Alkane Energy : 28 October 2014: Alkane announces readiness to meet winter demand

28 October 2014

Alkane Energy plc

Alkane announces readiness to meet winter demand from Monday 3 November

Alkane Energy plc ("Alkane" "the Group" or "the Company") (AIM: ALK), the independent gas to power producer, notes the findings of National Grid's Winter Outlook report published this morning, including a reduction in spare capacity in the UK electricity market to just 4 per cent for the coming winter period.

This level of spare capacity is the tightest seen in the UK for seven years and increases the risk of blackouts.

Alkane has been investing in fast response standby generation since 2010 and now has a portfolio of eight sites with over 90MW of generation capacity. These assets are growing our market share in the winter peak market and in supplying National Grid with flexible back-up power.

Neil O'Brien, Alkane's CEO, commented:

"Alkane has a record generating capacity which is flexible and ready to help supply the UK meet winter generating season."

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Background information

Alkane is one of the UK's fastest growing independent power generators. The Company operates mid-sized "gas to power" electricity plants providing both base load and fast response capacity to the grid. Following the recently announced acquisition of three power response sites from Carron Energy Limited and Dragon Generation Limited, Alkane has a total installed generating capacity of 140MW and an electricity grid capacity of 160MW.

Alkane's base load operations, where power is generated 24/7, are centred on a portfolio of coal mine methane ("CMM") sites. Alkane has the UK's leading portfolio of CMM licences, enabling the Company to extract gas from abandoned coal mines.

As CMM declines at any one site, Alkane retains valuable generating capacity and a grid connection which can be redeployed to power response. Power response sites are connected to mains gas and produce electricity at times of high electrical demand through peak running, or in order to balance the electricity grid through participation in the National Grid's short term operating reserve programme ("STOR"). Participants in STOR are paid premium rates when called upon by the Grid to meet temporary supply shortages. Alkane now operates 93MW of power response, one of the UK's largest power response businesses, with contracted revenues extending out to 2025.

The Group operates from 27 mid-size (up to 25MW) power plants across the UK, 15 CMM only, 8 mains gas only, 3 using both fuel sources and 1 using kerosene only. Alkane uses standard modular reciprocating engines to generate the electricity and sells this power through the electricity network. The engine units and other plant are designed to be flexible and transportable allowing additional capacity to be brought onto growing sites and underutilised plant to be moved to new sites to maximise efficiency.

Alkane transferred in June 2014 its shale gas interests to Egdon Resources plc. Alkane received 40m Egdon shares making us the largest shareholder in Egdon, a significant player within the UK shale industry.

Alkane has a range of core skills encompassing the entire project development cycle including planning and permitting, sourcing plant and managing the build and commissioning stage. This has enabled Alkane to establish a design, build and operate ("DBO") business for third party clients in the biogas and oil & gas industries.

The Group has circa 800km2 of acreage under various onshore Petroleum Exploration and Development Licences ("PEDLs").