SIMEC ATLANTIS ENERGY LIMITED is to announce that it has secured the necessary grid variations for the 230 MW/460 MWh battery energy storage system at the Uskmouth site and has finalized the novation of the connection agreement at the network. With excellent progress being made, the project is on track to be operational by 2024. SAE announced on May 24, 2022 that it had entered into an agreement with Energy Optimization Solutions and Quinbrook Infrastructure Partners through their holding company Uskmouth Energy Storage Limited to deliver a 230MW / 460MWh Battery Energy Storage System to the Uskmouth site.
The announcement further stated that the project was expected to generate around £40m in revenue for the company over 30 years, of which around £11m was to be paid within 18 months, subject to the achievement of certain milestones, the first including the novation of the network connection agreement which is now finalized. SAE is also to announce, following the novation of the grid connection agreement to EOS, that it has received an upfront payment of £6 million from UES, in the form of a loan. The loan is interest free for the term of the option agreement and will be repaid from the £6 million development premium payable on the planning award.
Planning is well advanced, with the project planning application now submitted. Planning permission is expected to be granted in the fourth quarter of 2022. An additional development premium of £4 million will be received upon financial close of the project and entry into the lease.
Financial close is expected in the first quarter of 2023. As part of this transaction, a £2 million convertible loan from SIMEC Group, a shareholder of approximately 29.7% of the company, was repaid. SAE no longer has any outstanding loans with a SIMEC group company.
SAE announced on March 22, 2022 the conclusion of a memorandum of understanding with the SIMEC group which committed SAE to create a new company owned 85% by SAE and 15% by the SIMEC group to hold the necessary land and assets. advancing sustainable energy projects at the Uskmouth Site. SAE announced the completion of the shareholder agreement and land agreements necessary to fulfill the terms and conditions and which will be used to share the revenues of the BESS project in proportion to the SPV shareholding. It should be noted that the £2m convertible loan repaid to the Simec Group is deducted from its 15% revenue share.
SAE continues to focus on its three main objectives: delivering maximum value from the Uskmouth site; delivery of the next phases of the MeyGen project; and the development of international opportunities for its fuel pellet conversion business for coal-fired power plants. Today’s announcement is a key next step in creating value from the Uskmouth site. SAE has additional land and infrastructure at the Uskmouth site and is advancing other BESS projects and exploring other energy projects to deliver maximum value from the Uskmouth site to stakeholders.
SAE will continue to update the market as these initiatives progress. Securing government support through the recently awarded Contract for Difference for an additional 28 MW of tidal power at the MeyGen site was an important milestone for the company. SAE confirms that MeyGen entered CFDs with the Low Carbon Contracts Company on July 28, 2022.
Within 20 business days of entering the CFD, MeyGen had to meet a number of prerequisites to ratify the agreement with the LCCC. SAE can now confirm that this first contractual milestone has been met. MeyGen is already home to the largest tidal current network, the most powerful tidal current turbines in the world and the largest authorized tidal current site.
By the end of 2021, MeyGen accounted for 75% of total global tidal current production, a huge achievement for this historic project. With the potential to expand up to nearly 400 MW of installed capacity, this is a site that can provide large-scale tidal power, at a cost equivalent to nuclear, and with the only predictable renewable generation available today. SAE is working to meet the CFD schedule, which will result in reaching the milestone delivery date in the first quarter of 2024 and financial close later in the year.
The expertise the Company has acquired through the development of the Uskmouth conversion project has considerable value and the potential to be applied to other coal conversion projects. SAE has a ready-made solution to address growing challenges related to energy security, electricity pricing, and the continued need to find low-carbon alternatives to coal. SAE has identified a number of coal conversion opportunities in Europe to apply the expertise gained at Uskmouth.
SAE will continue to explore these opportunities.