ALMOST £231 million was added to the market value of Scottish temporary power company Aggreko after it signed a deal to supply electricity in earthquake-hit Japan.
Aggreko has been asked to supply 200 megawatts of temporary power for at least the next year, which is enough to keep the lights on in 250,000 homes.
The Tokyo Electric Power Company (Tepco) has signed a letter of intent with Aggreko, hoping that its generators will go some way to dealing with an energy shortage in the wake of last month’s disaster.
In Tokyo there were rolling blackouts last month, and it is feared the problem will get much worse when air conditioners are switched on during Japan’s broiling summer months.
Once the terms of the deal have been thrashed out, a final agreement is expected to be signed in the next four to six weeks.
Analysts believe the agreement could be worth upwards of £40m to the company.
The firm has attributed its success in signing the deal to its decision to despatch a team to the area straight after the March 11 earthquake and tsunami.
It also built contacts when it provided power for the 2002 football World Cup in Japan and South Korea.
Chief executive Rupert Soames said: “Within a few days of the disaster, Aggreko entered into discussions with Tepco to bring additional power to the grid.
“Tepco has moved extremely fast and with great professionalism to define an engineering solution which will bring additional generating capacity to Japan. Aggreko is pleased it is able to be of assistance to the country at this very difficult time.”
There have been particular problems with Japan’s nuclear generating capacity. The Fukushima Dai-ichi nuclear power plant has suffered a partial meltdown and will not resume production in the near term, if at all.
Its two plants and 10 reactors account for one-fifth of Japan’s total nuclear capacity
Aggreko will employ around 150 workers to operate a total of 250 temporary generators around the Tokyo area.
Aggreko will immediately start shipping out the generators, which are all built in Dumbarton. They are expected to start delivering power to Japan’s grid in June.
Half of generation will be diesel- powered and half gas-fired. It will supply companies in the Tokyo Bay area.
UBS analyst Alex Hugh said he did not expect forecasts for the company to change immediately but he added: “We think this adds to the upside risk to forecasts.”
Upgrades could come when Aggreko puts out its first-quarter trading statement on April 27, Mr Hugh said. “This should help take Aggreko’s utilisation from 80% last year closer towards 90% in 2011 which would be a key driver of upgrades,” he added.
Aggreko shares closed at 1678p, up 84p, or 5.3%, on the day and their highest close since October. This values the firm at £4.6bn.
Tokyo Electric, which accounts for about one-third of Japan’s total power consumption, resorted to rolling blackouts last month after the quake.
It estimates it will be able to supply 46,500 megawatts of power by the summer, after bringing some damaged and mothballed thermal power plants back online. This would still be nearly 10,000 MW short of estimated peak demand, despite extensive conservation efforts since the quake.
The Japanese government is keen to avoid blackouts, which would particularly damage power-hungry industries such as car making and aluminium smelting.
It is thinking of allowing industries to coordinate plant opening hours. It is also mulling a relaxation of rules about whether companies can set up generators on factory sites.
Aggreko, founded in the Netherlands, moved to Scotland in 1974. It became an independent company following its demerger from the Christian Salvesen Group in September 1997.
It now owns roughly 13,000 generators, equivalent in capacity to around 10% of the UK’s peak power demand.
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