AGM Part 4 of bloody 4

Do CCE outsource projects?
Previously EMC did the work internally but the number of workers varies. We have now partnered with Lendlease and they can provide many thousands of contractors when we need them. We focus on the Core design side.
If Synergy are building Renewable Energy power stations to attain 20% RE by 2020 who will we sell the power to from Northam?
We will sell:

1. Power,
2. Renewable Energy Certificates, what we call LGC’s &
3. it will sell capacity into the market

The WA market is unique, it is different to the rest of the National Electricity Market, it is what’s called a capacity market. Every single power station on the market can sell, monetise the fact that it has energy available to sell to the market. It’s another revenue stream we can sell.

The government can change their mind though and cap the size of the new wind farm Synergy is building. The government may say to Synergy that they can only build a certain size wind farm and then Synergy may be forced to go to the market. Even if this doesn’t happen we are selling our energy on the spot market which means every 30 mins you get a payment for your energy. There is a daily spot market just like iron ore that can be sold under a long term contract or sold on the spot market.

The difference is that the spot market price is about twice what Synergy will pay for power. Finance is the key in this project. Once it is up and running the construction risk is taken out of the equation and the banks look upon you more favourably and thus cheaper interest rates apply. It’s all about risk.

All of a sudden you can sell the project or refinance or operate the only solar farm not on an offtake agreement in WA which is a very valuable asset. If there is someone out there willing to buy Renewable energy in the market which there always is, it is an incredibly valuable asset.

Capacity credit market is a process that is run periodically by the market operator to get another level of complexity in the RE market. This is another reason why we are holding off going into construction at the moment because it’s a formal process that’s just dragged on and on and on. We will get the results in the next few weeks. We are very confident we will get our capacity allocation but it’s a process that you go through, so standby for that. That is the third revenue stream.

How many other companies are you in competition with?
If we are BOO & developing our own solar farm there is no competition. As long as we are smart and we get a good site. In a tender process through DoD or CSIRO or Horizon power then you are up against competition it’s just depends on the projects.
What we don’t want to be doing is competing in projects where there are a thousand similar companies competing. We want to be going into tenders where there are only a handful of companies that can do the work say 1 in 3 or 4.
We bid on some Island work recently - An example was run on Cook Islands where we were underbid by companies coming in under the cost of the actual materials. What you see often in these projects is that they don’t get built.

The Cook island bid was awarded but now they have had to re-tender the whole process again because the successful bidder underbid and they can’t do the project. This is now turning out to be a 2 year bid process. The sales team is sharply focussed on which projects they bid on.

Where does the power go to from Northam?
The power goes into the Western Power Grid there is a 22KV line that runs along the front of the property and we tap into that grid. One of the barriers in building these projects is that you have to deal with Western Power and they can best your best friend or your worst enemy. In their view of your project, if you put your project in the wrong place where they view they don’t have any capacity in that line they will not let you connect, so you have to do a lot of work before you even start the process before you connect to the grid.

Western Power don’t just advertise where the good spots are and that is why CCE have built a very good relationship with Western Power. You need to go into a very good dialogue with Western Power because if we don’t build this good rapport we are a pain for them and they won’t talk to us.

Our project positioning is key into where we tap into their system. There is an augmentation process that is required which Western Power own that space so you apply to Western Power to connect and they tell you yes you can connect and they also tell you how much work is required and you pay that bill.

This work is contracted out by Western Power and is a long painful process with multiple stages of applications which we have been through all that. We have signed the contracts now and we are now ready to start.

At last years AGM there was talk about what was happening all over the world regrading projects, were are we with these projects
Europeans are the leaders in RE full stop. They are years ahead of the rest of the world but politically are having some problems. The Europeans want to lead the world in Ocean energy production and continue to invest in offshore RE generation. Europe remains very important & we need to continue to engage with European countries which have vacant spots in the offshore farms. They have consistent policy that promotes wave energy and that is clear to us. We continue to engage with European nations for wave farms such as:

Spain that has Biomet a site that is empty
Cornwall is a purpose built facility that is empty
EMEC Scotland has only one customer
EDF in France also has no customers at its site and knows we are the best at wave Energy without doubt

They have invested this huge amount of capital in wave energy and there is a real gap in the market for the technology that is why we were able to go to Cornwall and get a site& get a grant to deploy but we got a better offer in WA to deploy CETO 6 at Albany. But by no means have we walked away from Europe or even Wavehub.

Quite literally last night before the AGM MO talked to the CEO of Wavehub who called to say she was really disappointed we are deploying at Albany and not Wavehub. MO told her that they had received a better offer from the WA government and that tipped the scales to deploy at Albany.

Wavehub see CETO as being the best chance to deploy wave energy technology but MO wants Wavehub to come back with a better offer as CCE would love to deploy at Wavehub.

CCE’s focus is definitely on Albany now, but many companies around the world want CETO technology.

MO says the quality of the board members is outstanding and having this expertise on the board is seen in the industry as exceptional in moving the company forward across the globe. The new members of the board are a definite coupe for the company.

Presentations should happen again very soon in the new year around the country.

cheers
bugger me... I'm tired