New Long Term Local Authority Contract

RNS Number : 2721N

TEG Group (The) PLC

31 August 2011

 

 

For release

09:00

Date: 31 August 2011

The TEG GROUP PLC (TEG/L)

("TEG" or "the Company")

TEG CONSORTIUM APPOINTED PREFERRED BIDDER FOR NEW

ANAEROBIC DIGESTION PLANT IN NORTH EAST WALES

NEW LONG TERM LOCAL AUTHORITY CONTRACT

The TEG Group Plc ("TEG"), the AIM listed cutting edge green technology company, which develops and operates organic composting and energy plants, is pleased to announce that its consortium with Alkane Energy Plc ("Alkane") has been appointed as preferred bidder for a long term food waste contract.  The client is a consortium of three Councils, Denbighshire County Council, Conwy County Borough Council and Flintshire County Council, known as the North East Wales Hub ("the Council Hub").  This contract is the first of the Welsh Government's sponsored organic waste projects.

TEG and Alkane will create a joint venture company, to be called NEAT Biogas Limited ("NEAT") in which TEG will be a 70% equity holder and Alkane 30%.  Under the contract, NEAT is planning to construct and operate a new 20,000 tonnes per annum Anaerobic Digestion ("AD") plant to process the food waste supplied by the Council Hub together with additional third party food waste.

The key elements of the contract are:

·      the contract will be between the Council Hub and NEAT;

·      it will commence on completion of all commercial and financial documentation ("Financial Close"), expected to be before the end of 2011;

·      the term is 15 years with an option to extend for a further 5 years;

·      the contract guarantees a supply of food waste to the facility for approximately 60% of its capacity. 

The facility will be an AD plant processing food wastes to produce electricity and a digestate product, for use as a fertiliser in agricultural applications.  Full year revenues for NEAT are expected to build to approximately £2m and the facility is expected to generate approximately 1MW of renewable power, sufficient to satisfy the needs of approximately 2,000 homes in North East Wales per annum.  This type of operation is a recognised solution to the UK Government's stated objectives in complying with both EU landfill targets and de-carbonising the UK electricity market and the electricity generated will benefit from premium selling prices through the Feed-in Tariff scheme. 

The AD facility will be funded and operated by NEAT.  It is expected that asset funding will be used to fund the capital plant and TEG and Alkane will provide working capital in proportion to each party's equity in NEAT.  The planning application and environmental permit applications are expected to be submitted shortly. It is anticipated that the AD facility will commence operations in the first half of 2013.

TEG will supply and operate the key AD plant and equipment and civil engineering package for the facility.  Alkane will supply and operate all gas management, CHP and power generation equipment.  The TEG subsidiary, NOFCO Limited, will manage the placement of the digestate under a separate digestate management contract.

Commenting for TEG, Chief Executive Mick Fishwick said: "We are extremely pleased to have been awarded this prestigious long term contract by the North East Wales Hub and we look forward to working with the Hub and to constructing our first facility in North East Wales.  It is also very pleasing to see our partnership with Alkane further develop and build and we look forward to working with Alkane in our new joint venture company."

Commenting for Alkane, Chief Executive Neil O'Brien said:  "We are delighted at this award of Preferred Bidder for North East Wales.  This move into AD further broadens Alkane's business operations and strengthens our cleantech credentials.  The Alkane/TEG collaboration deal is proving its worth combining our heritage in waste management and energy generation.  There is a strong match of the skills of the two teams and we continue to work on a number of other AD projects."

ENDS

Contact:
The TEG Group Plc	Tel: [phone]
Michael Fishwick, Chief Executive	www.theteggroup.plc.uk
Peckwater PR	Tel: [phone]
Tarquin Edwards	[e-mail]
Ambrian Partners Limited (NOMAD and Broker)	Tel : [phone]
Andrew Craig / Ben Wright

Editor's Notes:

TEG

TEG provides state of the art technology for handling organic wastes.  Its in-vessel composting (IVC) system is one of the few approved technologies capable of treating animal by-product (ABP) waste and it is now providing an anaerobic digestion (AD) technology to produce power from food waste.  Plant economics are predominantly driven by the gate fees charged, rather than the value of the end product (compost).  The AD plants also benefit from power sales and Renewable Obligations Certificates ("ROCS") or Feed-in Tariffs ("FITs").  TEG owns its composting technology, the TEG Silo Cage System, and has an agreement with UTS Biogastechnik GmbH ("UTS") for the provision of AD technology into the UK waste markets.  The TEG processes are an economic and sustainable alternative to landfill.

