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Rame Energy's revenues soar, to sell Chilean project stake

Published: 15:00 29 Sep 2015 BST

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Rame is selling its 20% stake in the 15Mw Ruki/Huajache wind project in Chile

Rame Energy's (LON:RAME) revenues bounded ahead in its latest half year as its portfolio of wind and solar projects in South America started to mature.

The group, which has a British solar energy installation business, also urged the UK government to tread carefully with proposed subsidy cuts.

Revenues were just shy of US$3mln (2014: US$398,000) in the six months to June, while losses fell to US$1.06mln (US$1.14mln).

Rame has also decided to sell its 20% stake in the recently commissioned 15Mw (megawatt) Ruki/Huajache wind project in Chile to partner Santander.

Santander and Rame are working together on 133Mw of new developments in Chile, where a growing power crisis is inflating prices of completed projects.

They have an operating wind farm and a line-up of more than 30 potential projects.

Tim Adams, Rame’s chief executive, said the market, actively supported by the Chilean Government, continues to demand that increasing proportions of this new energy is produced via renewable means without tariff subsidy. 

“This has led many commentators to suggest that Chile is currently one of the most attractive markets for renewable energy in the world.”

Cold turkey

In the UK, the situation is not so clear following the UK government’s decision to review feed-in tariffs for solar projects.

UK rooftop solar installation business Beco had a good six months and has a strong order book but feed-in tariffs may face substantial reductions, though Rame said still it can offer substantial savings for businesses.

Rame bought the business partly to provide a platform to help it develop a solar business in Chile, where it now has an operational solar project and a number in development.

Finance chief Kevin McNair said the subsidy review did not mean solar energy was likely to disappear in the UK and he said Rame was committed to Beco.

McNair said: "We have a good UK business which is a small part of our overall business portfolio and we'd like to see it grow and prosper."

But he said any subsidy cuts would influence Rame's decisions on future solar projects in the UK.

He also urged the government to take a measured approach to any changes to allow the industry to adjust and survive.

"It's likely to change shape and it's a bit early to tell what that shape is going to be," he said. "If you want to wean people off subsidies, don't make them go cold turkey."

Cantor maintained its ‘buy’ stance and 24p target, but added if it can get a decent price for Ruki/Huajache it would highlight the value in its portfolio and reduce the financing risks.

Shares rose 2% to 6.64p.

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