Alkane enjoys another year of ouput growth in electricity

RENEWABLES firm Alkane Energy reported its sixth successive year of electricity output growth in 2010, up 26 per cent to 120 GWh.

The alternative energy company, which operates power generation plants using coal mine methane from abandoned coal mines, said three new sites, including one at Newmarket near Leeds opened on time and on budget, bringing the total number of plants to 12.

But the group, which operates on the former Wheldale Colliery near Castleford, reported a 43 per cent decrease in annual pre-tax profits to £1.4m due to significantly lower selling prices and a 50 per cent increase in depreciation.

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Alkane said that with tight cost controls in place and electricity prices expected to rise over the coming years, it is well placed to make further progress in 2011.

Alkane’s chief executive Neil O’Brien said electricity prices are ahead for 2011 and it has contracted two thirds of its expected 2011 output at an average price of £48 per MWh.

This follows a 21 per cent drop in average selling prices to £44 per MWh in 2010, down from £56 per MWh in 2009.

“The current prices for 2012 is £52/£53 per MWh and hopefully we’ll be back up to £56 per MWh in a couple of years,” he said.

“We are looking forward to a very successful 2011.”

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Alkane hopes to open three more coal mine methane sites this year. It has drilled at a site near Sheffield and is currently assessing the methane content.

The company is looking at ways to expand and is researching onshore gas opportunities. These are small pockets of gas that big companies would consider too small.

“We could pick up two or three licences in Yorkshire,” said Mr O’Brien, although he declined to say where.

Revenues in the year to December 31 rose by five per cent to £6.6m.