The TEG Silo Cage System

The Silo Cage system, one of the few technologies in Europe capable of treating this waste, is a natural process producing compost as an end product.  The compost is an excellent soil conditioner that fertilises, retains moisture, provides structure and reduces the incidence of plant disease.  TEG's Silo-Cages are housed in self-contained buildings, suitable for urban environments, are not unsightly and are environmentally friendly.

Collaboration with UTS

UTS Biogastechnik GmbH is one of the world's leading biogas companies offering services in the planning, construction, delivery and installation of biogas plants and their key components.  The company has its own production facilities and service shops, technical design and development departments as well as mobile mechanical and biological customer service technicians to support the international client base.  UTS also develops and sells specialized mixers, pumps and a variety of solid/liquid separating devices related to the biogas and agro/food markets. The company is headquartered near Munich, Germany with subsidiaries in Italy, Hungary, Spain, the Czech Republic and now a rapidly developing company UTS Biogas Limited, to service the United Kingdom & Ireland markets.

TEG Biogas (Perth) Limited

TEG Biogas (Perth) Limited ("TEG Biogas") is a joint venture company established by TEG with Albion LLP.  TEG Biogas is constructing a 16,000 tonnes per annum AD plant at TEG's Glenfarg site to produce 0.7MW of electrical power and 0.2MW of heat that is to be used by Binn Eco Park.  The facility is due to be completed in 2011.

General

Customers include local authorities, waste management companies, food processors, farmers and landowners.  The Company's expanding market is driven by increasingly stringent EU and UK legislation regulating the treatment and disposal of organic waste.  Statutory targets for the diversion of waste from landfill increase annually through to 2020, increasing TEG's market opportunity year on year. 

NOFCO

The Natural Organic Fertiliser Company Limited ("NOFCO"), a subsidiary of TEG, is a marketing company specialising in the development of end markets for compost products, an important aspect of all plant developments and key to local authority development.  The company has an expertise in the development of agricultural and horticultural markets and this capability is provided to customers to enhance TEG's overall service offering.

Alkane

Alkane is a profitable, cash generative, growing 'cleantech' business operating from 12 power plants around the UK with a growing presence in renewable biogas and demand management.

The Company has the UK's leading portfolio of coal mine methane ("CMM") licences, enabling the Company to extract gas from abandoned coal mines.  Alkane started extracting CMM in 1999 with sites at Shirebrook, Steetley and Markham.  Shirebrook and Markham are still operational today, a decade after they were opened.  Shirebrook is still producing CMM and surplus capacity has been deployed to conventional peak load along with capacity at Markham.  

The Group now generates power from 12 mid size (less than 10MW) plants across the UK and sells this power through the electricity distribution network.  The electricity is generated using standard modular reciprocating engines, and these units and other ancillary plant are designed to be flexible and transportable.  This allows additional capacity to be brought onto growing sites and underutilised plant to be moved to new sites to maximise efficiency. 

The Alkane operating model has already been transferred to demand management, and currently operates 8MW across two sites on conventional gas with our trading partners GDF SUEZ Energy UK. Demand management incorporates peak running (normally 16.00 to 19.00 each weekday) and Short Term Operating Reserve ("STOR") under which National Grid contract standby facilities with generators.

The Biogas market also provides a potential new business stream which will require the same power assets and core gas and electricity skills as CMM.  Alkane has a collaboration agreement with TEG Group PLC ("TEG") to build and operate anaerobic digestion ("AD") facilities.  AD is a complex biological process which converts waste material or energy crops into methane and fertiliser.

Alkane's on-shore licence position includes coal bed methane ("CBM") and shale gas potential.  These are longer term opportunities and have exploration risk.  The Company is seeking a partner to finance the exploration stage at their own risk. 

 

END

 

 

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