Shire Oak Energy
Good Energy bid for Shire Oak’s services to assist Good Energy in developing solar farms and to build up Good Energy’s own in house development capability. The agreement was overseen by an independent board committee and Good Energy’s Nominated Adviser advised that the terms of the contract were fair and reasonable and in the interests of Good Energy shareholders.
Indeed, we estimate that the net value for Good Energy shareholders of the arrangement with Shire Oak is between £15 and £20 million.
The contract between Good Energy and Shire Oak Energy was dated 10 July 2013. Details of the agreement were fully disclosed in the Proposed Placing and Open Offer and Notice of General Meeting which Good Energy issued the next day, 11 July 2013, and which has been available on the company’s website since.
The window of opportunity for solar development was incredibly tight. While Good Energy could have achieved the transformation in development skills and asset base alone: we had a straight choice between working with Shire Oak or missing the opportunity. We did the work, validated the deal rigorously with outside advisers, and delivered more than £15m of value to our shareholders.
Tidal Lagoon (Swansea Bay)
As part of our efforts to procure the renewable power we need to support our long term growth, we identified the opportunity to invest – alongside other investors - in Tidal Lagoon (Swansea Bay).
The Board established a sub-committee comprising only non-executive directors with full authority to consider the proposals and negotiate with Tidal Lagoon. To ensure no conflicts of interests could arise, our Chief Executive was not a member of that sub-committee. The Board also took extensive legal and regulatory advice in relation to the transaction.
Because the transaction was below the regulatory threshold for transactions with related parties, Good Energy was under no obligation to disclose it. Nonetheless, the Board wanted to be open and transparent with shareholders throughout.
Consequently, when we announced the agreement with Tidal Lagoon (Swansea Bay), we fully disclosed the relationship. The announcement was made on 7th May 2014 and has been on our website ever since. The relationship has also been disclosed in our annual report and accounts since the investment was made - and appears at page 102 in the most recent document.
The Board also notes the outcome of the Hendry Review published on 12 January 2017. The review concluded that there is clear evidence that:
- tidal lagoons can play a cost effective role in the UK’s energy mix
- there is considerable value in a small (less than 500MW) pathfinder project and that the government should move as quickly as possible to secure this
- tidal lagoons at scale could deliver low carbon power in a way that is very competitive with other low carbon sources
What about the environmental impact of a tidal lagoon at Swansea Bay?
Following our most recent AGM, our chairman John Maltby wrote to Keith Clarke, Chairman of Tidal Lagoon (Swansea Bay) Plc, to raise concerns voiced by certain shareholders about Good Energy’s investment in the project, particularly any potential environmental impact from it, and the source of the rock for the lagoon’s construction.
We were pleased to receive a response reassuring us that – once the Government provides a decision on the project and a contractor has been appointed - there will be rigorous processes in place to assess and manage any environmental impacts associated with the project. We were also assured that all applicable planning and environmental standards will be met throughout the project, including in relation to the procurement of rock. Decisions around the sourcing of the rock will sit with the contractor.
We will continue to monitor the project closely and share relevant updates with interested shareholders. We recommend that any shareholders with concerns in the interim should formally raise them with the board of Tidal Lagoon (Swansea Bay) Plc.
Disclosure about agreements between Good Energy and companies run by the husband of Good Energy’s Chief Executive
Good Energy has commercial arrangements in place with two companies - Shire Oak Energy and Tidal Lagoon (Swansea Bay) – of which the husband of Good Energy’s CEO is a director. These are fully commercial, transparently disclosed, and any potential for conflict of interest was appropriately managed. These arrangements date back to 2013 and 2014 respectively.
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