Pressure cashes in on green energy demand

Demand for biogas – a form of renewable energy derived from organic waste – is expected to soar as the UK faces up to the challenges caused by climate change.

Biogas can replace firewood or fossil fuels, which are becoming more expensive as supply struggles to keep up with demand.

Sheffield-based Pressure Technologies yesterday revealed that its Chesterfield BioGas (CBG) division has secured two orders to supply biogas upgraders and equipment, with a combined sales value of £4.6m.

The announcement was welcomed by a leading analyst at Charles Stanley Securities, and it followed an encouraging interim results performance from Pressure Technologies, which was published in June.

Both projects announced yesterday use the ‘Totara’ biogas upgrader, which is capable of processing up to 2,000 cubic metres of biogas per hour.

The Totara upgrader will clean the raw biogas, produced by the anaerobic digestion of waste, to ensure it is more than 98 per cent biomethane.

This means it will match the criteria required for natural gas, which is piped into households and commercial premises.

The CBG upgrader’s ‘Greenlane’ scrubbing method uses recycled water.

CBG is the only technology partner in the UK for the Greenlane system. More than 70 sites are operating around the world; and 27 of these employ the Totara model.

CBG will install and commission the upgraders, which have scheduled handover dates for the second half of the group’s 2014 financial year.

Once the sites are operational, CBG will generate extra revenue from a long-term contract to monitor the upgrader’s performance.

Stephen McCulloch, the managing director of CBG, said yesterday: “These orders mark a step change in the market for biogas upgrading, which is moving from small scale, proof of concept projects to large scale plants, which deliver commercial returns to our customers.”

Mr McCulloch said he couldn’t reveal who had placed the order for reasons of commercial confidentiality, but he hoped to be able to disclose more information soon.

He predicted CBG would make “a lot more announcements” before the end of the year.

John Hayward, Pressure Technologies chief executive, said: “I am very pleased for the team at Chesterfield BioGas.

“Their dedication and hard work over the last five years is finally reaping rewards.

“These order wins, together with a very promising pipeline of potential follow-on orders, give grounds for considerable optimism for the biomethane to grid market in the UK and the outlook for Chesterfield BioGas.”

CBG was founded in November 2008, following the signing of an agreement with Greenlane Biogas, which gives Pressure Technologies exclusive rights to market and manufacture Greenlane equipment in the UK and Ireland.

CBG provides services linked to the cleaning, storage and dispensing of biomethane for injection into the gas grid, or for use as a vehicle fuel.

In 2010, CBG installed the UK’s first biogas upgrader, which supplies biomethane to the national grid, at a Thames Water site in Didcot, Oxfordshire. A second upgrader was delivered in October 2012.

Richard Hickinbotham, of Charles Stanley Securities, said in response to yesterday’s announcement: “The statement confirms that there is a very promising pipeline of potential follow-on orders, that now gives the board grounds for considerable optimism for the biogas to grid market in the UK, and the outlook for CBG in particular.

“We have marginally raised our 2015 PBT (profit before tax) forecast by £200,000 to reflect the building momentum at CBG.

“It would appear that the foundations are now firmly in place for CBG to achieve further success and we continue to view forecasts for FY (full year) 2014 and FY (full year) 2015 as conserva- tive.

“We have now taken this opportunity to increase our price target to 305p, from a recently overtaken level of 220p, and maintain our buy recommendation.”

In June, Pressure Technologies said its cylinders division had driven “strong growth” in revenues and profits, while it expressed “considerable optimism” for the future of the group.

Recent deals won by the company’s Chesterfield Special Cylinders (CSC) division include a contract to supply the US Air Force with high-pressure cylinders for its fleet of F-22 Raptors and an agreement with the Royal Navy to provide cylinders for its sixth Astute Class nuclear submarine, HMS Agamemnon.

Pressure Technologies, which was founded more than 100 years ago, makes products ranging from gas cylinders for oil rigs to components used in valves.

In 2010, the group diversified further through the acquisitions of the Al-Met and Hydratron group of companies; these businesses make up engineered products, one of Pressure Technologies key trading divisions, .

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