REG - Corre Energy B.V. - Operational Update

Corre Energy BVAnnouncement

23/01/2023 07:00

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RNS Number : 4701N  Corre Energy B.V.  23 January 2023

Corre Energy B.V.

("Corre Energy" or the "Company")

Operational Update

Corre Energy is a leader in the development, operation and commercialisation
of Long Duration Energy Storage (LDES) projects that will enable the
construction and integration of large-scale renewables, accelerating
decarbonisation and enhancing the security and flexibility of energy systems.

 

The Company today issues an operational update for the period since its last
update in September 2022.  During this time, Corre Energy has made
significant operational, financial and strategic progress.

 

Keith McGrane, Chief Executive Officer of Corre Energy, commented:

 

"We are very pleased with the tangible progress the Company has made over the
last year, including the ground-breaking partnership with Eneco, underpinning
the economics of the ZW1 plant in the Netherlands.  It is also increasingly
clear from the positive actions we are witnessing that politicians,
legislators and regulators fully appreciate the value of and need for long
duration energy storage, to enable the energy transition and the journey to
net zero in Europe and North America.

 

"Corre Energy is delivering projects that will make a real positive difference
to energy consumers, both commercial and retail, and will benefit the planet
by accelerating the decarbonisation of the energy market.  The company has
built strong partnerships with world-class companies who share Corre Energy's
culture and beliefs, and it is through these partnerships that the Company
will continue to deliver on its commitments.

 

"In the immediate future, Corre Energy is absolutely focussed on delivering on
its key projects.  In addition, the market in which the Company operates,
driven by the global commitment to the energy transition, is now developing
very rapidly, and a number of additional opportunities are presenting
themselves.  Corre Energy expects to be able to leverage its early learnings
and successes to deliver significant additional value for all its stakeholders
for many years to come."

 

 

Highlights

 

·    Signed binding commercial terms for a 15-year offtake agreement with
Eneco, for the entire storage capacity of the Zuidwending (ZW1) Compressed Air
Energy Storage (CAES) project in the Netherlands.

o  ZW1 remains on track for Commercial Close during H1 2023

·    Encouraging progress on Green Hydrogen Hub project in Denmark (GHH1)
supporting Commercial Close during H2 2023

·    North American subsidiary formally launched and local project funding
discussions underway

·    Appointed advisers to complete European development capital
investment process for ZW1 and GHH1, with both targeted for completion in the
second half of 2023

·    Progress to date fully supports the project economics guidance
provided at the time of listing 1  (#_ftn1)

 

 

 

Regulatory backdrop:

 

In December 2022, the Council of the European Union agreed supportive
amendments to the renewable energy directive relating to the REPowerEU plan 2 
(#_ftn2)  3  (#_ftn3) .  These amendments identify storage assets as being in
the overriding public interest and require that permitting for energy storage
assets is accelerated in all permitting procedures.  The European permitting
environment is now supportive for all the projects within the Company's
identified pipeline.

At the World Economic Forum this month, the President of the European
Commission announced the Green Deal Industrial Plan 4  (#_ftn4) which will
guide Europe towards its goal of net zero.  This will entail creating a
supportive regulatory environment for crucial sectors, including storage,
through the Net-Zero Industry Act, and temporarily adapting state aid rules to
boost investment and financing of clean tech production.   Corre Energy
believes this indicates a growing commitment to and realisation of the value
of large-scale energy storage projects such as CAES within the overall energy
transition.

In August 2022, the Inflation Reduction Act 5  (#_ftn5) was signed into law in
the United States.  This provides a multi-billion dollar support package to
incentivise the build of renewable generation and grid-scale energy storage
projects.  The package includes providing standalone energy storage systems
with an investment tax credit of between 30% and 70% and offering a $3/kg
production tax credit for the manufacture of clean hydrogen.  These
incentives will have a significant beneficial impact on project economics and
encourage the transition to carbon-neutral production.  A similar incentive
structure is also applicable in Canada through the Clean Technology Investment
Tax Credit.

 

Corporate / Project update

 

While Corre Energy continues to develop and refine its longer-term pipeline,
sourcing and progressing opportunities which stretch out well over a decade,
the Company is focussed on achieving tangible milestones with its near-term
projects, particularly ZW1 and the GHH1.

 

In December, Corre Energy signed binding commercial terms for a 15-year
offtake agreement, with extension rights, with Eneco, for the entire storage
capacity of the ZW1 CAES project in the Netherlands 6  (#_ftn6) .  This
underpins the project economics for Corre Energy and helps to enable the
strategic vision of the Company.  Eneco will provide market access services,
enabling Corre Energy to benefit from revenue linked to the high flexibility
value of the asset, while also guaranteeing a base level of income.  The
modelling from both partners suggests a potential negative correlation to
offshore wind generation for ZW1 of between 0.8 and 0.9, greatly increasing
the extrinsic value of this type of multi-day duration facility in this
location, when compared to other types of energy storage.

 

ZW1 is progressing well, with Commercial Close expected during the first half
of 2023.  This requires completion of the commercial documentation relating
to the offtaker, grid and development agreements, land ownership and
permitting insurance.  Commercial Close will trigger further investments from
Corre Energy's financial partners and will enable the Company to target a date
for Financial Close, which will also trigger additional investments.

