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Atlantis Resources' MeyGen project not awarded 2017 renewable energy CfD by UK government, in dialogue about future allocations

Tim Cornelius, Atlantis’s chief executive officer, said: "I must acknowledge the difficulties of competing on a level playing field with established technologies like offshore wind, which has been operating at commercial scale in the UK for over a decade”
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He added: “It would be a travesty if the UK were to lose out on another emerging industry where it has established a first-mover advantage"

Atlantis Resources Limited (LON:ARL) noted that, as expected, its MeyGen Limited subsidiary was not awarded a 2071 contracts for difference allocation for renewable energy projects by the UK Department for Business, Energy & Industrial Strategy (BEIS).

However, the AIM-listed tidal power generation firm said it has commenced a dialogue with BEIS officials to “recognise the benefits of either a bi-lateral CfD discussion or the reintroduction of a marine energy sub-category in the next allocation round, either of which would be welcomed by Atlantis.”

READ: Atlantis Resources says MeyGen tidal power project set a new world record for monthly production in August

In a statement, Atlantis said it had forecast a two-thirds reduction in the level of revenue support required for the Phase 1C of MeyGen - the world's largest tidal stream project in northern Scotland  - versus that enjoyed by the first phase of the project and had “submitted a very competitive bid into the auction process.” 

However, the group said “this significant cost reduction was not sufficient to allow the project to secure a contract for difference in this auction where it was competing with established technologies such as offshore wind.”

Tim Cornelius, Atlantis’s chief executive officer, said: "We've made great strides in reducing our cost of generation so that we can slash our requirement for revenue support, and I am incredibly proud of the work the Atlantis team has done in this respect.

“However, I must acknowledge the difficulties of competing on a level playing field with established technologies like offshore wind, which has been operating at commercial scale in the UK for over a decade.”

CEO says “It would be a travesty if the UK were to lose out on another emerging industry”

He added: “It would be a travesty if the UK were to lose out on another emerging industry where it has established a first-mover advantage and where the cost of energy is on a steep downward trajectory. 

“We expect our ensuing discussions with BEIS to focus on how the future jobs and growth benefits of the sector can be secured for the UK.”

Atlantis pointed out that the first phase of the MeyGen project, Phase 1A, is approaching 2GWh of generation, and was made possible by the outgoing Renewables Obligation scheme, which provides a means of revenue support in addition to wholesale power prices.

The group said Phase 1B of the project did not participate in the UK CfD auction because it had been awarded funding support from European Commission mechanisms such as NER300 and Horizon 2020.

It added that the significant cost reduction achieved for Phase 1C is being accomplished through improvements in the technology, larger turbines, higher volumes, economies of scale and reduced financing costs.

Phase 1C at MeyGen is designed to provide nearly 240GWh of clean and predictable electricity to the grid each year from 2023.

Focus on marine power in other areas

The group pointed out that since November 2016, when BEIS announced the removal of the previously pledged ring-fenced allocation, the company has focused on developing marine power projects in other jurisdictions.

In the near term, Atlantis said, it will focus on delivering projects in France, Canada and South East Asia where tidal stream is well supported, and it  has also an intensive three-year programme for the delivery of a 160MW tidal range and flood protection project in the Wyre Estuary.

The Atlantis CEO the group is “being kept very busy pursuing opportunities in France and Canada, both of which have pledged capital and revenue support for tidal stream power.” 

He added: “The market for tidal power in South East Asia is growing rapidly and we hope to be making some announcements shortly with respect to large scale projects in that region. We are also very focused on our tidal barrage and flood protection project in the Wyre estuary, which we believe also offers a route to low cost, predictable and sustainable domestic electricity supply.

Cornelius concluded: “We expect to be able to provide a further update to the market on these projects in due course. Our diversification strategy has been well executed. The future of marine power is very bright and I am very excited about the outlook for Atlantis."

In early morning trading, Atlantis shares were 1.4%, or 0.5p lower at 36.5p.

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