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Plutus PowerGen

Plutus PowerGen undergoing quiet transformation

The company has developed generation capacity at six sites that kicks in when power is required – usually during the winter peak between November and February, or when required by the grid

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Plutus PowerGen PLC (LON:PPG) is undergoing a financial and strategic transformation that ultimately should have a positive knock-on impact for its current micro market capitalisation.

The company has developed generation capacity at six sites that kicks in when power is required – usually during the winter peak between November and February, or when required by the grid.

These FlexGen units are normally 20 megawatts (MW), which shortens the planning timelines.

They are unmanned and activate within 30 seconds of being switched on by the likes of National Grid, which runs the UK electricity network, and other Plutus power purchase partners.

Transformation underway

An announcement towards the end of last month essentially foreshadowed the group’s transformation with THE group confirming the termination of its agreement with current financial backer Rockpool.

The enterprise investment scheme specialist has thrown around £35mln of cash behind Plutus, which, along with debt, has helped create the current six-strong network of sites.

It is likely the original Flexgen operations, which are housed in individual companies, will be sold off as soon as market conditions are right.

The plan thereafter is to create a gas portfolio, which would be ecologically, financially and strategically superior to before.

Under the Rockpool collaboration, Plutus never held more than a 44.5% carried interest in the individual operations it created.

It meant the assets couldn’t be consolidated on the company’s balance sheet and neither could they contribute to the profit and loss account, which was a major drawback for visibility.

Change of tack

Going forward, Plutus will own more than 50% of the new gas ‘Peaker’ units, ensuring any future development adds to the asset value and earnings of the business.

And Plutus won’t just focus on the highly irregular demand patterns of the winter months.

Rather, it will likely tap into the daily, day ahead and electricity balancing markets throughout the year – but only when it’s profitable.

That would see the new sites running for between 1,500 and 2,000 hours a year, interim chief executive James Longley told Proactive’s Andrew Scott recently in an interview.

In the August 29 announcement, Plutus said it had entered into a collaboration agreement with an unnamed investment adviser.

Game-changer 

The plan initially is to develop 80MW of gas power in four separate 20MW units followed by a “contemplated” 160MW of Peaker sites.

All the company would say about its would-be financial backer is that its leadership team has a “strong track record in sizeable civil project funding in the energy generation space”.

In his Proactive grilling, Longley said each site, once up and running, would generate £1mln of underlying profit (EBITDA) in its first full-year net to Plutus - based on 50% ownership.

“That’s a complete game-changer for us,” he added.

Quick facts: Plutus PowerGen

Price: £0.00

Market: AIM
Market Cap: £1.83 m
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