Altech (ASX: ATC, FRA: A3Y) reports encouraging DFS results for 120 MWh CERENERGY® battery project - Kalkine Media

Highlights

• With a capital cost of €156 million, the project is expected to deliver NPV of €169 million with an IRR of 19%.
• The anticipated EBITDA from the project is €51 million.
• Considering the expected growth in grid storage market, board and JV partners have decided to proceed to funding phase.
• Grant funding applications process has been initiated.

Altech Batteries Limited (ASX: ATC, FRA: A3Y) has shared the encouraging results from definitive feasibility study (DFS) undertaken for a 120 MWh CERENERGY^® project. The project is planned to be built on land of ATC in Saxony, Germany. The project development is being done by Altech Batteries GmbH (ABG) and joint venture partner, Fraunhofer IKTS. In ABG, 75% interest is held by Altech Advanced Materials AG and ATC.

Details of DFS

The life of the project is 20 years and with regular maintenance activities and sustaining capital every year, the plants can last over 30 years. The estimated capital cost of the project is €156 million, with an impressive net present value (NPV) of €169 million (NPV₉). The project is estimated to create net cash flow of €51 million every year from operations.

The forecast internal rate of return stands at 19%, guaranteeing a swift capital recovery period of merely 3.7 years. Upon reaching its maximum production capacity of 120 1MWh GridPacks, the expected annual revenue amounts to €106 million.

The project’s economics is compelling as expected EBITDA is €51 million or a margin of 47%. Considering that the grid storage market would grow at a compound annual growth rate of 28%, ATC’s board and JV partners have given thumbs up to move towards the funding phase, final investment decision.

The proposed plant would produce 518,400 cells; 2,160 Sixty kWh modules; 120 MWh GridPacks annually. The cost advantage offered by the CERENERGY^® batteries is the anticipated low levelised cost of €0.06/kWh for the life of the battery. This is comparable with lithium-ion batteries at €0.06/kWh.

Financing for the project

The company has selected the European market, especially Germany for development of its CERENERGY^® battery development project. Diverse funding opportunities are available at the European, German federal, and Saxony state levels. Institutions like, the European Innovation Council, European Investment Bank and federal and regional grant play a crucial role in assisting the battery sector.

In a recent announcement by the EU parliament concerning the zero valley concept, certain regions have been designated as special economic zones, accelerating their financial support and development. With these diverse groups, the grant application process has been initiated.

The ongoing discussions with European banks indicated that equity and mezzanine financing play a crucial role for successful implementation, enhancing both equity and grant contributions for this substantial renewable energy project.

Offtake discussions with prospective customers

Altech has strategically established non-disclosure agreements (NDAs) with major utility conglomerates in Germany, demonstrating a keen interest in acquiring CERENERGY^® 1 MWh GridPack batteries. Advanced discussions are in progress.

The company aims at pre-selling the complete initial production line for five years to two utility companies. The focus is on establishing promising partnerships, indulge in negotiations to get offtake agreements.

ATC shares jumped 2.08% to trade at AU$0.073 apiece at the time of writing on 20 March 2024.