Tuesday 18 October 2016 11:42 AM
Windflow Technology cuts UK business due to policy changes, Brexit
By Sophie Boot
Oct. 18 (BusinessDesk) - Windflow Technology, the unprofitable wind turbine manufacturer, says it's reducing activity in the UK to the maintenance of its existing fleet due to policy moves away from wind power.
There are eight Windflow turbines in Scotland, of which the company has full or majority ownership of six. Windflow entered the UK market six years ago, "six years which have been dominated by market uncertainty, created by several UK policy reviews, delays and reversals," it said in a statement today. It is restructuring in the UK with three staff members being made redundant, while two will stay to carry out maintenance.
The UK Feed-in Tariff scheme, where users are paid for the renewable energy they generate, has been "very significantly reduced in value to the point where it has effectively been wound down" in the past year, chief executive Geoff Henderson said.
He pointed to the scrapping of the Renewable Obligation scheme, which placed an obligation on UK electricity suppliers to get an increasing proportion of the electricity they supply from renewable sources, but will close to all new generating capacity in March 2017, and the market price for electricity collapsing to under 50 GBP per megawatt hour.
"At the same time, the UK government has underwritten a new nuclear power project by purchasing its output at £92.50/MWh," Henderson said. "In addition the UK government has recently made the already difficult planning process even more difficult for wind projects, while facilitating fracking. Grid access has also been difficult to obtain, thus frustrating the development of a resource that could help ease energy poverty, which is a very real factor in the north of Scotland."
Brexit has also been a factor due to the exchange rate uncertainty generated by the UK's public vote to leave the EU. Earnings from the UK are worth 20 percent less than a few months ago, Henderson said, adding that the company will watch the UK over the next few years but has decided to refocus its growth efforts in the Pacific.
In the year to June 2016, Windflow reported a $3.6 million loss on revenue of $1.8 million. It said trading conditions were difficult, which it largely attributed to changes in UK policy, while saying the New Zealand market had continued to be stagnant because of an oversupply of power.
The shares last traded at 1 cent, and have dropped 9.1 percent this year.