Plutus PowerGen enters equity funding collaboration agreement

Flexible energy generation company Plutus PowerGen has entered into a collaboration agreement for the equity funding portion of its proposed initial 80MW and contemplated further portfolio of 160MW of peaker gas sites in the UK, it announced on Thursday.

The AIM-traded firm said the agreement had been signed with an FCA-regulated and accredited investment adviser, whose leadership team it claimed had a “strong” track record in sizeable civil project funding in the energy generation space.

It explained that the adviser had “recognised the potential” of the Plutus portfolio, understood the current UK power dynamics and the need for UK peaker sites.

Plutus said it had agreed to give the counterparty to the collaboration agreement a first right of refusal on the funding for both its proposed as well as its contemplated gas site portfolio on an ongoing basis, which currently totalled 240 MW.

The company said it expected to maintain a majority equity interest in its portfolio of gas- powered peaker sites, which the board anticipated to be ultimately significantly larger than its interests in the current six ‘FlexGen’ and one gas site portfolio, which had been funded by EIS investors through Rockpool Investments.

It said the new funding for the peaker gas sites would be provided on a site-by-site basis and was subject, among other things, to completion of full due diligence and investment committee approval.

Plutus and the counterparty intended to work together to initially develop and fund a pipeline of four identified projects totalling around 80MW, with the counterparty granted exclusivity over those projects until 31 December.

The counterparty and Plutus intended to agree heads of terms for each project, the board added.

Until the execution of binding terms for the initially contemplated site build out, Plutus said the name of the counterparty to the collaboration agreement would remain confidential.

Additionally, Plutus PowerGen announced that it received notice on 27 August from the non-executive directors of Rockpool that its management of the existing Rockpool EIS funded sites was to be terminated, on a six month notice period.

The board said it believed that would assist in accelerating the sale of the portfolio of six 20MW diesel sites, and one gas site in development, in which the company retained a 44.5% equity stake.

Plutus said it would continue to retain the management of Attune Energy.

The board added that the company’s subsidiary Plutus Energy Limited was currently owed £0.51m in accrued and deferred fees from the six co-invested companies.

It said it anticipated accruing, under the existing management agreements, a further £0.31m in management fees during the six month notice period, in addition to receiving ongoing management fees.

The directors said they expected that the ending of those management contracts would dovetail with the commencement of the development of the new gas peakers portfolio.

“The collaboration agreement for the equity funding portion of our gas powered peaker portfolio is a milestone development for Plutus and is the culmination of extensive negotiations over a long period,” said Plutus PowerGen interim chief executive officer James Longley.

“The counterparty is highly experienced in the energy generation space and the agreement recognises the potential of the current proposed and contemplated portfolio.

“The financial metrics for the gas sites are superior to that of the existing portfolio, and with an established entity who understands the demand and potential of the peaker market.”

Longley said the asset financing negotiations were progressing “well”, with the company said to be “very positive” about its future.

“With regard to the Rockpool sites we believe the ending of the management contracts will assist in the facilitation of the sale of the assets which should generate significant profit and have an attractive yield potential for investors and potential buyers once capacity mechanism is reinstated.

“We look forward to updating shareholders with details of our progress in due course.”