Energy Developments Limited

 

www.energydevelopments.com.au
 

DUET successfully acquired 100% of the EDL business on 22 October 2015.

EDL is a Brisbane-based owner and operator of remote and clean energy power generation projects located in Australia, Europe and the United States. EDL’s operations comprise four regional business units:
  • Australian Remote Energy;
  • Australian Clean Energy;
  • European Clean Energy; and
  • US Clean Energy.
Within the Australian Remote Energy business unit, EDL provides electricity to remote towns, communities and mines that are not connected to power grid infrastructure, via power plants that are predominately fuelled by natural gas with some diesel generation.

Within its Clean Energy business, EDL generates power from methane gas extracted from underground metallurgical coal mines (referred to as waste coal mine gas or WCMG) and methane gas extracted from landfills (referred to as landfill gas or LFG).
 
EDL does not own any coal mines or landfills, and enters into gas supply and tenure agreements on commercial terms with the relevant counterparties.
 
All of the Remote Energy projects operated by EDL are located in Australia, while Clean Energy comprises projects located in Australia (WCMG and LFG), Europe (LFG) and the US (LFG).
 
EDL operates predominantly under a build, own and operate model.
 

Snapshot
Ownership interest 100%
Revenue ($ million) 443
EBITDA ($ million) 233

EDL's latest results are contained in the latest Management Information Report

 

Reliable Revenue Streams

For its Remote Energy projects, revenues are earned under long-term capacity-charge based contracts with blue chip / investment grade counterparties.

For its Clean Energy projects, generation is sold on the grid or to retailers under Power Purchase
Agreements (PPAs) or Contracts for Difference (CFDs).

For its Clean Energy projects, EDL has secured exclusive access to the WCMG and LFG under long dated gas supply agreements.
 
Revenue is primarily a function of installed capacity and power generated and comprises:
  • the sale of electricity to counterparties (referred to as black revenue) – counterparties typically comprise blue chip multinational mining companies, State-owned bodies, and private utility providers; and
  • the sale of environmental credits (referred to as green revenue).
The Australian Remote Energy business generates black revenue, while the Australian, European and US Clean Energy businesses generate a combination of black and green revenue.

Green Revenue

EDL generates green revenue from the sale of environmental credits through various renewable energy schemes in the countries in which it operates. A brief overview of these schemes by geography is summarised as follows:
  • Australia: green revenue in Australia comprises the sale of Large-scale Generation Certificates (LGCs) created under the Large-scale Renewable Energy Target (LRET) scheme and the sale of Australian Carbon Credit Units (ACCUs) to the Emissions Reduction Fund (ERF).
  • Europe (United Kingdom): green revenue in the United Kingdom comprises a combination of revenue generated under the Non-Fossil Fuel Obligation (NFFO) scheme which pays a contracted price for power generation and the sale of Renewable Obligation Certificates (ROCs) under the Renewable Obligation (RO) scheme.
  • US: the US does not currently have a Federal renewable energy or carbon abatement policy. Instead certain US states operate various renewable energy schemes which are broadly similar to the LRET scheme in Australia. Under these schemes, renewable energy generators are awarded Renewable Energy Certificates (RECs) for each MWh of electricity generated from any eligible renewable energy source. RECs can be sold or traded.

Growth Initiatives

Increase in installed capacity

EDL has expanded its installed capacity in recent years via both organic growth and bespoke acquisitions. Installed capacity has increased from 597MW in June 2011 to 903MW at 30 June 2016, a compound annual growth rate of 8.6%. EDL is well positioned to continue this growth across all its business segments including the renewable energy sector. 

Synergies with DBP Development Group and United Energy 

EDL and DDG have already collaborated on a number of joint business development proposals, offering customers integrated gas pipeline and generation solutions.

The rollout of these combined product offerings has the potential to be fairly significant for remote mines, particularly in the Pilbara, who are looking to displace current diesel-fueled power.

In addition, United Energy has provided technical assistance to EDL in high voltage cabling and grid connection design. In future, there is potential for United Energy to support EDL as it seeks to acquire or build private distribution networks, combined with distributed generation.

Cullerin Range Wind Farm acquisition

On 13 July 2016, EDL completed the acquisition of the 30MW Cullerin Range Wind Farm (Cullerin). Cullerin, which has been operational since 2009, enjoys one of the highest historical capacity factors for an Australian windfarm, at around 38%.

The Cullerin acquisition leverages EDL’s experience and capability in managing a distributed generation portfolio which is diversified across a range of fuel sources. It is also an excellent strategic fit for EDL and complements the business’ existing portfolio which includes 160MW of distributed generation located in NSW and the ACT.

Additional opportunity in the renewable energy sector

EDL is looking to build on its acquisition of the Cullerin wind farm to establish a portfolio of mid-scale grid connected renewable generation sites.

This sector must see significant growth over the next 3-5 years if the renewable energy target (RET) of 33,000 Gigawatt-Hours is to be met by 2020.

EDL is well positioned to be successful in this sector as it is able to manage the operation of these mid-scale generation sites as part of its global generation portfolio totalling over 900MW.

EDL is able to manage the electricity sales and green credits generated from additional renewable sites within its existing contracting portfolio, while at the same time having the advantage of being able to fund these opportunities with more flexible corporate level debt.

A longer term opportunity for EDL is to utilise and up-scale the hybrid solution it is developing at Coober Pedy to integrate wind, solar and storage technologies to replace diesel generation for remote towns, mines and industrial sites.

Operational overview

 
Year to 30 June 2016 Year to 30 June 2015
Installed Capacity (MW)
Australian - Remote 355 381
Australian - Clean 363 342
US - Clean 102 94
UK and Greece - Clean 83 83
Total 903 900
 
Generation (GWh)
Australian - Remote 1,222 1,242
Australian - Clean 1,763 1,756
US - Clean 540 552
UK and Greece - Clean 495 529
Total 4,020 4,080
 
Occupational health and safety
Lost Time Injury Frequency Rates 3.0 1.1
Total Recoverable Injury Frequency Rates 5.1 3.3
Environmental
Scope 1 CO2-e emissions n/a n/a

Financial summary

$ million 
Year to 30 June 2016 Year to 30 June 2015
Generation revenue 426 428
Total revenue 443 449
EBITDA 233 218

Credit ratings

Rating levels as at 1 September 2016:

S&P BBB- (stable)
Moody’s Not rated