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Aggregated Micro Power Holdings PLC: DEEP DIVE
OVERVIEW

Aggregated Micro believes in power of local energy

AMP wants to add 25 sites in Greater London and extend its reach into the North-West around Liverpool and Manchester
electric vehicle charging
OVERVIEW: AMPH The Big Picture
Where is the power going to come from?

Mass adoption of electric vehicles is now taken as a given by most industry participants.

BP for instance, forecasts there will be 12mln electric vehicles (EVs) on UK roads by 2040.

READ: AMP to raise £8.5mln to retire convertible loan stock

That was one of the reasons why the energy giant snapped up Chargemasters, operator of the UK’s largest EV charging network, last summer.

Richard Burrell, chief executive of Aggregated Micro Products Holdings PLC (LON:AMPH) believes that even with the likes of BP getting involved the issue of where all the electricity will come from to power these vehicles has yet to be addressed.

It is also why AMP is looking at diversifying into EV charging.

Currently, AMP’s grid balancing arm operates two natural gas-powered sites in Kent and Essex with capacity for about 24Mw of electricity that can be switched on at times of peak power demand, but the focus is switching to smaller sites of 2-4Mw capacity.

Burrell wants to add 25 sites in Greater London and extend its reach into the North-West around Liverpool and Manchester.

Synergies

All you need is planning permission and a connection to the gas network, says Burrell, who adds that as its generators are roughly the size of two containers they can easily fit on bits of unused land.

AMP currently generates most of its revenues from wood fuels and combined heat/power boiler businesses.

In the first half of its financial year, AMP delivered over 80,000 tonnes of wood pellet and wood chip to nearly four million customers. It also provided service and maintenance to around 900 biomass boilers.

And Burrell sees many synergies between this business and new EV charging outlets.

“A small-scale power generator is an attractive proposition. It’s all about providing power where it’s needed most,” he told Proactive.

“We are believers in clean energy distributed at down a local level and not dependent on national grid or big power stations.

READ: AMP posts sharp rise in H1 revenue

Broker finnCap recently repeated its price target of 135p for AMP after the firm published its half-year results which showed a sharp rise in revenue and gross profit.

The target compares to market price currently of 90p, implying upside of 50%.

“The group’s strategy has evolved over recent years and in the short term, the majority of its revenues and profits are expected to be generated in the wood chip and wood pellet markets, through its main trading subsidiary, AMP Biomass Fuel.

“Its Project Development activities are expected to be widened and will benefit from regulatory changes with new areas such as grid balancing and peaking plants expected to become a good growth area for the group.”

finnCap notes the UK government has a legally binding target of reducing the UK's greenhouse gas emissions by 80% by 2050 against 1990 levels.

READ: AMP’s Incubex associate to launch North American environmental futures

Some 8GW of coal-fired generating capacity has already been decommissioned since 2012 and a further 10GW is expected to close by 2025, most of which will happen by 2020.

In addition, 2GW of gas-fired combined plants are expected to close by 2020. Taken together, this represents approximately 25% of the UK’s generating capacity.

With some nuclear generators also being decommissioned the supply of electricity is becoming much more volatile and has increased the need for flexible and controllable stand-by supplies.

finnCap forecast revenues this year to March will rise 18% to £51mln and adjusted profits will come in at £1.1mln.

The broker’s share price target is based on a sum-of-the-parts valuation, which also includes credit for AMP’s 29.1% stake in carbon trading exchange Incubex and its off-balance sheet boiler project vehicle, AMPIL.

“With forecast year-end net cash of £4.7m, the balance sheet is now much stronger and supports further growth,” read a recent note.

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Aggregated Micro Power Holdings PLC Timeline

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