Infinis Energy reports on LFG activity, increased RO sales in Q1

By Katie Fletcher | August 17, 2015

Infinis Energy plc recently released its financial results for the quarter ended June 30, reporting approximately 93 percent, or 404 gigawatt hours (GWh), of the electricity sold in the quarter was sold under the Renewable Obligation regime.

The company sells its landfill gas (LFG) electricity pursuant to either the Non-Fossil Fuel Obligation or the RO regime. The transition from NFFO to RO contracts continued in this period from the company’s year-end results reported in June, with the proportion of exported power sold under RO contracts increasing from 84 percent in the quarter ended June 30, 2014 to 93 percent in the quarter ended June 30, 2015. The proportion of electricity generated under the NFFO regime decreased from 15.8 percent in the quarter ended June 30, 2014 to 7 percent in the quarter ended June 30, 2015.

Exported electricity generation in the quarter was 435 GWh compared with 463 GWh in the same quarter last year. This 6 percent reduction was due to a combination of the natural decline in LFG, drier weather conditions and DNO instructed outages at Bletchley and Wapseys Woo—two of Infinis’ top 10 sites by installed capacity—each resulting in 11 days of lost output. Adjusting for the one-off DNO outages, the output decline would have been 4.7 percent.

The generated GWh of electricity was sold at an average all-in price of £97.26 ($151.58) per MWh. “Going forward we will have greater exposure to the market wholesale electricity price as our NFFO contracted volume decreases,” said Eric Machiels, CEO of Infinis.

In the quarter ended June 30, wholesale power spot prices averaged £42.11 per MWh, an increase from the quarter ended June 30 of the prior year where wholesale power spot prices averaged £39.30 per MWh.

Besides wholesale electricity price, Infinis highlighted several other areas impacting its quarter one results including EU’s 2020 renewable energy target, operational improvements, seasonality and others.

In September 2011, Infinis upgraded its 24/7 centralized monitoring system that allows the company to continually collect data on its operations to make adjustments, plan maintenance and balance LFG fields across the landfill sites from which it extracts the gas. “As a result of the significant investments in centralizing, monitoring and optimizing our operations, we believe we are able to collect substantially all of the LFG that is economically recoverable from the landfill sites from which we extract LFG,” Machiels said.

At the end of quarter one, Infinis continues to have the long-term exclusive right to extract LFG from 60 landfill sites operated by FCC. Of these 60 sites, Infinis extracts LFG on a royalty-free basis from 45 sites, and on the other 15 sites pays a small royalty, which is passed on to the ultimate landlord. The company also has the exclusive right to extract LFG on a royalty basis from 61 additional landfill sites. Of these 61 sites, 13 sites are operated by FCC and 48 sites are operated by other landfill operators. In addition to these 121 operating sites, Infinis has seven outsourced sites in its portfolio. The company had power generation installed capacity of 311 MW of electricity at its operating sites and 12 MW at the outsourced sites in its portfolio at the end of the period.

In the quarter ended June 30, across the company’s top 30 landfill sites by LFG availability, its engine reliability, which is calculated by dividing hours run by hours scheduled to run, has averaged 97 percent.

Revenue for the quarter was £42.1 million compared with £42.6 million for the quarter ended June 30 of the prior year. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter ended June 30 was £22.9 million compared with £23.6 million for the quarter ended in the comparable period of 2014.

The company’s gross profit was £17.87 million compared to £18.3 million in the first quarter of the prior year. Capital expenditure for the period was £3.3 million, down slightly from £3.5 million in the comparable prior year period.

One recent development discussed in its quarter one earnings report was the U.K.’s announcement of its intention to discontinue the Climate Change Levy exemption for renewable electricity from Aug. 1. “Based on our initial assessment of this measure, Infinis expects a reduction in EBITDA attributable to the bond group of approximately £4.5 million in the year ending March 31, 2016 and approximately £6.5 million in the year ending March 31, 2017,” Machiels said.