Key points:
- SIMEC Atlantis shares soared 68.5% on the £40m battery system contract.
- The deal has breathed new life into the stalled Uskmouthcal power project.
- However, the council must still approve the project’s construction.
The SIMEC Atlantis Energy Ltd (LON: SAE) share price soared 68.5% after the company won a £40 million contract to install a battery energy storage system (BESS) at the Uskmouth power conversion renewable energy site.
Also read: Five Best Environmentally Friendly and Ethical Green Stocks.
The deal to deliver a 230 MW/460MWh battery energy storage system was signed by the Uskmouth Energy Storage Limited, a portfolio company of Energy Optimisation Solutions and Quinbrook Infrastructure Partners.
The contract will be among the largest BESS projects in the United Kingdom, and the anticipated £40 million in revenue will be generated over the next thirty years. However, investors will be happy to know that revenues worth £11 million are expected to be generated in the next 18 months as SAE meets certain project milestones.
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The Uskmouth site conversion project faced significant opposition from certain environmental groups. Still, the latest plan to install a battery energy storage system was okayed by the Newport City Council, which said that such a project does not need an environmental impact assessment (EIA).
However, the council is yet to approve the official construction plans, which should be relatively quick unless other parties challenge the city’s decision. Initial plans to convert the coal-powered plant into one that uses plastics as feedstock had to be halted after the issue was referred to the Welsh government last year.
We do not expect much opposition to converting Uskmouth B Power Station into a battery energy storage facility since the plant will not be generating electricity but will be storing it from the national grid while supplying the same power back to the grid when needed.
Investors reacted positively to today’s news since the project will contribute significantly to the Welsh government’s goal to transition to a “lower-carbon electricity system”. However, the installation of the BESS is expected to take 12 months, during which locals will have to endure some disruption.
However, once the system has been installed, there will be minimal traffic to and from the site, mainly due to maintenance activities. Investors cheered the news, as evidenced by the rally in SAE shares, but the shares had given up most of their gains at writing.
*This is not investment advice. Always do your due diligence before making investment decisions.
Simec Atlantis share price.
The Simec Atlantis share price soared 68.5% to trade at 3.455p, rising from Monday’s closing price of 2.05p.