2018 was perhaps the most transformative year for our Group since our 2014 initial public offering, reflected not least in our change of name to SIMEC Atlantis Energy Limited following the reverse takeover of SIMEC Uskmouth Power Limited. This acquisition and the ensuing relationship with the SIMEC Group (part of the GFG Alliance) have added scale and momentum to our transition to a diversified, sustainable energy company. We entered 2019 with the announcement of our intention to acquire the Green Highland Renewables (“GHR”) Group of companies from the GFG Alliance. Having assessed the available financing options for the Group to purchase GHR, it was determined that an alternative transaction structure would be in the interests of shareholders and we will provide further information in the near future. We have also continued our quest for geographic diversity, including through the formation of our new joint venture, Normandie Hydrolienne, which will be focused on the development of tidal energy projects to exploit the vast resources of the tides along the northern French coast.
Around the world, scientists are tracking the impacts of climate change, which is in turn forcing governments to act. The UK government has put moving to a cleaner, greener economy at the heart of its Industrial Strategy and is leading the world by introducing a bill in June 2019 to commit the government to a net zero emissions target. This means moving away from using conventional coal and gas-fired power to electricity generated from renewable sources such as tidal power, and achieving the ambitious aim of a carbon neutral economy by 2050.
Generation continues from our flagship MeyGen project, which formally completed its construction phase in 2018 and has now produced more than 17 GWh of electricity, representing generation equivalent to the average annual consumption of some 5,500 UK households. This is more than any other tidal stream project in the world and demonstrates the pivotal position we have established in this sector. We are now proceeding with plans for the addition of two new turbines at the site together with a subsea hub, which is designed to permit connection of multiple turbines into a single subsea cable, allowing us to significantly reduce the balance of plant costs in future projects. This phase of the development is known as Project Stroma and, as part of the proposed funding package, we are investigating opportunities for replacement of the existing finance package to reflect the increasing maturity of the project. Project Stroma has already been awarded €16.8 million of revenue support funding from the European Commission’s NER300 fund, which uses proceeds from the sale of carbon credits to support renewable energy and carbon capture projects.
South Wales is home to the 220MW Uskmouth power station conversion project, which represents one of the most exciting sustainable energy projects currently under development in the UK. Upon completion of the conversion from a coal fired power station, the plant is intended to deliver up to 220MW of baseload
power to the grid by drawing solely on a fuel created from waste destined for landfill. In November 2018, the environmental planning and permitting contract and the Front-End Engineering and Design (“FEED”) contract were awarded. In the same month, we were pleased to sign a Heads of Terms with leading UK infrastructure fund manager Equitix for the sale, subject to contract, of a 25 per cent stake in the project following completion of the FEED. This agreement implies a valuation for our 100 per
cent stake of over £130 million.
Across the English Channel, northern France presents further opportunity for growth through the remarkable tidal resources of Normandy. Here we have entered into a collaboration with the regional agency for economic development and the regional investment fund, Normandie Participations, to form a joint venture company called Normandie Hydrolienne. This vehicle is dedicated to the development of tidal energy in the fast flowing Raz Blanchard, whose waters, together with those of neighbouring Alderney, could host up to 2GW of tidal turbines. Whilst these projects will take time to come to operational fruition, early planning is essential to enable us to carry forward the momentum gained recently in Scotland across to France.
Finally, on a global scale, we continue to seek out supply opportunities in Asia, Australia and North America for our marine energy technologies and services, including our new AR2000 tidal turbine and our range of engineering and project delivery skills across the sustainable energy spectrum.
The overall loss for the year reflects the development investmentwe continue to make in our flagship tidal energy and waste to energy projects, with consistent revenue generation from power sales expected as they come online over the next 24 months. I would like to take this opportunity to express my thanks to all our colleagues, shareholders and stakeholders for their continuing commitment and support for the Company, which is highly appreciated and valued.
ANNUAL GENERAL MEETING
Our Annual General Meeting will be held on Friday 26 July 2019. Details of the resolutions to be proposed are set out in a separate Notice of Annual General Meeting, which accompanies this report for shareholders receiving hard copy documents, and which is available at www.simecatlantis.com for those who elected to receive documents electronically.
John Mitchell Neill