SIMEC Atlantis posts €86 million loss for ‘challenging’ 2021

Tidal energy company SIMEC Atlantis Energy has widen its losses for 2021, driven by the discontinuation of a power station conversion project and operational difficulties experienced at the MeyGen tidal energy site during the year.

SIMEC Atlantis recorded a loss after tax of £74.1 million (€85.7 million) for the last year, compared with a £19.4 million (€22.4 million) loss posted in 2020.

According to the company, the increase in loss is driven by £53.1 million (€61.4 million) of non-cash impairments on tangible and intangible assets in the year.

The most significant are a £32 million (€37 million) charge against the Uskmouth Power Station assets following the decision not to proceed with the power station conversion project, and a £13.2 million charge (€15.3 million) on the value of the Meygen project assets, reflecting the operational difficulties experienced with the turbines during the year.

The company’s revenue fell from £13.5 million (€15.6 million) in 2020 to £9.3 million (€10.8 million) in 2021. This reflected a drop off in revenues in the Atlantis Turbines and Engineering Services division following the successful completion of the first phase of the Japan contract.

Power sales from the Meygen tidal power project were £1.6 million (€1.8 million), a drop of £0.9 million (€1 million) from 2020, reflecting the turbine outages during the year, according to SIMEC Atlantis.

SIMEC Atlantis’ closing net asset balance in 2021 was £16.7 million (€19.3 million), as opposed to £81.8 million (€94.6 million) a year before, with the decrease largely the result of the asset impairments recognized during the year.

Graham Reid, SIMEC Atlantis’ CEO, said: “We have been presented with many significant challenges, but I am incredibly proud that we’ve overcome most of these and I know we have the team, skills and assets in place to deliver long-term, sustainable growth for our business and you, our shareholders.

“2021 saw the Company make some difficult but important decisions. While these have had short-term impacts on the business and our financial statements, I am convinced they are the right decisions which will ultimately deliver value to shareholders in the medium to long term.“

SIMEC Atlantis’ tidal business also had a challenging last 12 months, with three out of the four tidal turbines at MeyGen out of the water for much of that period as a result of technical issues coupled with a delay in securing funding to redeploy to these turbines

The MeyGen site currently has two of the four turbines fully operational, and according to SIMEC Atlantis, the project has generated 43GWh of renewable power to date, with 7GWh in 2021/22.

To put the achievement in context, this represents 60% of worldwide generation from tidal energy, SIMEC Atlantis noted.

In April 2022, the company secured £2.5 million (€2.9 million) loan from Scottish Enterprise to fund the redeployment of the two remaining Andritz tidal turbines and support the stabilization of operations.

SIMEC Atlantis said it expects to complete the redeployment of the remaining two turbines within the next nine months.

“Whilst the first phase of the MeyGen project has suffered from operational challenges, the learnings from this first phase of MeyGen have been enormous and these learnings are already being applied to future phases of MeyGen and tidal power projects elsewhere.

“We continue to believe that tidal power has a crucial role to play within modern renewable energy dominated electricity grids in providing a predictable and sustainable source of electricity generation, and the first phase of MeyGen has demonstrated the viability of tidal power as a commercial source of sustainable, predictable power generation,” the company said.

As for the future phases of the project, SIMEC Atlantis said it remained optimistic in its ability to secure revenue support through the UK government’s ring-fenced mechanism, which would allow the company to progressively build out at least the remaining consented 86MW at MeyGen, and ultimately to the site’s full 398MW capacity.

“Development of the MeyGen project remains a key priority for us, and we will continue to explore ways to further develop the site and generate value for shareholders,” SIMEC Atlantis said in a statement.

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