Renewable Energy Generation

Unusually low wind speeds in recent months has held back progress at Renewable Energy (WIND) and cost in excess of £1m in lost profits.

The AIM quoted green energy specialist has almost doubled its operating capacity, and is the leading developer of small onshore wind farms in the UK. With plenty of scope to expand it is still on course to invest £100m by the end of next year - a realistic goal given the 100 projects, worth £1bn, that are currently under consideration. Indeed, recent figures confirm onshore wind is the largest source of 'clean' electricity, generating 30% of the UK's total renewable electricity.

Renewable has 41MW of capacity across 10 operational wind farms, with a further three sites awaiting construction. The group also completed its flagship Goonhilly Downs farm in Cornwall, trebling output as a result. Of more significance is the signing of Power Purchase agreements for all its current capacity, which spans one to three years.

In the six months to 31 December sales increased 22.8% to £4.3m, but the poor weather resulted in a £600,000 loss (2009: £400,000 profit).

The REG Bio-Power arm was hit by the high price of used cooking oil, but it has recently secured two contracts with National Grid to provide Short Term Operating Reserve (STOR) carbon neutral services. Though still loss making this should help push the operation close to cash break-even.

With net cash of £7.6m and available project financing Renewable should be self funding. The decision to reject a 67.7p bid in January was on the basis that it 'significantly undervalued' the business. A full-year loss of £1.8m is anticipated, rising to a £300,000 profit in 2012. At current levels, the shares are a hold.