For the period ending on 31 December 2024
- MPower and AMPYR Distributed Energy finalise 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 will be extinguished in full
- The conversion from debt to equity is binding and subject only to FIRB approval being obtained by AMPYR
- Pipeline of project development opportunities boosted following positive engagement with several project development groups
- Active discussions continuing to secure project funding solutions for a rollout of hybrid renewable energy assets
Sydney – 31 January 2025 – MPower Group Limited (ASX: MPR)
Leading specialist renewable energy, battery storage and microgrid business MPower Group Limited (ASX: MPR) (the Company) is pleased to provide the following report on its activities for the quarter ending 31 December 2024 (Quarter).
The December Quarter was punctuated by the finalisation of terms to convert project funding for the Narromine Renewable Energy Project in New South Wales into project equity and strengthened by continued progress across the Company’s development pipeline and efforts to establish a portfolio of distribution-connected hybrid renewable energy assets.
Narromine Renewable Energy Project
On 10 October 2024, MPower and AMPYR Distributed Energy announced that the Narromine Renewable Energy Project would be acquired by AMPYR following agreement being reached on the terms for the conversion of Narromine’s $10 million project funding facility into project equity.
As a result of the planned 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 31 December 2024 was $10.36 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 near future once FIRB approval has been obtained. A further update will be provided once completion of the conversion has taken place.
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 following the conversion.
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 successfully in line with its design specification, exporting more than 5,400MWh of energy in its first five full months of operation.
Image: Narromine Renewable Energy Project (NSW)
Portfolio update
During the Quarter, MPower scoped upgrade works for its 100% owned solar and battery project at Lakeland in Far North Queensland. At the time the project was acquired by MPower in 2022, several upgrade opportunities were identified to enhance project performance and reliability. A number of project enhancements have already been implemented by MPower and further upgrades are now planned to better align project performance with the project’s original design. MPower is engaging with project stakeholders to finalise the scope, timing and funding for the upgrade works.
Also during the Quarter, MPower boosted its pipeline of project development opportunities following active discussions with several project development groups. The Company has refined its strategic approach to distribution-connected hybrid renewable energy projects, including its approach to project design, project delivery, offtake, geographic focus and project funding. MPower is actively seeking to align its strategy, pipeline and capabilities with project funding to support the rollout of projects and the establishment of a portfolio of hybrid renewable energy assets.
Additional information on Appendix 4C
Cash receipts during the Quarter were $1,606K, reflecting an increase from prior periods brought about by the inclusion of cash receipts from the Narromine project for the full quarter for the first time. 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 at Lakeland (QLD) and Narromine (NSW).
In respect of the cashflows associated with Narromine:
As the Narromine project has been 100% owned during the construction period, cashflows associated with construction are shown under investing and financing activities rather than operating activities.
Cashflows from the sale of clean energy from Narromine project will continue until completion of the sale of the project occurs (refer above) and will be shown in cashflows from operating activities. At completion of the sale, the project’s cash balance will transfer with the project.
The main operating cash outflows were operating costs of $576K and staff costs of $367K (which excludes some related party remuneration costs that have been deferred by agreement). Net cash from operating activities during the Quarter was $368K.
Funding
MPower’s cash resources (principally being its operating cashflow from its service activities and the sale of renewable energy from its operating assets) continue to be stretched to meet its operating costs at its current level of activity, which is not sustainable in the long-term. Operating costs have been pared back but the challenge remains to deliver additional cash inflows into the business. In addition, there are various liabilities that come up for payment in the course of the next 12 months and MPower needs to be positioned to meet those commitments.
MPower’s principal strategy to resolve the current position is to secure third party project funding that will support a rollout of hybrid renewable energy assets at a faster rate than the Company has delivered to date. In this regard, we continue to engage in active dialogue to secure such funding. While the underlying financial metrics of hybrid projects are compelling, the challenge remains securing capital partners with an appropriate risk appetite and alignment to the scale of the opportunity that MPower has created. If funding of new projects can be achieved, it will see the required funds flowing to the Company and MPower’s strategic plan being delivered.
In addition to seeking funding for the construction of future projects, MPower may look to recycle capital currently invested in project assets and/or raise further capital to meet its operating requirements and other liabilities.
Payments to related parties
Payments of $22K 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