PPG.L Regulatory News (PPG)

Plutus PowerGen Plc / Ticker: PPG / Index: AIM

2 March 2017

PLUTUS POWERGEN PLC ("PPG" or the "Company")

Response to OFGEM Statement

Plutus PowerGen Plc (AIM: PPG), the AIM listed power company focused on the development, construction and operation of flexible electricity and gas power generation in the UK, notes the statement from OFGEM that it is "minded to" cut TRIAD payments to local embedded generators.

The Board believes that the proposed modifications to the current system outlined by OFGEM could cause significant harm to the UK's industrial sector, and in turn consumers, as well as a wide range of distributed generators and energy storage developers. The Board supports National Grid's view that the proposed changes further threaten security of supply as necessary capacity is forced off or delayed. Accordingly, it believes the OFGEM proposals to be deeply flawed, narrowly focused and potentially very damaging to UK industry and investor confidence at a critical time. The Company looks forward to an active participation in the consultation process.

The Board welcomes the proposed wider review of the regulatory and market arrangements surrounding network charges (the Targeted Charging Review or 'TCR') also promised by OFGEM. The Board believes this work will result in a more cohesive assessment that recognises and values the benefits that flexible energy generation plays in the UK currently by delivering a critical supply of energy to combat the instability and volatility created by the increasing use of renewables; which by their very nature provide power intermittently to the National Grid.

PPG and its projects benefit from access to multiple revenue streams in addition to TRIAD, namely Short Term Operating Reserve (STOR) and Firm Frequency Response (FFR) as well as receipt of the prevailing power price at the time of generation. For PPG, the maiden profits recently reported in the Company's interim results were achieved via the receipt of management contracts for its projects before the commissioning of its Plymouth site, highlighting the continued scope for profit growth as it continues to add projects to its pipeline.

PPG CEO Phil Stephens said, "Network charging is a very complicated and an emotionally charged topic in the UK, which has dramatic knock-on effects across many sectors. Any decision to implement change should not be taken lightly, narrowly or suddenly, but must instead be careful, holistic and systematic. The statement from OFGEM indicates that it prefers to deliver a short-term response to a complicated, long-term issue.

"PPG's projects tap into a range of revenue streams which is testament to the strong requirement for the critical supply of energy we provide to the UK market, which is currently volatile and at risk of black and brown outs due to the ongoing reconfiguration of the UK power generation mix. The proposals provide very little recognition of this, instead narrowly focusing on the interests of large integrated energy companies. I believe this decision could cause significant harm to industrial manufacturers, many of which have embedded generation, which in turn could affect consumers and the UK's commercial competitiveness."

Until the consultation process and formal decisions have been announced, PPG will not be making further comment.

**ENDS**

For further information, please visit www.plutuspowergen.com, or contact:

Notes to Editors

Plutus PowerGen Plc is an AIM listed company focused on the development, construction and operation of flexible stand-by power generation sites in the UK. At present, the market dynamics for flexible power generation are positive due to the continued downward pressure on capacity available to National Grid to balance supply and demand, leading to their announcements about possible power shortages over the next few years.

Flexible Power generators such as PPG offer a viable and timely solution to the power capacity shortfall in the UK. To this end, PPG is initially focusing on delivering 200MW of capacity by the end of 2017 and currently has a project pipeline of potential development sites with 700MW of power generation capacity.

PPG has a straightforward multi-revenue stream model with large and stable counter-parties and is using project/EIS funding through SPVs to finance construction of the generation assets. This structure has the benefit of limiting dilution to plc shareholders as the assets are financed and built.