Good Energy to sell renewable assets, invest more in Zap-Map

Renewable electricity supplier Good Energy Group announced the intended sale of its 47.5MW renewable asset portfolio as part of a strategic shift to energy and mobility services on Thursday, driven by further investment in electric vehicle mapping platform Zap-Map.

The AIM-traded firm said it was launching a sale process of its entire 47.5MW generation portfolio, with the proceeds to be used to accelerate and support previously-identified strategic growth opportunities.

It said those investments would not occur all at once, so in the meantime the proceeds would further strengthen the company's balance sheet.

Good Energy’s generation portfolio was refinanced and restructured in April as part of a balance sheet simplification exercise, and as at 30 June, the portfolio was held at a net book value of £56.8m.

In early 2020, Good Energy undertook a formal revaluation exercise of the assets as their historic carrying value was not fully reflective of their open market value.

The company said it had appointed KPMG as financial advisor for the disposal, and was expecting to complete the process during the first quarter of 2022.

Meanwhile, the board said the EV mapping platform Zap-Map now had more than 290,000 registered users and over 95% of the UK's public points mapped on its network, with more than 75% of electric vehicle drivers in the UK having downloaded the platform.

The company said it intended to participate in the current funding round being undertaken by Zap-Map, which had an anticipated size of £7m.

“This will allow Zap-Map to embark on its next course of commercial and development goals, which will crystallise its leading position for its market services in the UK and initiate steps of international expansion to selected territories,” the Good Energy board said in its statement.

It said that was expected to complete on a similar timescale to the disposal of its generation assets.

Additionally, Good Energy said it was currently building a new platform for its decentralised energy service business, in a bid to enhance its existing products and propositions and deliver new services for feed-in tariff customers.

“This platform will enable smart export for solar customers, and the ability to pay actual as opposed to deemed rates, providing material benefits to the business and customers,” the directors said.

“We expect payback on the £1m investment to deliver this platform within 12 months and will be rolled out during the first half of 2022, to support growth in this segment.”

Good Energy said it was expecting to make further investments across both transport and decentralised energy, to deliver on its strategic plan.

Looking at its trading, the board noted that the energy supply landscape had changed “significantly” in recent months, but said that by the spring it expected a “certain normalisation” within the domestic market, with “significantly fewer participants” competing in a more balanced manner on product attributes, differentiated service and price.

Good Energy said it expected a degree of industry restructure, with an increased level of regulatory scrutiny particularly on capital adequacy, consumer protection and operational and financial governance.

The market had continued to experience high wholesale energy prices, which had led to 22 supply companies failing since the start of September, of which 13 had been announced since 13 October.

“These market exits will have a short-term impact on the business,” the board said.

“We expect to incur unforecasted costs of up to £1m through the renewables obligation and feed-in tariffs levy mutualisation processes, and £1.5m of additional commodity costs from a higher number of business and domestic customers than expected.”

However, given its exemption from the price cap, Good Energy said it had the flexibility to change tariff pricing further where necessary, and would continue to monitor that closely through the winter.

Continued volatility in the energy industry would put short term financial pressure on the business, but the company said there was still a route to achieve its full-year expectations.

“Good Energy has been at the forefront of the UK's energy transition for over 20 years, stimulating the growth of renewable power generation,” said chief executive officer Nigel Pocklington.

“Our job is done as a developer and asset owner as we focus on the new frontiers - the electrification of transport and decentralised energy generation.

“Bigger investment in Zap-Map, will reinforce their market position and help deliver the products and services for EV drivers.”

Pocklington said the firm saw “significant opportunities” to scale that business internationally.

“We are also increasing investment in a brand-new platform to better serve our decentralised energy customers.

“With one of the largest feed-in tariff customer bases, we are investing in new products and services to better serve their needs.”

While the retail energy market continued to experience some short-term challenges, Nigel Pocklington said Good Energy was “positive” about the future.

“We will largely be a debt-free company, with a strong balance sheet for growth.”

At 1137 GMT, shares in Good Energy Group were down 1.75% at 280p.