A major Scottish tidal energy project is expected to make long-awaited progress after its developer secured additional funds.
Simec Atlantis Energy, operator of the MeyGen scheme, announced on Monday morning that it had received a £4 million “development premium” from Uskmouth Energy Storage (UES).
The premium – paid in order to secure the lease for a project site – was part of the arrangement that paves the way for UES to deliver a 230 megawatt (MW) battery energy storage system (BESS) at the Welsh site.
Receipt of the cash “marks another major milestone in the delivery of one of the largest BESS projects in the UK”, as well as the “unlocking of value” for Simec Atlantis (LON: SAE) and its shareholders, the firm said.
Analysts believe it will also give fresh impetus to the MeyGen tidal array, located in the Pentland Firth off the north coast of Scotland.
The first phase of the project comprises four 1.5 MW turbines, with plans to build in additional capacity in subsequent stages.
Simec aims to take financial close on the second part of MeyGen next year, after the project secured price support for 28 MW of capacity as part of the most recent Contract for Difference round.
Operations at phase 2 are set to begin in 2027.
Progress at MeyGen has been slow though, with Simec Atlantis having to contend with numerous other challenges, including financial woes and a struggle for control of the firm.
Max Campbell, a research analyst at financial services firm Longspur Capital, says this latest injection of cash will give the troubled firm a much needed “boost”.
He said: “SIMEC Atlantis (SAE) has announced that it has received the £4.0m development premium, marking financial close at its Uskmouth battery energy storage system (BESS), one of the largest BESS projects in the UK (230MW/460MWh). Following financial close, SAE is now expected to receive c. £950k annually over the 30 years covered by the agreement. This will provide a needed cash boost for SAE and allow for continued work at its MeyGen Tidal Project.”
In its update on Monday Simec Atlantis revealed it is also “making good progress with finalising its audit” and is on track to publish its 2022 annual report later this month.
The firm revealed last month that it would not meet an end of June publication deadline and requested a suspension of share trading until it can do so.