The Company is dedicating significant resource and effort to GHH1, and the
consortium is rapidly progressing the structure of the arrangement, following
the learnings from ZW1, and putting in place all the essential elements to
move to Commercial Close in the second half of this year.  Achieving
Commercial Close will enhance the value of this project and provide the
Company with sell-down options, further improving the financial position of
Corre Energy.

 

Last week Corre Energy formally launched its North American subsidiary 7 
(#_ftn7) .  As mentioned above, the regulatory backdrop here, created by the
Inflation Reduction Act, is very supportive for the development of LDES
solutions.  Corre Energy is currently considering specific opportunities in
North America and assessing additional sources of capital in this region to
enable developments to advance.

 

Financial position

 

Given the sharper focus on nearer-term projects, at the end of 2022 Corre
Energy streamlined its operations and cost base.  This will significantly
lower operating costs for 2023 without impacting the speed of strategic and
operational progress on the Company's key projects.

 

The Company has amended its funding arrangement with Fondo Italiano per
L'Efficienza Energetica (FIEE) such that, subject to certain conditions, FIEE
will now invest up to €4 million on an accelerated Commercial Close for ZW1.

 

Outlook

 

Corre Energy is greatly encouraged by the improvement in the political and
regulatory landscape in North America and is actively considering specific
opportunities and assessing additional sources of capital in this region to
enable developments to move forward rapidly.  It is likely that the
development of these projects would be primarily separately funded through
investments at a local level.

 

The Company's strategy remains unchanged and on track, supported by the
offtake agreement with Eneco on ZW1.  Following Commercial Close on the ZW1
facility, the Company will seek to identify opportunities for a partial equity
sell-down, in line with the long-term business model.  This will create
further financial capacity to fund other near-term projects and to develop its
European portfolio.

 

ESG

 

Corre Energy aims to report during 2023 on its ESG performance in accordance
with relevant disclosure standards.  In this exercise the Company will
consider the standards set by the Value Reporting Foundation, the
Sustainability Accounting Standards Board, the Task force on Climate-related
Financial Disclosures and the Carbon Disclosure Project.

 

The Company is also focussed on aligning its sustainable activities with EU
taxonomy classifications.  This will assist all stakeholders to assess the
environmental sustainability of the Company's activities, with reference to
the European Green Deal.  Corre Energy's projects and products support
decarbonisation, offer enhanced security and flexibility to Europe's energy
systems and help deliver the transition to renewable energy at scale.

 

2022 Full Year Results

 

The Company currently expects to publish its financial results for the Full
Year 2022 on 30 May 2023.  An investor call will be arranged at that time,
with further details to come in due course.

 

 

 

Corre Energy is a leader in the development and operation of Long Duration
Energy Storage (LDES) projects and products, accelerating the transition to
net zero and enhancing the security and flexibility of energy systems.  Our
projects address the increasing balancing requirements of renewable power and
provide essential and cost-effective services to system operators in the form
of storage and balancing services.

We also unlock the value of renewables by combining hydrogen production with
long duration and flexible energy storage, and by doing so we can help to
deliver more affordable, green energy to customers.  www.corre.energy
(http://www.corre.energy)

This announcement is released by Corre Energy B.V. and contains inside
information for the purposes of Article 7 of the Market Abuse Regulation (EU)
596/2014 ("EU MAR") and is disclosed in accordance with the company's
obligations under Article 17 of EU MAR.

 

For further information, please visit www.corre.energy or contact:

 

 Corre Energy                                   IR@corre.energy

 Davy (Euronext Growth Listing Sponsor)         +353 87 689 9195

 Barry Dixon, Head of Decarbonization

 Niall Gilchrist, Corporate Broking

 Barry Murphy, Corporate Finance

 Aoife Foley, Corporate Finance

 Murray PR (Financial PR and IR)                + 353 1 498 0300

 Pat Walsh, Managing Director

 

 

 

1https://corre.energy/wp-content/uploads/2021/11/Corre-Energy-Investor-Presentation-September-2021.pdf
(https://corre.energy/wp-content/uploads/2021/11/Corre-Energy-Investor-Presentation-September-2021.pdf)

2 https://data.consilium.europa.eu/doc/document/ST-16238-2022-INIT/en/pdf
(https://data.consilium.europa.eu/doc/document/ST-16238-2022-INIT/en/pdf)

3 https://www.europarl.europa.eu/doceo/document/TA-9-2022-0441_EN.pdf
(https://www.europarl.europa.eu/doceo/document/TA-9-2022-0441_EN.pdf)

4 https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_23_232
(https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_23_232)

5 https://www.govinfo.gov/content/pkg/PLAW-117publ169/html/PLAW-117publ169.htm
(https://www.govinfo.gov/content/pkg/PLAW-117publ169/html/PLAW-117publ169.htm)

6
https://corre.energy/wp-content/uploads/2022/12/CEBV_20221219_ZW1OfftakeAgreement_RNS.pdf
(https://corre.energy/wp-content/uploads/2022/12/CEBV_20221219_ZW1OfftakeAgreement_RNS.pdf)
 

7
https://corre.energy/2023/01/17/corre-energy-expands-project-operations-to-north-america/
(https://corre.energy/2023/01/17/corre-energy-expands-project-operations-to-north-america/)

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