively impact those who are reliant on this subsidy.

"For Inspirit it highlights that our superior electrical output will position us as one of the only mCHP appliances that will make economic sense for both the domestic and small commercial market, which is considerable in size. If the DECC's preferred option proceeds I suspect our competitors need to adjust their strategies accordingly, whilst Inspirit will continue as planned to deliver on our goal of having both a 2kW and 3kW appliance for the domestic and overseas markets available shortly."

More information on Inspirit Energy can be seen at: www.inspirit-energy.com

 About Inspirit Energy Holdings Plc

Inspirit Energy Holdings plc, is developing and commercialising a highly efficient micro combined heat and power (mCHP) boiler for commercial applications. The boiler is specifically designed to meet the challenge of reduced carbon energy supply and is capable of running on natural gas, LPG and Bio Fuels. The appliance produces hot water (for tap water or central heating) and electrical output simultaneously. The installation can be of single or multiple configuration and its high operating efficiency together with the off-set of electricity costs provides a very attractive investment payback proposition. 

Inspirit intends to explore opportunities to license out the underlying technology and the Directors believe that, in some instances, the patents owned by Inspirit may be also used in the development of products other than a mCHP appliance. A prototype of the appliance has been independently tested and shown to be capable of simultaneous generation of up to 15kW thermal and up to 3kW electrical output. Once development of the appliance has been completed and commercialised, the Directors expect that the appliance will initially be marketed in the UK and Europe and eventually worldwide. Additional revenue streams may be possible through product licensing, sales of warranties and further development of the product.