Plutus PowerGen agrees to develop a 100MW gas-powered energy portfolio

AIM-listed Plutus PowerGen, which constructs and operates flexible power projects, agreed to develop a 100 megawatt gas-powered energy generation portfolio with a specialist energy company.

A letter of intent was signed with the agreement, which would expand the company's power supply and is in line with its strategy to become a dedicated merchant supplier and producer of energy for Britain.

The company wants to exploit its existing pipeline which has land capable of hosting about 700 megawatts of renewable fuel-powered capacity, which will diversify its capability, provide an additional revenue stream and de-risk its business model.

Five 20 megawatt gas powered sites are expected to be constructed to supply flexible on demand power to the UK grid, which will be developed in tandem with the 200 megawatt diesel power generation portfolio currently being developed by the company due to be completed by the end of 2017.

Construction will be funded through debt and minority equity, thus avoiding diluting the company’s shareholders.

Chairman Charles Tatnall said: "This agreement to build a gas powered portfolio represents a highly positive step towards achieving our stated objective of becoming a leading flexible energy supplier in the UK.

“Our entry into gas powered generation diversifies our offering, provides us with an additional revenue stream and solidifies our market position as an alleviator of the rising UK power supply issues. We are excited about the potential impact this deal has on our business."

Currently, the market dynamics for flexible power generation are positive due to the downward pressure on capacity available to the National Grid to balance supply and demand, with possible power shortages over the next few years.

Shares in Plutus PowerGen were down 4% to 1.42p at 0916 BST.