REG - EnergyPathways PLC - CAES Project Update & £15m Financing Agreement

EnergypathwaysAnnouncement

Today 08:30

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RNS Number : 1889C  EnergyPathways PLC  28 April 2026

 28 April 2026

 

 EnergyPathways plc

("EnergyPathways" or the "Company")

 

EnergyPathways launches FEED for the world's largest CAES project

 

Engineering studies with Siemens Energy confirm economic viability of the MESH
Compressed Air Energy Storage ("CAES") project. FEED has been launched, funded
by a £15m Financing Agreement

 

EnergyPathways plc (AIM: EPP), the energy transition company, is pleased to
announce completion of pre-FEED studies with Siemens Energy which confirm the
economic viability of its planned large scale CAES project expected to be the
UK's largest long duration energy storage facility (the "Project").

 

The Company has now launched Front End Engineering and Design ("FEED") to
progress the Project to Final Investment Decision during 2028. FEED will be
funded by a minimally dilutive £15 million financing agreement, also
announced today.

 

The Project is located in the East Irish Sea and Barrow-in-Furness Cumbria and
forms part of the Company's wider MESH energy project, which also comprises a
large-scale natural gas and hydrogen storage facility and a low-carbon
hydrogen production plant. The MESH project has been designated as a project
of "national significance" by the Secretary of State for Energy Security and
Net Zero.

 

The CAES project addresses Britain's growing demand for Long Duration Energy
Storage ("LDES") which is needed to shift intermittent renewable energy across
long periods to reduce the vast amounts of curtailed wind being lost, costing
consumers billions of pounds per year. The project is a low-cost storage
development with which can produce dispatchable power for as little half the
cost of gas power generation. It can help reshape the UK's electricity sector
and reduce its dependency on imported gas.

 

CAES Project Highlights

 

·     Expected to be the world's largest CAES project and Britain's
largest LDES project.

·     A 300 MW CAES facility with 55 GWh storage capacity, offering
multiday discharge capability and critical grid stability services.

·     Project commerciality and economic viability have been confirmed by
pre-FEED studies completed with EnergyPathways' major project technology
partner Siemens Energy.

·     FEED, planning, consenting, Environmental Impact Assessment (EIA)
and grid connection arrangements launched and underway.

·     Participation in Ofgem's LDES cap and floor second round expected
to commence later this year.

·     FID planned for 2028 with operational startup at the end of 2031,
subject to regulatory approvals. Gas Storage Licence award decision is not
required for this project to proceed.

·     Local support received for MESH planned onshore facilities from
"Team Barrow", a private/public partnership to strengthen and diversify
Barrow-in-Furness' economy.

·     A £15 million financing agreement in place to fund FEED.
Expressions of Interest for project financing also received from leading
global banks and project financing discussions are underway.

 

The MESH CAES Facility

 

The MESH CAES facility will have a power capacity of around 300 MW and energy
capacity of 55.2 GWh, providing over 7 days of sustained power output. It is a
highly flexible fast-response system that will be able to provide a suite of
ancillary grid stability services. It is expected to be the world's largest
CAES facility and Britain's largest LDES project.

 

The facility will use surplus power from Britain's grid and nearby offshore
wind farms to compress air into large, purpose-built, offshore salt caverns.
When required, the stored air will be withdrawn, heated and expanded, via a
high‑efficiency cycle turbine designed for hydrogen fuel heating, to
generate decarbonised dispatchable power. The offshore plant uses proven
technology comprising three compression and two generation trains connected to
four large scale offshore salt caverns of circa 700,000 m³ each.

 

The CAES facility will be connected to the UK electricity grid and nearby
major offshore wind farms. The grid connection identified is in an optimal
location to harness Britain's vast amounts of curtailed and wasted renewable
power, lying between the country's 2 major grid constraint boundaries, the B6
and B7a.

 

An onshore sustainable industry park will be developed at Barrow-in-Furness to
support the MESH project. It will include the CAES storage operations base as
well as a low carbon hydrogen and graphite production facility. The onshore
infrastructure will be connected to the CAES offshore platform via an existing
repurposed gas pipeline compatible for hydrogen transportation.

 

£15 million Financing Agreement

 

The Company is also pleased to announce that it has entered into a £15
million financing agreement (the "Financing Agreement") with a global
institutional investor (the "Investor") to fund development activities in
relation to its large-scale MESH energy storage project, located in the East
Irish Sea and Barrow-in-Furness, under the following terms:

 

1.    Secured £5 million Loan Note (the "Loan Note")

 

The Company has entered into a three-year Loan Note that will allow it to draw
down up to £5 million at the Company's election and subject to mutual
agreement between the Company and the Investor. Each drawdown will be subject
to a 10% Original Issue Discount and has a six-month repayment holiday
followed by six equal monthly repayments.

 

The Loan Note will be secured by a fixed and floating charge on the assets of
the Company and will be non-interest bearing, save for a default interest rate
of 3 per cent. per month which will apply on any overdue amounts, and the
nominal value of the Loan Note can be converted at the Investor's option at a
reference price ("Reference Price") plus a 40% premium. The Reference Price is
calculated as the average of the daily VWAP of the Company's ordinary shares
for the five consecutive trading days prior to the date of each applicable
loan drawdown. The Investor will not be eligible to convert any drawdown at
lower than the Reference Price plus a 40% premium.

 

In the event the Company issues new equity shares (excluding the ATM
Facility), the Reference Price will be reset at the lower of the Reference
Price in the Loan Note and the price at which the Company has issued new
equity shares.

