With oil prices on the way back south again after a recent rally, one might be forgiven for thinking that the timing was wrong for an alternative energy play but some compelling fundamentals at Alkane Energy (ALK:AIM) might prove that supposition wrong.

Alkane is an independent energy company with three main businesses. The group divides its attentions between Coal Mine Methane (CMM) which involves the extraction of gas from disused coal mines for power generation; Power Response involves fast start gas turbines providing critical support at times of peak demand to the national power grid; and finally its Design, Build & Operate (DBO) segment which contracts to design, build, and operate contracts for anaerobic digestion biogas plants.

Full-year results for the 12 months to the end of December 2014 point to a bright start to 2015 and this is evidenced by capacity expansion in its Power Response business which saw 56MW added in 2014.

There is also additional CMM capacity being lined up with the new base load site at Markham Main in Yorkshire expected to be on stream during the second half of 2015. Forward earnings visibility at Alkane is another plus with 82% of output already contracted at prices in line with 2014 and this should go some way towards mitigating the problems created by weak power prices. Beyond 2015 however, the investment case is less certain and consequently analyst David Brockton at Liberum reduces the broker’s FY16 earnings estimates by 23% as well as lowering its target price from 50p to 32p.

At 21.4p Alkane should benefit from expanded capacity and forward visibility in 2015 but there’s less certainty beyond that.