With interests in German wind, Welsh landfill and Australian waves, green technology investor REH offers a diverse exposure to the renewable energy sector.

However, a less gusty year than usual in Germany failed to waft recent results as high as expected, only cutting pre-tax losses by 29% to �1.5m for the six months to December (REH’s new year-end) on flat revenues of �1.5m. A wind hedge arranged with a German bank came to naught due to a mistake and REH walked away with no costs but no compensation either.

Yet things are looking up as a healthy �92m credit facility has been agreed with Standard Chartered bank to expand the 32.5 megawatt (MW) Teutonic wind farm. Chief executive Mike Proffitt said the first drawing-down from the bank will be to refinance the farm, which ‘will liberate �3m of equity’. An additional 8MW is to be added in July and Proffitt wants to get up to 500MW of wind in the next five years.

Then, Proffitt explained, the company aims to establish a Polish wind farm and is ‘working on a large deal in the UK’. A possible project in Hungary has been shelved after ‘politics’ got in the way. The Welsh gas scheme has doubled flow to its 1MW capacity and will be able to sell at the 73% higher market price in September.

REH’s Ceto wave project, named after the Greek goddess of sea beasts, is now ‘oven-ready for commercialism’. Proffitt suggested it is the only wave technology with the capacity to be profitable without incentives in ordinary market conditions. ‘We’ve tested the prototype in Australia and it has the same capital costs as a wind turbine but produces three times the output,’ he said. Management is pondering the method of bringing the technology to market this coming year – ‘it may be a joint venture, it may be with debt’.

As the company’s cash flow now covers its central corporate expenses, Proffitt believes REH can now just ‘expand income by expanding our assets.’ House broker Panmure Gordon’s target price of 65p doesn’t look too demanding and the volatile shares, blown down from their 50p float, could be worth a flutter.

Renewable Energy Holdings	AIM	�20.37m	45.00p	0.00p
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