Aggregated Micro Power Holdings (AMPH) have recently acquired their third wood fuel supplier this year. In March they completed the acquisition of Forest Fuels for £2.82million (m) in cash and £2.5m in shares and in August that of Midland Wood Fuel for £1.4m. Then in October they bought the customer base of Cornish company Mi Generation for £0.75m. They can now claim to supply 8 per cent of the UK wood chip and wood pellet market with over 2000 customers nation wide. To finance this expansion they successfully raised £4m from Convertible Loan Notes and £1.7m from share placement in March.

AMPH was founded in 2010 by its current chairman and largest investor, Neil Eckert, but was only placed on the Alternative Investment Market in 2014. At the time, revenue came not only from wood fuel but also from electricity generated by a biomass gasification plant in Cumbria. The latter was closed in 2016 as their strategy turned from technology towards project development, or as they wrote in March “We are agnostic to technology, but have strong conviction in pursuing the strategy of aggregating micro-power”.

AMPH now has two divisions: wood fuel supply and projects. The latter acts as a commercial energy savings company (ESCo), meaning that it is a one-stop-shop for commissioning, installing and maintaining wood fuel boiler systems mainly for schools and other institutions. They also deal in combined heat and power (CHP) biomass systems.

The systems are owned and financed by an associate company AMPIL, from whom AMPH collects fees. AMPHIL raises funds separately by issuing listed loan notes. £10m has been raised this month to add to £12m raised earlier in the year. This will allow considerable expansion of the project management business.

These systems qualify for the government’s Renewable Heat Incentive (RHI), which pays a few per cent of the annual output of renewable-fuelled heaters. For non-domestic use, payments continue for 20 years. In last year’s Autumn Statement the RHI was extended until 2020 with the goal of increasing the UK’s share of renewable heating from 3 per cent to 12 per cent in this period.

RHI brightens the prospects for wood fuelled boilers and CHP. By providing everything from financing through fuel supply for the life of the boiler, AMPH think they are onto a good thing. Looking ahead they see a trend to larger scale boilers, and have an interest in two 49 MW CHP projects to be built near ports on the Humber in the near future. They also see a future for biomass systems on stand-by, to fill in when other renewable energy is low. “Micro-power” might then be not quite the right name.

Financially the picture is unclear. The last reports are for the quarter to 31 March 2016 before the wood fuel purchases kicked in. They show revenue of £204 thousand (k), with administrative expenses which are three times revenue leading to a loss of £353k. For the year to 31 December 2015 revenue was £1125k with a loss of £7201k, in large part due to impairments from the closure of the Cumbria site.

An interim report is expected in December. We will see at that time whether the new acquisitions and added financing are able to turn AMPH into profit.