Rurelec Regulatory News (RUR)

18 Dec 2009 07:00



 18th December 2009 

Rurelec PLC

("Rurelec" or "the Company")

Energia Del Sur sells first Certificates of Emission Reduction (CERs)

Rurelec  PLC (AIM: RUR), the power plant developer and owner-operator of power generation assets in Latin America, announces the first sale of CERs by its 50% owned subsidiary Energia Del Sur (EdS").

The forward sale agreement between Corporacion Andino de Fomento (CAF), the Andean Development Corporation, and KfW, the development arm of the German government is expected to be valued at €5.1 million (approximately £ 4.5 million), based on a fixed price of between €11 and €11.16 per CERs. The agreement is based on the total CERs generated by EdS, from September 2009 until December 2012. Settlement of the purchases will be effected annually based on the number of CERs verified and delivered. The directors expect that EdS will generate 145,000 CERs in a full year of generation. A right of first refusal to acquire CERs generated subsequent to 2012 has also been granted in the contract. This agreement, which contains no unsatisfied conditions precedent, replaces the contract with a European utility announced on 5th November 2008.

Rurelec's South American expansion projects qualify for Certified Emission Reduction Certificates (CERs) due to power generation coming from technologies which reduce CO2 emissions.

CAF has agreed to advance €1.8 million (US $2.7 million) to EdS as part of its CER purchase arrangements. These funds are to be used to pay down bank debt with Standard Bank, London in advance of a refinancing of EdS now due to occur early in 2010.

Peter Earl, Managing Director of Rurelec said: "We are incredibly proud of our achievements in Argentina. We have managed to increase capacity whilst generating cleaner energy. This has been recognised by the UNFCCC, through the registration of our CERs providing us with an additional revenue stream.. In turn, we are delighted to have entered into the forward sale agreement with CAF and KfW and look forward to a long term relationship with both."

EdS is the owner of the 136 MW gas fired combined cycle power plant in Patagonia, Argentina. In 2009 it completed an expansion of the plant by adding 60 MW of steam turbine capacity and converting it to combined cycle operation in Comodoro Rivadavia, one of the principal gas producing zones of Argentina. The CCGT capacity is working at full capacity and is helping to alleviate power shortages in Argentina.

Under the combined cycle conversion, the waste heat from the two existing General Electric 6B gas turbines is channelled through two new heat recovery steam generators ("HRSGs") which have been installed on site. Instead of being released directly into the atmosphere, the waste heat from the existing power plant is captured by the HRSGs. This in turn allows electricity to be produced by a single steam turbine synchronised to the two original gas turbines from the same consumption of natural gas as is currently used to fire the open cycle gas turbines. 

EdS is now generating approximately 40 per cent. more electricity in combined cycle, compared with the previous production in open cycle, without any increase in gas usage. This significant reduction in gas consumption per MW generated reduces the new CCGT unit's emissions of CO2 for every MW hour of electricity generated.

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