Whereas 2020 was a year that delivered economic shocks as a result of society coming to terms with the restrictions that Coronavirus imposed on us all, 2021 has provided an opportunity to demonstrate the tenacity and ingenuity of which humanity is capable. The re-engagement of the United States in the Paris Accord and the increased consciousness of consumers has focussed the minds of global organisations on taking a leading position in sustainable solutions to prevent themselves facing major challenges in their business. This increased prioritisation of green and digital technologies plays to the strengths of SAE and the expectation is that continued government support for these developing technologies will become clearer during the year ahead.
Over the last 12 months, we sought to further consolidate our position in the renewable and sustainable energy generation sector; delivering clean electricity from the MeyGen array, installing a fully operational tidal turbine in Japan’s coastal waters, moving closer to financial close on the Uskmouth conversion project and building out our client’s portfolio of hydro assets.
MeyGen’s generation experienced some interruptions during 2020 but the efficiency of turbine recovery and re-deployment in such a hostile environment gave further confidence in being able to reduce the long-term cost of generating energy from tidal sources. MeyGen has now produced over 37 GWh of electricity, equivalent to the annual consumption of some 12,000 UK households. Demonstrating the Group’s ability to deploy our turbine technology far from home, February 2021 saw the commissioning of a pilot turbine located in the straits of Naru Island, within the southern Japanese Goto island chain. Working at our operations and maintenance base at Nigg Energy Park in Scotland, the turbine was assembled and tested in nine weeks before shipping to Japan. This whole exercise was delivered under the further strictures of COVID-19 – a testament to the dedication and professionalism of the broader SAE team – including industrial partners and stakeholders.
The Uskmouth power station conversion project, commenced in 2018, has continued to complete significant milestones in its development. In July 2020 we announced that we would deliver the development in two phases with the total net output remaining at 220MW. Detailed EPC contractual discussions are in the final stages and discussions on the provision of energy via a private wire network has been developed in parallel. More recently the announcement of the Group’s part in the South Wales Industrial Cluster (SWIC), which has been awarded £20m funding from Innovate UK to initiate work to decarbonise the region with a focus on industry and power, highlights the key role the repurposed Uskmouth Project can play in the journey to net zero. The Group will, as a partner of SWIC, carry out feasibility work on carbon capture usage and storage from the repurposed power station. Despite planning permission for the construction of new silos, conveyors, and rail upgrade for handling the new fuel external to the existing Uskmouth power station being called in by the Welsh Government, the Group remains fully committed to the project and is confident the project complies with all relevant Government policies and legislation.
Following its acquisition in 2019, Green Highland Renewables (“GHR”) has continued to construct hydro assets for clients throughout 2020 and 2021. Despite some early COVID 19 restriction, work continued on sites throughout 2020 and the first of the new schemes were commissioned in Q1 2021. The long-term income from Operations and Maintenance and Managed Service Contracts for a portfolio of hydroelectric assets continues to grow and provides valuable cash flows.
2020 and early 2021 saw two material senior personnel changes; Ian Wakelin, Non-executive Director and Chair of the Audit Committee, resigned in July 2020 having accepted the role of Chairman of Viridor Group, and was replaced by Duncan Black in November 2020. I would like to place on record my appreciation for Ian’s service, contributions, and leadership over the past two years. Duncan brings a wealth of experience and has previously held the position of CFO of Atlantis, and as a Non-executive Director of the Board until 2018. Duncan’s deep understanding of the Company and his contacts in, and knowledge of, the Asian power and infrastructure markets provide invaluable challenge and context that will, in turn, allow Atlantis to pursue expansion opportunities presented by our project partners in Japan and South Korea.
In January 2021, after leading the Group for 15 years, Tim Cornelius resigned to take up the role of Group Chief Executive with the Global Energy Group and we welcomed Graham Reid as our new Chief Executive. Graham is an experienced and highly capable CEO, leader and engineer and we are benefitting from his considerable project management and delivery experience to steer Atlantis through the delivery phase of the Uskmouth Power Station conversion project, the build out of fuel production plants, the expansion of the MeyGen project and the development of further hydro asset opportunities.
The 2020 results illustrate the continued investments in the development activities of the Group – notably the Uskmouth project as it navigates through the final stages ahead of financial close. The materially increased revenues from the tidal division, mainly as a result of the Japanese project, demonstrate the potential in this sector alongside the continuing generation from MeyGen and a full year’s contribution from GHR. Expenses are greater than 2019, as a result of the Japanese project, but 2020 has not suffered any of the write downs that we accounted for in 2019, thus significantly reducing the loss in 2020 when compared with the previous year.
As I noted last year, the initial challenge of Coronavirus was met with a measured and calm response; the later resurgence was similarly countered with key projects being developed with vigour and resolve and innovative solutions utilised – most notably in the delivery of the turbine to Japan at the start of 2021 against the background of international lockdowns and limitations.
SAE does not stand in isolation when capitalising on the opportunities that we search out; I would pay tribute to all our stakeholders, executive team and our employees for their commitment, effort and dedication during such challenging times and for their continuing commitment and support which will be instrumental in enabling SAE to meet the corporate goals that will deliver sustainable growth and value for all.
ANNUAL GENERAL MEETING
Notice of the Annual General Meeting will be announced in due course. Details of the resolutions to be proposed will be set out in a separate Notice of Annual General Meeting, which accompanies this report for shareholders receiving hard copy documents, and will be available at www.simecatlantis.com for those who have elected to receive documents electronically