The board of Christchurch-based Windflow Technology Ltd (NZX: WTL) has told shareholders that further actions are being taken to address concerns about progress in the United Kingdom market.
The company said there was continuing uncertainty around the availability of the Feed-in Tariff (FIT) beyond last April – an incentive scheme that was expected to encourage farmers and other UK landowners to make use of wind turbine energy.
Windflow said late last week the company has yet to receive orders from the UK and Government guidance there on the likely outcome from a review of FIT may be available in July, but failing that the date for release of the review is December.
“The export guarantee from the New Zealand Export Credit Office has now lapsed due to the passing of time,” said Windflow chief executive Geoff Henderson.
He said the company was re-applying for this guarantee. The UK distribution agreement with VG Energy Limited was also being re-negotiated to cater for the change in market conditions, “together with the desire by Windflow that VG Energy Limited expand their distribution network within the UK.
Although Windflow was confident of the “sustainability of the UK market and that the review of the FIT will extend the availability and value of the incentive” there was still uncertainty associated with the review, together with the presence in the market of larger machines de-rated to 500 kW (the rating of the Windflow turbine).
This, Windflow said, has created an increasing fundamental uncertainty regarding the future of the business.
To address this risk, the company “has restructured its manufacturing capacity, reduced its overhead costs and is now actively realising certain assets.
“The company is also in the early stages of internationally licensing its intellectual property and is pleased with strong interest received to date.”
The company’s turbine drive-train technology -- in the form of the torque limiting gearbox enabling the use of a synchronous generator -- provides “competitive advantages” which are accessed by international manufacturers far more readily than by Windflow itself.
Windflow has seen the last of its 97 Windflow 500 turbines erected on the Te Rere Hau wind farm in Palmerston North.
While it expects turbine orders from the United Kingdom to eventuate following the FIT review, the company is also currently seeking bridging capital to provide liquidity through the period in which the review is complete and any licensing agreements confirmed.