reh article

Below is a good article on REH and CETO from the UK point of view. Most of it you've heard before but there's maybe one or two nuggets in there for some. The journo could have done more research on the $5mill aussie grant though!

It's interesting that 70% of REH is held by institutions as compared to CNM's retail shareholder base. Imagine where CNM's share price will be when the Aussie institutions jump on board - you'd have to suspect there's more than a few funds just waiting for the final details of the emmissions trading scheme to be mapped out. Once it is delivered - giddy up.

Also, is it just me that thinks REH and CNM would together make a great global company with complimentary strategies and skills? (just a thought, but lets get a CETO site up and going first eh!).

One more point on the article - i have to disagree that CETO is at a " relatively early stage" - if a commercial plant could be operational within 2 years as suggested in the article, i'd say it's more like the "final stages" of development. But that's just symantics.


Strategic Partnerships Underscore The Potential Of Renewable Energy Holdings’ Wave Technology

By Rue Swabey

Momentum is building at Aim-traded, Isle of Man-based Renewable Energy Holdings (REH). The company’s portfolio includes proven and cash generative wind and bio energy technologies as well as a proprietary wave power technology called CETO that is still relatively early stage. But not that early: in the last twelve months REH has agreed two strategic partnerships to develop and commercialise its CETO wave power technology.

Last year Australia-based Carnegie Corporation, a developer of clean energy technologies, purchased the rights to use CETO technology in the southern hemisphere for £4.7 million plus a license fee and an annual royalty of 2.5 per cent of net earnings. And in January, REH announced that EDF Energies Nouvelles (EDF) had agreed to pay £3 million for a collaboration agreement that gives it the right to joint venture the commercial roll-out of CETO in the northern hemisphere. Each joint venture will pay a three per cent license fee to REH. Carnegie Corporation is very familiar with CETO as its chairman, Alan Burns, was one of its inventors. And last October the Australian government awarded Carnegie a grant of A$5 million to assist in developing CETO. The £3 million from EDF will come through in instalments as certain milestones are reached, including the instalment and connection of CETO II units and the manufacture and installation of a CETO III unit.

These deals have effectively de-risked CETO for REH’s shareholders at the same time as allowing the company to retain 100 per cent ownership of the intellectual property. CETO is a seabed pump which works differently from other wave power prototypes. On the seabed CETO is safe from storms, and only requires a small pipe to carry high pressure seawater onshore, allowing the generation of electricity to be undertaken on land and without the extra cost of protection and transmission engineering. CETO is also able to produce fresh water by reverse osmosis. Its ability to desalinate water has been somewhat overlooked given the current focus on green energy but REH is in contact with customers interested in the desalination aspect from Australia, Bermuda and the Bahamas.

Pre-commercial CETO II testing is currently underway in south-west Australia. There are plans for CETO III demonstration plants in Ireland and France, and if all goes well, a commercial plant could be in operation by the beginning of 2010. In May, REH applied for an investigative and monitoring permit for its CETO technology in the coastal region of British Columbia, Canada. The site is an isolated region that is developing an eco-tourism resort. The local community is on board and REH’s chief operations officer, Dr Jannie Retief, is at pains to stress the importance of having this support. The project looks promising, given good tidal conditions and a favourable regulatory framework.

REH is in a fairly unique position amongst its peer group as it has other revenue-generating assets. Many wave power companies have no other income and are burning cash at a rapid rate. But REH’s bread-and-butter assets are progressing well. Its German wind farm capacity has grown to 42.5MW and there are plans to develop more wind assets in Europe. For this purpose REH recently increased its project finance facility with Standard Chartered Bank to €177 from €135 million. REH also has a 30MW wind site under development in Poland and is in advanced stage negotiations on a 69MW site in Wales. And last November REH signed a new power purchase agreement for its Welsh methane gas project dramatically improving the earnings rate to a weighted average of £104.61 per megawatt hour from the previous below market rate of £52.10.

These factors contributed to a threefold increase in revenues in 2007 to £4.6 million up from £1.5 million in the previous year. However the top line also includes £750,000 in extraordinary revenue from the Carnegie deal. The net loss narrowed slightly to £1.45 million from £1.54 million in 2006. As of December 2007 REH had £7.1 million cash on the balance sheet having raised £8 million last August. This is a comfortable cash cushion to have and combined with the strategic agreements in place and the increase in the Standard Chartered facility, means that funding is not a pressing issue for REH.

House broker Panmure Gordan has a buy rating on REH and a target price of 80p for 60 per cent upside from the current 50p. In spite of the recent positive newsflow the share price has hovered between 40p and 60p for the last 12 months. Broker coverage is scare and trading is thin as more than 70 per cent of REH’s shares are held by institutions which seem happy to stay put. But successful pre-commercial trials of CETO would take the share price to a new level. And don’t forget that CETO can desalinate water, and water is likely to be the next commodity to take off.


I like the last sentence too