 

At each drawdown, the Company will issue warrants to the Investor that will be
equal to 30% of the value of the drawdown. The Investor will be eligible to
exercise these warrants at the Reference Price plus a 40% premium. The
Investor will not be eligible to exercise any warrants at lower than the
Reference Price plus a 40% premium.

 

In the event that a scheduled cash repayment is not made, the Investor has the
right, for a period of up to 12 months following the missed repayment date, to
subscribe for new ordinary shares in the Company in satisfaction of the
relevant amount at a price based on a ten per cent. discount to the lowest
VWAP of the Company's ordinary shares during the twenty trading days prior to
the date of the missed repayment.

 

2.    £10 million 'At-The-Market' Equity Placing Facility (the "ATM
Facility")

 

The Company has entered into the ATM Facility with the Investor, pursuant to
which the Company may, at its discretion, issue new ordinary shares to the
Investor over a period of three years. The total net proceeds receivable by
the Company under the ATM Facility are capped at £10 million (unless agreed
by both parties), and the number of shares issued in any tranche is subject to
limits, including a cap of 2.99 per cent. of the Company's issued share
capital (on a post-issuance basis) per tranche. The Investor is entitled to a
fee equal to 5 per cent. of the gross proceeds of any shares sold under the
facility.

 

Following the sale of shares, the net proceeds (after deduction of fees and
associated costs) are payable to the Company on a periodic basis. The Investor
has the right, at its discretion, to settle such proceeds either in cash or up
to 50 per cent. of each payment may be set off against sums outstanding under
the Company's Loan Note with the Investor.

 

Under the terms of the ATM Facility, shares held by the Investor may be sold
by the Investor into the market at a minimum sale price not less than the
closing market price on the trading day immediately prior to sale. The
Investor has also agreed to use reasonable endeavours to effect such sales in
an orderly manner and is subject to certain customary volume limitations and
dealing restrictions, including limits on the proportion of market volume in
which it may participate. For the avoidance of doubt, the Investor is
restricted from placing any of the Company's shares at a discount to the
Company's share price.

 

Gas Storage Licence Application

 

Further to previous announcements made by the Company, it is awaiting a
decision from the North Sea Transition Authority ("NSTA") on its Gas Storage
Licence application. The Company is hopeful a decision will be made shortly.
If successful with its application, the Company is poised to advance its MESH
gas and hydrogen storage project, which also has potential to be nationally
significant energy infrastructure asset.

 

Ben Clube, CEO of EnergyPathways, said:

 

"I am delighted to kick off the FEED programme for our MESH CAES project. This
project, when brought online, will be an invaluable asset for the UK's
electricity network and will help deliver the objective for a clean energy
system.

 

"Importantly, we expect UK consumers will see the benefits of our CAES project
through lower power bills. By harnessing Britain's abundant wasted wind power,
it can be used to produce low-cost dispatchable power to reduce our dependency
on expensive gas imports for our power supply.

 

"Our CAES project creates the infrastructure to store and redistribute our
nation's growing surplus of renewable energy and dispatch it in periods of low
wind, electricity scarcity or high demand. Critically, our CAES project will
be able to dispatch power over long periods, in excess of 7 days, making it a
reliable source of power when renewables are not available.

 

"The CAES project will be a low-cost development that adds little to no
additional subsidy cost onto taxpayers and consumers for it to be developed.
Critically it has been designed as a modular system and so similar projects
can be rolled out across the UK creating a credible pathway to domestic energy
self-sufficiency.

 

"I look forward to working closely with our team, external advisors, investors
and project stakeholders to take the CAES project to fruition as quickly as
possible."

 

Investor Engagement with EnergyPathways

Engage with us by asking questions, watching video summaries and seeing what
other shareholders have to say. Navigate to our Interactive Investor website
here: https://energypathways.uk/ (https://energypathways.uk/)

 

Enquiries

 Investor questions on this announcement                                       https://energypathways.uk/link/yzYvQPm
 We encourage all investors to share questions on this announcement via our   (https://energypathways.uk/link/yzYvQPm)
 investor hub

 EnergyPathways                                                               Tel: +44 (0)207 466 5000, c/o Burson Buchanan (Financial PR)
 Ben Clube / Max Williams

                                                                            Email : info@energypathways.uk

 Cairn Financial Advisers LLP (Nominated Adviser)                             Tel: +44 (0)20 7213 0880
 Jo Turner / Louise O'Driscoll / Sandy Jamieson

 SP Angel Corporate Finance LLP (Broker)                                      Tel: +44 (0)20 3470 0470
 Richard Hail / Adam Cowl

 

 

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For further information on EnergyPathways visit www.energypathways.uk
(http://www.energypathways.uk)

and @energy_pathways on X.

 

Forward Looking Statements

This announcement contains forward-looking statements relating to expected or
anticipated future events and anticipated results that are forward-looking in
nature and, as a result, are subject to certain risks and uncertainties, such
as general economic, market and business conditions, competition for qualified
staff, the regulatory process and actions, technical issues, new legislation,
uncertainties resulting from potential delays or changes in plans,
uncertainties resulting from working in a new political jurisdiction,
uncertainties regarding the results of exploration, uncertainties regarding
the timing and granting of prospecting rights, uncertainties regarding the
timing and granting of regulatory and other third party consents and
approvals, uncertainties regarding the Company's or any third party's ability
to execute and implement future plans, and the occurrence of unexpected
events.

 

Actual results achieved may vary from the information provided herein as a
result of numerous known and unknown risks and uncertainties and other
factors.

 

 

 

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