Greenko Group plc GKO Half Year Trading Update

  Greenko Group plc (GKO) - Half Year Trading Update

RNS Number : 8477O
Greenko Group plc
17 October 2012












17 October 2012



                              Greenko Group plc

                         ("Greenko" or "the Company")

                                      

                           Half Year Trading Update



Greenko, the Indian developer,  owner and operator  of clean energy  projects, 
announces its trading update for the six months ended 30 September 2012.



The Company had a successful first half and remains on track for  management's 
expectation of 30%  full-year revenue  growth, as well  as the  delivery of  a 
1,000 MW operating portfolio in 2015. The advantages of clean power in  India 
continued to improve over  the period, as wind  and hydro power achieved  grid 
parity with coal-fired generation, interest rates fell 0.5% and July's massive
blackouts simultaneously exposed the scale of the country's power deficit  and 
deprived one  tenth  of the  world's  population of  electricity.  Subsequent 
government initiatives to strengthen and extend the transmission grid, improve
the credit quality of State Electricity Boards and renew the Generation  Based 
Incentive (GBI)  have  further  reinforced the  inherent  value  of  Greenko's 
portfolio.



Operating Projects

Hydropower is running well and the monsoon's late start was largely offset  by 
its extension  into October.  The  recently acquired  32 MW  of  run-of-river 
projects  in  Himachal   Pradesh  are  performing   well  and  have   exceeded 
management's  initial  expectations.  Biomass   is  operating  in-line   with 
expectations and, although it  remains below the  long-term target plant  load 
factor (PLF), four of the six plants benefitted from modest increases in their
power tariffs.  LVS,  the Company's  gas  plant, is  operating  in-line  with 
expectations.



Over the  period  merchant power  prices  were unexpectedly  robust,  and  the 
Company sold Renewable Energy Certificates (RECs) at approximately €25/MWh, as
well as approximately half of the 346,300 carbon credits (CERs) on-hand at the
year end. The remaining CER inventory should be sold this year. India's well
publicised grid  failure in  July  had no  material  impact on  the  Company's 
operating projects, as most of the problems occurred at the eastern end of the
Northern Grid, away from Greenko's generating assets.



Projects in construction

Greenko's  focussed  development  strategy  has   over  500  MW  of   projects 
in-construction. These remain on  schedule and include  three 100 MW  utility 
scale wind power projects,  plus six hydro projects  totalling almost 200  MW. 
In addition to this,  work should soon start  on Greenko's fourth wind  power 
cluster in Rajasthan. The significant projects under construction are:



· Ratnagiri Wind  Farm (100 MW  - Maharashtra): the  sub-station for  the 
grid connection was  completed with  120 MW  of capacity.  Two-thirds of  the 
Phase-1 (65.6 MW)  turbines are  completing pre-commissioning  trials and  the 
first power was exported during  the monsoon. The remaining Phase-1  turbines 
are expected to  begin commissioning  shortly. Phase-2 (35.2  MW) remains  on 
schedule, with construction expected to start at the end of 2012, bringing the
project to a capacity of 100.8 MW in late 2013. The project should deliver one
of the best PLFs in the State and it has an attractive 15-year power  purchase 
agreement (PPA) with a tariff of Rs5.69/kWh, plus the GBI once it is  renewed. 




· Basvanbagewadi Wind Farm  (100 MW - Karnataka):  site work is  underway 
and the sub-station  for the  grid connection is  nearing completion.  Phase-1 
(51.2 MW) turbine components are due to start arriving on site this month  and 
the project should begin commissioning in the current financial year. Phase-2
(49.6 MW) remains on track to start site preparation at the end of 2012,  with 
commissioning in late 2013. The project should achieve an annualised 30+%  PLF 
using the GE XLE technology.



· Balavenkatpuram Wind Farm(100 MW - Andhra Pradesh): site access work is
underway and  all  key permits  are  in  place, along  with  the  construction 
contracts. Phase-1  (51.2  MW)  turbine components  are  expected  to  begin 
arriving on site around the end of 2012, with commissioning targeted to  start 
in mid-2013. Phase-2 (49.6 MW) remains on track for the start of construction
in late 2013. The project will use the GE XLE technology.



· Dikchu Hydropower (96 MW - Sikkim): the project is progressing well and
is now one  third complete. It  remains on  time and on  budget, despite  the 
significant challenges  caused  by  this year's  flooding  and  landslides  in 
Sikkim. The underground power  house excavation is  completed, the head  race 
and pressure shaft  tunnelling is  on schedule, and  project commissioning  is 
still planned for late 2014.



· Small Hydropower (92.6 MW - Karnataka and Himachal Pradesh): five small
projects are under construction  and on schedule  for commissioning in  2014. 
Key permits  and  contracts  are  in place,  site  access  work  is  underway, 
tunnelling at Paudital Lassa (24 MW)  has started and construction of  AMR-2's 
(10 MW) headrace and power house is scheduled to begin this month.



