SIMEC Atlantis’ tidal turbine for MeyGen project (Courtesy of SIMEC Atlantis)

SIMEC Atlantis swings to half-year profit

SIMEC Atlantis Energy has recorded a profit before tax of €5.2 million (£4.5million) for the first six months of fiscal 2023, as opposed to the loss of €9.9 million (£8.6 million) filed for the same period a year earlier.

SIMEC Atlantis’ tidal turbine for MeyGen project (Courtesy of SIMEC Atlantis)

The profit before tax of €5.2 million (£4.5 million) for the six months ended June 30, 2023, arises from the recognition of the €11.5 million (£10 million) development premium received from Uskmouth Energy Storage as revenue, following the signing of the Uskmouth land lease agreement.

According to SIMEC Atlantis, it continues to see the benefits of the restructure it completed in 2022 with lower employee and depreciation costs compared to the same period last year.

Whilst the results were adversely affected by tidal turbine repair and maintenance costs at MeyGen, these were also lower than the same period last year.

The €4.6 million (£4 million) balance of the development premium described above was received in July 2023. The initial €6.9 million (£6 million) was received in 2022 as a loan and was recognized as income on the signing of the Uskmouth land lease.

The unaudited consolidated cash position of SIMEC Atlantis as at June 30, 2023 was €1.7 million (£1.5 million).

MeyGen tidal energy project: Phases 1 & 2

The MeyGen Phase 1 array continues to operate successfully, with three turbines in stable operations whilst the fourth is currently undergoing preventative maintenance and upgrade works and will return to operation next year, according to SIMEC Atlantis.

“The MeyGen operations team is doing an excellent job operating and maintaining the MeyGen Phase 1 turbines and has developed invaluable expertise and experience that is both enabling the ongoing successful operation of MeyGen Phase 1 and which is being brought to the development of MeyGen Phase 2,” said Duncan Black, the chairman of SIMEC Alantis.

Whilst MeyGen Phase 1 has had its challenges, the operating track record and learnings that have been accumulated since the commissioning of the MeyGen Phase 1 project have proven the economic viability of tidal stream generation, SIMEC Atlantis claims.

“I would particularly like to thank the MeyGen funders, Scottish Enterprise and Crown Estate Scotland, for their continued unwavering support and patience, as well as the junior lenders, Engie and Morgan Stanley,” Black added.

As for the MeyGen’s Phase 2, SIMEC Atlantis secured a total of 22MW over four contracts for difference (CfDs) from the UK government in the fifth allocation round (AR5) for the MeyGen site earlier in September.

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This is in addition to the 28MW CfD the company secured in the AR4 allocation round for MeyGen in July 2022, providing an aggregate of 50MW of CfDs for the next phase of the MeyGen project.

The higher strike price of the CfDs awarded under AR5 compared with AR4, coupled with the economies of scale afforded by the increase in the size of the project to 50MW, provide a significant boost to the project economics, according to the company.

Work continues apace on the development of the MeyGen Phase 2 project, with financial close targeted for the second quarter of 2025 and operation of the 50MW array starting in 2027. 

“Whilst MeyGen Phase 2 remains a hugely challenging project, securing the revenue for 50MW of capacity is a huge step forwards and we will now turn our attention to securing tidal turbine supply for 3MW turbines, consenting variations to enable the larger turbines and financing for the project,” Black concluded.

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