Atlantis Resources Ltd (LON:ARL) will try to negotiate a bilateral contract for difference (CfD) with the UK government for Phase 1C of its MeyGen tidal stream project off Scotland, proposing a price that is half of the administrative strike price in the recent auction.
The whole MeyGen scheme has a lease for up to 398 MW, with Phase 1C planned at 73.5 MW. The 6-MW Phase 1A of the project was deployed under the Renewables Obligation (RO) scheme, while the 6-MW Phase 1B secured EU funding.
The tidal power company failed to secure support in the UK government's CfD auction last week for Phase 1C as there was no ringfencing for earlier stage marine renewables. It has already said it would welcome a bilateral CfD discussion or the reintroduction of a marine energy sub-category in the next auction.
While announcing interim results today, the company said it plans to ask the government to consider entering into bilateral talks for the award of a 15-year CfD for Phase 1C and added that the proposed price per MWh is half of the administrative strike price for the technology in the recent auction rounds. For tidal stream, the administrative strike price, a cap for government support, was set at about GBP 300 (USD 406/EUR 338) per MWh. Atlantis said that proposing a 50% lower price is a sign of its commitment to rapid and significant cost reductions. The company also pointed out that 40% of the GBP-290-million budget for the recent auction was not allocated, so there are funds to back a more diverse mix of technologies.
The CfD auction mainly backed offshore wind projects, where prices fell to GBP 57.5 per MWh.
Atlantis ended the first half of 2017 with a consolidated cash position of GBP 6.9 million, down from GBP 10.2 million at the end of 2016. Total equity increased over the period to GBP 67.4 million from GBP 66.6 million.
The company said it is now in a position to consider a re-finance of the 6-MW MeyGen Phase 1A to improve returns and free capital for new investment opportunities.
In the first half of 2017, Atlantis was announced as the preferred developer of the 160-MW tidal barrage and flood protection infrastructure project in the Wyre Estuary, England. "We believe that this is the best pathfinder project in the UK to help demonstrate the benefits of predictable low-cost generation from a fleet of commercial scale tidal barrages across the UK," said chief executive Tim Cornelius.
(GBP 1 = USD 1.354/EUR 1.128)
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Aerial view of the MeyGen site. Source: Atlantis Resources Limited