Projects in development

In addition to  the projects  already mentioned, Greenko  has over  900 MW  of 
projects  in  its  pipeline  that   are  fully  permitted  and  under   active 
development. The Company expects to  start construction on approximately  400 
MW of these projects during the next financial year.



The 49.5 MW  Devgarh wind project  in Rajasthan was  promoted into the  active 
development portfolio and should  be commissioned in  2013. Greenko has  been 
evaluating several projects  in Rajasthan  over the  last four  years and  the 
recent significant increase  in power tariff  to Rs5.44/kWh brought  Devgarh's 
development timeline forward. Anticipated annual generation is  approximately 
107 GWh  and  the  project  is  expected to  provide  an  attractive  IRR  for 
shareholders. Greenko's other wind project in Rajasthan (Jaisalmer - 100  MW) 
remains on track for construction to start in late-2013.



Greenko's generating portfolio strategy is designed around asset clusters that
offer local  economies of  scale,  as well  as diversification  by  geography, 
off-take and  technology. In  this regard,  while GE's  wind turbines  should 
provide the majority of Greenko's new  wind capacity over the next few  years, 
the Company  considers it  prudent  to broaden  and diversify  its  technology 
base. As such,  the Devgarh project  is likely  to use the  Vensys-82 1.5  MW 
gearless turbine, made by ReGen  Powertech, which Greenko believes provides  a 
capable alternative  for the  Indian market,  as well  as giving  the  Company 
diversification at an attractive price.



In hydro, Greenko continues  a dual strategy  of actively assessing  potential 
acquisitions and new  concession tenders  that meet  its risk-adjusted  return 
threshold. As always, management remains  highly selective and takes  forward 
only the most attractive opportunities that complement the existing portfolio.



Corporate

Greenko strengthened its Board in August, with the appointment of Keith Henry,
whose extensive experience  in the  global power and  energy sectors  includes 
running large private  and publicly listed  companies that successfully  built 
major assets in developed and emerging  markets. During his career, Keith  was 
Chief Executive of National Power plc, a FTSE100 company, International Power,
Brown  &  Root  Ltd,  and  Kvaerner  Engineering  &  Construction  Ltd.  This 
significant appointment  reinforces the  Company's commitment  to the  highest 
standards  of  corporate  governance,  as  well  as  enhancing  its   existing 
capability as the roll-out  of Greenko's utility  scale clean energy  projects 
accelerates across India.



Outlook

Greenko  remains  on  track  to  more  than  double  its  current  operational 
generating capacity by the end of 2013, as the first phase of construction  is 
substantially completed at each of its four main wind clusters. These  should 
take the total operating wind capacity to over 250 MW by the end of 2013. The
associated equipment orders  have been  placed for all  these projects,  which 
also have  the  necessary equity  and  debt  funding in  place.  The  Company 
therefore remains comfortably on track for its 2015 operating target of  1,000 
MW.



Anil Chalamalasetty, CEO and MD  of Greenko, said: "We  had a good first  half 
and are now looking  forward to seeing  turbines up and  running at our  first 
three 100 MW wind farms. Progress in hydro has been particularly good and  we 
continue to see exciting opportunities  to increase shareholder returns.  The 
Devgarh wind project is also a fine  addition to our portfolio of projects  in 
active development.  Having  evaluated ReGen's  turbines  over the  last  two 
years, Devgarh provides  an appropriate  opportunity for us  to diversify  our 
technology suppliers and launch our fourth major wind cluster in India."



                                    -Ends-



For further information please visit www.greenkogroup.com or call:



Greenko Group plc

Anil  Chalamalasetty 
+44 (0)20 7920 3150

Mahesh Kolli

Vasudeva Rao Kaipa

Mark Thompson



Arden Partners plc

Richard Day / Adrian  Trimmings  +44  (0)20 
7614 5917



Tavistock Communications

Matt Ridsdale  / Mike  Bartlett   +44 
(0)20 7920 3150



About Greenko

Greenko is a mainstream participant in the growing Indian energy industry  and 
a market leading  owner and operator  of clean energy  projects in India.  The 
Group is building a de-risked portfolio  of wind, hydropower, natural gas  and 
biomass assets within India and intends to increase the installed capacity  it 
operates by winning concessions  to develop new greenfield  assets as well  as 
making selective acquisitions which enhance shareholder value.



Greenko's portfolio  is carefully  planned  and managed  to ensure  it  offers 
investors diversification geographically and spreads risks across a number  of 
projects which utilise varied  environmental technologies. The Company's  goal 
is to reach 1 GW of operational capacity in 2015.



With a core belief in  sustainability both operationally and  environmentally, 
Greenko endeavours to be a responsible  business playing an important role  in 
the community beyond its  role in the power  generation industry. The  Company 
maintains  a  continuous  involvement  in  localised  projects  and  community 
programmes which  centre on  education,  health and  wellbeing,  environmental 
stewardship and improving rural infrastructure.



Greenko Group plc  was admitted to  trading on  the AIM market  of the  London 
Stock Exchange (LSE: GKO) in November 2007.



                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


TSTUNRRRUVARAUA -0- Oct/17/2012 06:00 GMT
 
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