REG - Mast Energy Dvlpmts. - Pyebridge Update

Mast Energy DevelopmentsAnnouncement

27/02/2023 07:00

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RNS Number : 0220R  Mast Energy Developments PLC  27 February 2023

Mast Energy Developments PLC

(Incorporated in England and Wales)

(Registration Number: 12886458)

Share code on the LSE: MAST

ISIN: GB00BMBSCV12

('MED' or 'the Company')

 

27 February 2023

 

Mast Energy Developments PLC

 

 Pyebridge Has Significant Enhancement of Income Following Capacity Market
Auction Results and Update of Trading Results for 2022

 

Mast Energy Developments PLC ('MED' or the 'Company'), the UK-based
multi-asset owner and operator in the rapidly growing Flexible Energy market
is pleased to announce an update with regards to its current flagship
producing asset, the 9 MW Pyebridge Synchronous Gas-powered Flexible
Generation Facility (the 'Site' or 'Pyebridge'). The update specifically
refers to the Site's Capacity Market ('CM') contract and the outcome of the
recent Capacity Market Auction results, as well as an overview of the key
highlights with regards to the Site's actual performance for 2022, both
operationally and economically.

 

Capacity Market

 

Upon acquisition of the Site by MED, it had a pre-existing T-4 CM contract at
a tariff of £8/kW/pa with a contract value of c. £60k per annum. Due to the
UK energy market having moved significantly since the Site previously obtained
the aforementioned contract, MED took a strategic decision to forego the
contract in favour of applying for new replacement CM contracts in the
2022/2023 CM bid window. Consequently, MED applied for and was successful in
pre-qualification to bid for two new CM contracts, being a T-1 and a T-4 CM
contract. Following the preparation of a robust CM Auction bid strategy, MED
is pleased to announce that pursuant to the recent Capacity Market Auctions
and subsequent results, its T-1 bid cleared at £60/kW/pa and, its T-4 bid
cleared at an unprecedented historic record price of £63/kW/pa.

The Directors are pleased at the success of MED's strategy to replace the
Site's previous low-value CM contract with new replacement contracts at
significantly higher tariffs. The Site's new replacement T-4 contract at
£63/kW/pa compared to its previous T-4 CM contract at £8/kW/pa results in a
c. 7.5x (or 750%) uplift in income. The new additional T-1 CM contract, which
the Site did not have before and is a new additional contract, will further
enhance the Site's revenue significantly.

The Site's new T-1 CM contract has a revenue value of c. £308k per annum and
its new T-4 CM contract has a revenue value of c. £324k per annum (the latter
up from the previous T-4 contract's c. £60k per annum). Both contract values
will increase the Site's revenue profile accordingly.

 

Pyebridge Trading Update

 

Following the period of the Site's post-acquisition optimisation (see RNS
dated 5 July 2022), and since starting full-scale production during March
2022, the Site generated the following actual performance figures for the c.
 10-month period March to December 2022 (the 'Period'):

·    Electricity Generation Sales Revenue for the Period: c. £1.054m,

·    Total Electricity Generation Output for the Period: c. 2,738 MWh, and

·    Average Electricity Generation Sales Price achieved per MWh sold for
the Period: c. £385.

 

Both the achieved generation production and sales price outperformed the
market, with the market's average wholesale price in 2022 coming to only c.
£204 per MWh, resulting in an 88% performance above the market and validating
MED's strategy and ability to outperform the market. MED's success in this
regard is mostly related to the astute utilisation of Artificial Intelligence
('AI') and Machine Learning ('ML') techniques related to its trading
algorithm, in conjunction with its PPA Route-to-Market partner, Statkraft.

 

The Site's previous financial performance led the Company to increase its
expectations of Pyebridge, which were set out in the Pyebridge Trading Update
RNS announcement dated 19 October 2022. The Company confirms that due to
unexpected variables during the period under review, including the generation
of unprecedented record levels of electricity generation from renewables, most
notably wind (which is a hedge to reserve power) from September to December
2022 in the UK, and which went beyond those considered possible by the Company
when issuing its expectations, the previously stated expectations are no
longer valid. This is a consequence of the increase in electricity generation
from renewables reducing the reserve power required across the UK during this
period and consequently impacting the electricity generation sales at
Pyebridge.

 

Pyebridge Asset Value

 

Following the Pyebridge SPA deferred consideration settlement (see RNS dated
16 December 2022), the total effective acquisition purchase price for the Site
was reduced to c. £2.1m.

During the Site's recent annual insurance cover policy review, the Site's
asset value was independently confirmed at c. £6.3m (on a conservative
replacement cost basis). The Site's fair asset value compared to its purchase
price therefore highlights the significant upside that MED's investment in
Pyebridge has established.

 

Pieter Krügel, MED CEO, commented: "We are pleased to report that Pyebridge
obtained new Capacity Market contracts at considerably higher values, which
will significantly enhance the Site's revenue profile and profitability.
Moreover, we are pleased with the Site's actual performance during 2022, with
specific reference to the 88% outperformance of the average market price,
highlighting our ability to provide significantly better returns compared to
the market. We are confident in our ability and strategy to keep delivering
outperformance during 2023. Finally, the Site's fair asset value compared to
its acquisition price furthermore highlights MED's ability to identify and
acquire sites at an attractive discount in order to enhance value for its
shareholders.

Further, we are advancing the development of the rest of our projects in the
portfolio and looking forward to bringing our next project, Bordesley into
production later this year.

"MED has a very exciting year ahead, being well established and positioned to
fast-track production and growth. We look forward to updating investors with
further key developments during the year ahead."

 

 

ENDS

This announcement contains inside information for the purposes of the UK
version of the Market Abuse Regulation (EU No. 596/2014) as it forms part of
United Kingdom domestic law by virtue of the European Union (Withdrawal) Act
2018 ('UK MAR'). Upon the publication of this announcement, this inside
information is now considered to be in the public domain.

 

 

For further information please visit www.med.energy (http://www.med.energy) or
contact:

 

  Pieter Krügel                          info@med.energy                                                       Mast Energy Developments Plc  CEO
  Jonathan Critchley & Keith Swann       +44 (0)20 3869 6080                                                   Clear Capital Markets         Corporate Broker
  Zainab Slemang van Rijmenant           zainab@lifacommunications.com (mailto:zainab@lifacommunications.com)  Lifa Communications           Investor and Public

                                                                                                                                             Relations Advisor

 

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