Renewable Energy Holdings CEO Mike Proffitt on his supercharged expansion plans
In a blog created by carmaker Lexus to promote its hybrid models and launch a ‘green’ debate among drivers, anti-poverty campaigner and blog contributor Bob Geldof veers from the four-wheel discussion to dismiss renewable energy initiatives, such as wind and wave power as “Mickey Mouse”, adding that “to really help the planet, we have to go nuclear, fast.
Mike Proffit, the CEO of AIM-listed Renewable Energy Holdings (REH), suggests that it’s Geldof who’s full of hot air. REH was formed when Proffitt saw a “real economic opportunity” for proven renewable energy technology during the ratification of the Kyoto Protocol, an international agreement setting targets for industrialised countries to cut greenhouse gas emissions. He explains: “In Autumn 2004, I saw the convergence of three powerful forces: firstly, the ratification of the Kyoto Protocol; secondly, signatory countries putting significant emphasis on subsidies for renewable energy technologies; and thirdly, rising fossil fuel prices which I took to be sustainable.”
Political, social and environmental issues are driving demand for ‘green’ energy. Research by M&A’s sister publication Growth Company Investor magazine and law firm Hunton & Williams indicates that 13 renewable energy companies joined AIM in 2007, raising £350 million – 6.4 per cent of the total funds raised on the junior market last year.
Proffitt floated REH on AIM in February 2005, raising £10 million and attaining an initial valuation of £14.5 million. Since then REH has been back to the market, raising a total of £15 million.
Although REH hasn’t posted a profit at the pre-tax line, revenues are increasing rapidly and the company aims to become a substantial business by 2009 with the development of a wind farm in
Proffitt is a veteran in the energy industry, having spent more than 20 years building “mini” power stations for hotel groups, such as Canadian Pacific and Wyndham followed by a stint with the Manx Electricity Authority. With REH, his focus is entirely on the future.
The company has two wind farms in
While concentrating on wind and biogas, Proffitt decided to spread REH’s interests on a more speculative venture. One of the investors in the company is Alan Burns, an inventor who has devised a wave power technology called CETO.
“CETO was in Burns’ stable of inventions,” explains Proffitt. We thought we would add this to our wind and landfill gas technologies.”
In layman’s terms, the attraction of CETO lies in its simplicity. Unlike other wave technologies, the system doesn’t generate electricity at sea, but pumps salt water ashore to create an on-shore waterfall. “We simply put a waterwheel at the end of that waterfall,” claims Proffitt
REH has hooked up with Carnegie, a developer of clean energy technologies, and EDF Energy to bring CETO to market. Proffitt says: “We believe the EDF Energy name opens doors more readily than our own name. CETO is our property, but having a working partner like EDF will help us to commercialise it more rapidly.”
Back in 2005 when the initial £10 million was raised, REH became engaged in a whirlwind of activity with the construction of a wind farm in
Since then the wind business has grown with the acquisition of a second wind farm in
REH’s wind developments have been de-risked through feed-in electricity tariffs – fixed and guaranteed by the German Government for 20 years – that encourage the use of new energy technologies.
Proffitt says: “In terms of business application,
However, REH’s wind farms haven’t been without their difficulties. In 2006, technical problems causing the wind turbines to cut out and poor wind conditions caused REH to take a £1.5 million hit. Since that “terrible year”, the turbines have been rectified and are exceeding budgeted output.
Proffitt is looking further a field, to
“We want to spread our weather risk, so our wind activities are currently focused on
A flexible credit line means REH is ready to finance other opportunities for diversification into energy technologies with zero carbon emissions. Proffitt explains: “Run-of-river power and woodchip gasification are areas that we would like to get involved in. If a project meets our investment criteria and Standard Chartered’s lending criteria, we have the ability to take it on.”
Unlike Geldof, Proffitt doesn’t believe future energy supply will be entirely nuclear. Neither does he perceive the government’s push for a new generation of nuclear power stations as a risk to his business.
“I believe the medium-term future of energy usage will be a combination of nuclear and renewable sources. However, the long-term energy supply will be clean-coal technology and renewables.”
So take that Bob Geldof.