redT sign deal for 700MWh of German grid projects

This announcement contains inside information

26 July 2018

redT energy plc

("redT" or the "Company")

redT signs exclusive deal to deliver more than 700MWh of projects supporting German grid, with 80MWh as first phase deployment

Flow machines replace coal power, providing grid services revenue and energy trading opportunities for infrastructure investors

redT energy plc (AIM:RED), the energy storage solutions company, is pleased to announce that it has signed an exclusivity agreement with Energy System Management GmbH (ESM), a German energy development company, part of WWF solar, to deliver two 40MWh grid-scale energy storage projects in Germany as a first phase deployment, with plans to roll out a further 690MWh of projects in the future.

The first phase projects are fully developed, ready for financing, with planning approval, grid connection and approval to supply Secondary Control Reserve (SCR) to Germany and Austrian markets. The initial 80MWh phase, representing 1,066 of redT's Gen 3 tank units, is expected to begin construction in 2019, subject to financial close being reached.

This agreement means that redT has been selected as the sole energy storage supplier for a portfolio of network reinforcement projects across Germany. Alongside providing the energy storage solution, the Company will also bring its knowledge and expertise in terms of operating the machines, to create maximum trading revenue returns for infrastructure investors looking to finance the project.

The first projects will install a total of 80MWh of flow machines, across two sites, primarily to provide SCR, also known as Automated Frequency Response Reserve (aFRR) to the German grid. This is the first time flow machines will be used to provide SCR in Germany, with this service typically being provided by ramping coal-fired power plants. This service requires up to a 4 hour charge or discharge duration and is designed to maintain equilibrium on the electrical network between demand and supply. Providers of SCR are paid a fee based on their available power (MW) and energy (MWh) to charge or discharge to the grid when required.

Flow machines offer a superior alternative to coal fired power stations, in that they can respond much faster to market signals without the environmental impact. Germany's ongoing energy transition has been a factor in the continuing shift away from centralised coal and nuclear power in Germany with market design also incentivising the use of flow machines for this service with SCR procurement switching from weekly one hour periods to daily procurement of four hour periods from July 2018 onwards.

Alongside providing secure, infrastructure returns, redT's machines will also provide significant additional upside from energy trading activities. redT flow machines provide a flexible platform, enabling asset owners to perform multiple services, with no degradation cost in order to maximise project returns. Investors in projects such as this can typically expect project IRR results in the mid-teens.

Interest in energy storage infrastructure which provides flexibility for energy networks is currently at a high, with significant undeployed capital looking to be invested into fully developed projects such as these.

Scott McGregor, CEO of redT said:

"These projects are a groundbreaking development, not only for redT but for European energy markets as a whole. We are very pleased to partner with ESM, and together we look forward to delivering these projects to market.

redT is proud to be the exclusive energy storage partner on the initial 80MWh phase, with a planned expansion of an additional 690MWh of future projects. This is a real long-term infrastructure application for energy storage - providing 4-hours of capacity to the grid and supporting the growth of renewables, which is what stationary energy storage is designed to do. We are pleased that economic models in the market now support this development.

Recently, large short-term, up to 1-hour grid frequency power storage projects such as the 100MW project in Australia have raised the profile of energy storage for short-term services. These large projects in Germany represent the next phase of energy storage, providing full 4-hour services as infrastructure support for the growth of low cost grid-scale renewables.

These projects confirm the suitability of redT's technology for "mega projects" at grid level, especially in Germany where Transmission System Operators (TSOs) are now looking for long duration, flexible energy storage infrastructure to balance their market areas.

For redT, these projects underwrite our mid-term forecasts and delivery of our Gen 3 product to the market, we are looking forward to delivering these projects following financial close."

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About redT energy

redT energy plc are experts in energy storage, specialising in the design, manufacture, installation and operation of energy storage infrastructure which creates revenue alongside reliable, low-cost renewable generation for businesses, industry and electricity distribution networks. Using patented vanadium redox flow technology to store energy in liquid, redT's own energy storage machines can be run continually with no degradation: charging and discharging for over 25 years, matching the lifespan of renewable assets in on-grid, off-grid and weak-grid settings.

redT's energy storage solutions, developed over the past 15 years, address today's changing energy market by providing a flexible platform for time shifting surplus renewable power, securing electricity supplies and earning revenue through grid services. The company has customers in the UK, Europe, sub-Saharan Africa, Australia and Asia Pacific. redT energy plc is listed on the London Stock Exchange (AIM:RED) and has experts located in the UK, Europe, Australia, Africa, Asia and the USA. For more information, visit www.redTenergy.com

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