News

August 05, 2008

Alkane Energy’s Coal Mine Methane Portfolio Set To Benefit From Rising Electricity Prices

By Rue Swabey

Aim-traded Alkane Energy is a profitable green energy company that specialises in the use of coal mine methane as a fuel for electricity generation. It operates seven coal bed methane energy sites in the UK and one in Germany, and has licenses to develop more than 20 sites in the UK. Although the medium term outlook is positive the company’s share price is trading at low earnings multiples. But while most Aim shares are down, Alkane stands apart on two counts: it works with proven technologies and it makes money. Last year the company reported a 60 per cent increase in adjusted profit before tax to £1.3 million.

Although methane is a greenhouse gas that is 23 times more potent than carbon dioxide, the UK government does not recognise the logic that in using methane Alkane is reducing emissions. Thus the company does not qualify for incentives such as renewable energy certificates (ROCs). Alkane has been benefiting from climate change levy revenues worth up to £4.00 per MWh since 2003, but it will cease to receive these revenues this November. The company’s management has spent a considerable amount of...