For the period ending on 30 September 2024
- Narromine Renewable Energy Project (NSW) achieved commercial operations and commenced generating revenue
- Narromine is the first project that MPower has owned, constructed and commissioned as part of its Build Own Operate strategy
- MPower and AMPYR Distributed Energy have agreed terms for the conversion of Narromine’s $10 million project funding facility into project equity
- AMPYR will receive 100% equity in the Narromine project and all project funding to be extinguished in full
- Further progress across the Company’s portfolio of clean energy assets to support a planned portfolio of clean energy assets across Australia
- New funding arrangements secured to increase and extend the Company’s corporate debt facilities
Sydney – 31 October 2024 – MPower Group Limited (ASX: MPR)
Leading specialist renewable energy, battery storage and microgrid business MPower Group Limited (ASX: MPR) is pleased to provide the following report on its activities for the quarter ending 30 September 2024 (Quarter).
Operational highlights in the September Quarter were focussed on the Narromine Renewable Energy Project in New South Wales, which achieved commercial operations and commenced generating revenue in July 2024. Later in the Quarter, terms were agreed for the conversion of Narromine’s project funding into project equity.
The Quarter also saw further progress across the Company’s portfolio of clean energy assets as well as the continued advancement of MPower’s development activities to establish a portfolio of distribution-connected clean energy assets.
Narromine Renewable Energy Project
During the Quarter, MPower completed the construction of the Narromine Renewable Energy Project, with revenue commencing at full capacity in July 2024 following the successful commissioning and connection of the project to enable participation in the National Electricity Market.
The start of commercial operations marked a key milestone for the Narromine project and is the first project that MPower has owned, constructed and commissioned as part of its Build Own Operate strategy.
The Narromine project is now generating and exporting clean energy at full capacity into the National Electricity Market. A merchant market revenue strategy has been adopted initially, with project revenues determined by the prevailing wholesale spot prices for energy and Large-scale Generation Certificates.
Later in the Quarter, MPower and AMPYR Distributed Energy announced that the Narromine Renewable Energy Project would be acquired by AMPYR after terms were agreed for the conversion of Narromine’s $10 million project funding facility into project equity.
As a result of the transaction, AMPYR will receive 100% equity in the Narromine project and all funding costs, including principal, capitalised and accrued interest, will be extinguished in full. The principal outstanding under the funding facility at 30 September 2024 was $10 million.
MPower expects to record a gain of approximately $700K following completion of the transaction upon deconsolidation of the asset, subject to finalisation of the accounting treatment and review by the Company’s auditors.
The conversion from debt to equity is binding on the parties and is subject only to Foreign Investment Review Board (FIRB) approval being obtained by AMPYR. Completion of the conversion to equity is expected to take place in the coming months once FIRB approval has been obtained.
MPower was responsible for the design and construction of the project and will continue to be the operations & maintenance provider and asset manager in respect of the project.
The Narromine project is a 6.7MWdc/4.99MWac solar project in central-west New South Wales. The project includes Bifacial PV Modules, Single Axis Tracking and central inverter technology, with the capacity to produce more than 14,000MWh of energy in its first year of operations. The project achieved commercial operations in July 2024 and has performed in line with its design specification, exporting more than 1,600MWh of energy in its first two full months of operation.
The acquisition by MPower of 100% of the rights to the Narromine project was completed in August 2023 and site works commenced in February 2024. The project was funded by AMPYR Distributed Energy under a project funding relationship established in March 2023.
Image: Narromine Renewable Energy Project (NSW)
Portfolio update
In the previous Quarter, MPower commenced a process to investigate the potential sale of the Lakeland project with the intention of recycling capital for the future expansion of its clean energy portfolio. Since that time, MPower has shifted focus away from a potential sale to alternative ways of leveraging the Lakeland project in combination with other operational and development assets. MPower remains open to all options to maximise the value in the Lakeland asset.
MPower continues to refine its portfolio of development assets across the eastern states of Australia. This includes hybrid solar/battery storage projects in New South Wales, South Australia and Victoria that are at various stages of development. MPower is actively working with its development partners and advisers to progress its development pipeline and funding opportunities to support the rollout of projects and the establishment of a portfolio of clean energy assets.
Financial overview
Cash receipts during the Quarter were $1,246K and were broadly in line with previous quarters. Receipts predominantly comprise revenues generated through the Company’s service and maintenance activities, together with the sale of clean energy and associated renewable energy certificates from the group’s clean energy assets. While the Narromine project began generating revenue during the Quarter, the associated cashflows from the Narromine project commenced after the end of the Quarter and are expected to continue until completion of the sale of the project occurs in the coming months. As the Narromine project has been 100% owed during the construction period, cashflows associated with construction are shown under investing and financing activities rather than operating activities.
The main operating cash outflows were operating costs of $573K and staff costs of $581K. Net cash used in operating activities during the Quarter was $208K.
During the Quarter, MPower secured new funding arrangements that support the Company’s plans to establish a portfolio of distribution connected clean energy assets across Australia. MPower finalised terms for a new $1.5 million facility and at the same time agreed extensions to $2.7 million of existing corporate facilities to provide longer term funding to the Group. The new facility terms with Oceania Capital Partners and Tag Private were in place at the end of the Quarter.
To date, the Company has been able to navigate the complexities of developing and delivering distribution-connected clean energy assets with limited financial resources and a minimal balance sheet, which has been underpinned by the Company’s service and maintenance activities. It is critical to the Company’s future that new revenue streams are brought on in the coming months through the delivery of new projects so that the Group has sufficient financial resources to continue pursuing its strategy, promote growth and establish a scale of operations that can support its cost base. The funding environment for small-scale clean energy projects and portfolios continues to be very challenging for MPower. Notwithstanding this, the Company is actively engaging with a number of parties with a view to partnering on future solar and battery storage projects.
Comment
Chief Executive Officer Nathan Wise commented: “The successful acquisition, delivery, commissioning and subsequent sale of the Narromine Renewable Energy Project showcases MPower’s end-to-end capability with a focus on distribution-connected clean energy assets. The team has accomplished many milestones in a relatively short period of time.”
“As we move forward with our portfolio of development and operational assets and look to build our pipeline of project opportunities, MPower will use its experience and track record to tackle the funding headwinds and other challenges involved in rolling out infrastructure assets at scale.”
Payments to related parties
Payments of $20K to related parties and their associates relate to remuneration payments made to the directors of the Company.
Ends
Contact
For further information, please contact:
Nathan Wise
Chief Executive Officer
(02) 8788 4600
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