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Date: 2006-03-30 10:57:43
Wave Energy Project in Wales

(Press release from London Stock Exchange AIM)

Regulatory Announcement

Company: KP Renewables PLC
Headline: Wave Energy Project in Wales
Released: 07:00 14-Dec-05
Number: 6252V

Press Release 14 December 2005

Wave Energy Project in Wales

KP Renewables Enters Joint Development Agreement for UK's First Wave Power Station

Copenhagen, Denmark and London, England: KP Renewables plc ("KPR"), the AIM-quoted, renewable energy project developer, announces today that it has entered into a joint-development agreement ("JDA") with Wave Dragon Limited ("Wave Dragon") which provides a framework for the two stage development, financing, construction and operation of up to 77MW of wave energy projects in Wales.

The first stage would involve the deployment of a 7MW Wave Dragon unit off the coast of West Wales, near Milford Haven, by spring 2007. The unit is projected to provide sufficient electricity to power up to 6,000 homes. An application for a £5m "Objective 1" grant for the first stage of the project has been made to the Welsh European Funding Office ("WEFO").

If the first unit deployed proves successful, the second stage would feature up to 11 Wave Dragon units at a deeper water, more energetic site, with a total capacity of 77MW (subject to regulatory consents) These units are expected to be deployed during 2008 and 2009 and projected to provide sufficient electricity for up to 60,000 homes.

Andrew Davies, Minister for Economic Development and Transport said, "Wales has a significant marine energy resource and the Wave Dragon project has the potential to harness that power to provide clean, renewable energy. Our vision is to make Wales a showcase for clean energy production and energy efficiency and our marine assets offer new opportunities for the production of renewable energy and help us meet our targets by 2020. It also offers us the opportunity to develop the supply chain for these emerging technologies, and bring further economic benefits to Wales."

A Wave Dragon unit is an offshore floating device that works by channeling waves into a reservoir which is above sea level. The water is then released through a number of turbines and generates electricity in the same way as hydro power plants. The technology has been developed and tested over the past eight years in tanks in Denmark and Ireland. The Danish prototype is believed to be the first offshore device in the world to deliver power to a national electricity grid.

It is expected that the energy generated from the project will be sold by KPR under its Power Purchase Agreements, as outlined in its AIM admission document dated 26 July 2005. The energy will provide an alternative to fossil fuel derived electricity, thereby reducing net CO2 emissions. Renewable electricity also generates valuable credits in the form of Renewable Obligation Certificates.

The total cost of the first stage of the development is projected to be £12 million. The JDA signed between the parties, while non-binding, provides a specific framework for the projects to be developed by the parties. The outline terms of two further agreements, detailing the individual development stages of each of the 7MW and 70MW stages, have been agreed although the final ownership percentage and investment by the parties will be finalised for each individual project as they are developed.

It is intended that the projects in Wales will be managed by the Special Purpose Vehicle, Wave Dragon Wales Limited. The Wave Dragon technology would be provided by Wave Dragon ApS and KPR would be responsible for the overall development of the project, including financing.

The directors of KPR believe that development of the Wave Dragon wave energy project has the potential to generate new jobs in a wide range of industries across Wales and beyond, including maritime services, engineering, construction, and via extensive collaboration with Welsh universities. More specifically, Swansea University has expressed an interest in becoming involved through the development of power electronics and participation in environmental studies. If the second stage of the development is undertaken, the directors of KPR anticipate that the construction phase could create up to 1,000 jobs with around 20 permanent operational jobs.

Dr James Watkins, CEO of KPR stated that, "We believe that the UK's wave energy potential is even greater than the potential for the UK's wind energy industry. Having already developed a promising pipeline of wind energy opportunities, we felt the need for a strong presence in wave power, which is a crucial component of the UK renewables mix. After a thorough review of the available wave technologies in the market, we chose Wave Dragon because we believe it is the only wave energy technology which is scaleable and can be delivered in large modules allowing us to develop operational power plants on a scale similar to conventional size power plants; i.e. from 70 to 500MW."

Chairman of the board of Wave Dragon, Hans Christian Sorensen added, "We are looking forward to the cooperation with KPR in developing these projects using Wave Dragon's technology. KPR has a management team and Board that are very experienced in the development and roll-out of renewable energy plants in the UK. The successful commissioning of the first stage 7MW Wave Dragon unit will open up the renewable energy market in the UK for Wave Dragon's technology. The subsequent development, in the second stage, of a full-scale 70MW installation will represent the UK's first true Wave Power Station."

- ENDS -

For further information please contact:
KP Renewables Tel: +44 20 8231 8820
Dr James Watkins, CEO
Robert Smyth, Finance Director

Wave Dragon ApS Tel: +45 3536 0219
Hans Christian Sorensen, Chairman
Erik Friis-Madsen, Inventor & Consulting Engineer
Tel: +45 2811 0219
Tel: +45 3537 0211

Media enquiries:
Gareth Mead / Martin Sutton Tel: +44 (0) 207 398 7700