Record energy prices see Prospex receive repayment from El Romeral

Europe-focussed gas and power project investor Prospex Energy updated the market on the El Romeral power plant in southern Spain on Thursday, which it said was currently providing a “very healthy income” from selling electricity into the Spanish spot market at record levels.

The AIM-traded firm holds a 49.9% working interest in El Romeral through its interest in Tarba Energía.

As a direct result of the strong electricity prices in the fourth quarter, Prospex said that on 29 December, Tarba made a loan repayment of €0.3m to its shareholders, of which its share was €0.15m.

The board said that would further bolster the company's cash flow position into 2022, and reduced the shareholder loan balance in Tarba for the El Romeral asset.

From September to December, gross monthly income from El Romeral had averaged more than €0.24m per month, making for a significant increase from previous periods due to the high electricity prices in Spain.

Spot prices of more than €400 per megawatt-hour had been recorded, with the average price between September and December being over €180 per megawatt-hour.

For comparison, from March to August, when the El Romeral plant was acquired, the price achieved averaged €76 per megawatt-hour, which translated to average gross monthly income of €93,000 per month.

The company said the high income from electricity generation at the plant was being augmented by the ability of the plant to run 24-hour operations regularly.

It said the initial outlay by Tarba for the plant optimisation and automation project of €90,000 was now expected to have delivered a return on investment by the end of January.

Since the El Romeral plant was now “comfortably” meeting its running costs, and with forward curve electricity prices looking “very strong”, Prospex said it expected that during 2022 further loan repayments were likely to be passed up to its shareholders.

“This loan repayment by Tarba Energía to its two shareholders is 40% of the €0.75m acquisition cost of El Romeral,” said chief executive officer Mark Routh.

“With electricity spot prices at an all-time high and the forward curve looking extremely robust, I am confident that Tarba can comfortably make further loan repayments up to its shareholders over the coming year.

“This means that Prospex is likely to be generating a net income towards its overheads and operating costs, something which will sit very well with shareholders and potential investors alike.”

At 1117 GMT, shares in Prospex Energy were up 1.85% at 3.31p.