REG - EnergyPathways PLC - MESH set to accelerate UK’s energy transition

EnergypathwaysAnnouncement

24/02/2025 07:15

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RNS Number : 1805Y  EnergyPathways PLC  24 February 2025

24 February 2025

EnergyPathways plc

 

("EnergyPathways" or the "Company")

 

MESH positioned to accelerate the UK's energy transition

 

EnergyPathways (AIM: EPP), an energy transition company, is pleased to
announce the progress on its MESH energy storage project.

 

The mission of the UK government is to deliver on its "Clean Power by 2030"
target. Its roadmap to providing security of power supply for the UK centres
around installing new clean sources of power at pace and developing a flexible
system that can accommodate and store Britain's renewable resources, while
reducing the use of unabated gas power generation. The Government is pushing
ahead with reforming energy policy, regulations and markets across all sectors
of the energy industry to accelerate the UK energy transition.

 

The MESH project is being developed as an integrated energy system. It can
play a big part in contributing to Government's 2030 ambitions. It provides
the UK Government with large-scale flexible capacity and long duration storage
needed to compliment the expansion of wind power capacity. It can be
operational as soon as late 2027. As an energy transition project backed by
private capital and using the UK's "best in class" offshore supply chain and
work force to support a "just transition", the benefits of MESH are being
recognised by Government bodies including the Department for Energy Security
and Net Zero ("DESNZ"), the North Sea Transition Authority ("NSTA"), and The
Crown Estate.

 

The Company is pleased to report the following developments on MESH:

 

·      EnergyPathways has signed a non-binding memorandum of
understanding ("MOU") with a clean energy fund for a cornerstone equity
financing, that is priced at multiples to current share price, effectively
minimising shareholder dilution. The funding complements the existing Global
Green Asset Financing ("GGAF") loan facility and, along with other debt
financing provides capital for MESH's growth plans in gas storage, hydrogen
and decarbonised gas power generation. This provides further demonstration to
the Government of MESH's ability to attract private capital to the UK energy
transition.

 

·      following the Company making representations and consultations
with the NSTA, an opportunity emerged to request a new straight to development
petroleum licence for the MESH project that aligns with the project and
supports an accelerated energy transition. The previous P2490 licence has
lapsed. The P2490 licence was an old traditional exploration licence that was
not ideally structured to allow delivery of the MESH project and was
financially less beneficial for the Company.

 

·      the Company has commenced discussions with a tier 1 FTSE 100
company regarding an agreement for MESH long term gas storage capacity and gas
sales off-take as well as providing project debt financing for the MESH
natural gas storage development.

 

·      the Company submitted a final concept engineering report for
MESH-H2 to DESNZ, MESH-H2 is a large-scale 640MW salt cavern hydrogen storage
facility with total storage capacity of 2.8TWh. It will be integrated with the
wider MESH project and linked to offshore regional wind to supply decarbonised
energy.

 

·      the critical decision on the Company's gas storage licence
application to the NSTA is expected soon. The development of the MESH gas
storage project will advance under this licence through to a development plan
approval, construction, installation and into operations involving The Crown
Estate and the NSTA.

 

 

Ben Clube, CEO of EnergyPathways plc said:

 

EnergyPathways looks forward to advancing the MESH project with an award of
the gas storage licence. MESH can make a major contribution to accelerating
the UK energy transition and meeting the Government's 2030 clean energy
targets.

 

We are very pleased to have entered into a non-binding MOU for an equity
placing to further demonstrate the Company's ability to attract private
capital to the UK's energy transition. In conjunction with the GGAF loan, it
has increased the Company's financial flexibility and options and ability to
create value for its shareholders.

 

Our progress with a Tier 1 FTSE 100 company on a long term gas storage
capacity and gas offtake agreement along with project debt financing is very
encouraging.

 

With the UK government burdened by mountains of debt and limited scope to push
up tax rates further, the UK's heavy reliance on public financing to subsidise
energy projects to meet its 2030 clean power target look unsustainable. The
opportunities for private capital backed energy transition projects are
increasing and it is clear the Government is giving priority to projects that
can accelerate the UK's energy transition.

 

The challenges of the UK energy transition are significant for all
stakeholders involved. A very understandable challenge for UK regulators is
the need to adapt regulations or their application to meet the Government's
energy transition ambitions. Our experience has been that the UK regulators
are effective operators in a moving landscape.

 

Following consultation with the NSTA, EnergyPathways is very pleased to have
the opportunity to restructure the petroleum licensing arrangements for its
MESH project that complement the gas storage licence. The new petroleum
licence puts the MESH project in a far firmer position. It enables
EnergyPathways to develop MESH as an integrated energy system and better
contribute to accelerating the UK's energy transition.

 

We look forward to working with the Government and regulators to help
accelerate the UK's energy transition.

 

 

UK Energy Policy and Regulatory Reform

 

Ed Milliband, Secretary of State for Energy Security and Net Zero, stated in
the Clean Power 2030 Action Plan (December 2024): "In an increasingly unstable
world, our dependence on fossil fuels leaves us deeply vulnerable as a country
- and that is true no matter where they come from. But there is a solution: by
sprinting to clean, homegrown energy, we can take back control from the
dictators and the petrostates. That is why the Prime Minister has put
delivering clean power by 2030 at the heart of one of his five missions and
Plan for Change."

 

Ed Milliband stated at the Department of Energy Security and Net Zero
Committee (15 January 2025); "...North Sea oil and gas will continue to play
an important role in the decades ahead. There is important common ground in
that we must build the future for the North Sea, and the future is going to be
in carbon capture and storage, offshore wind, hydrogen-the industries of the
future….The Department for Energy Security and Net Zero (DESNZ) will soon
consult with the industry, trade unions on licensing".

 

The NSTA's Chief Executive, Stuart Payne, in the NSTA 2025 Overview stated:
"Now we are at the start of an exciting new chapter devoted to the vital
energy transition which integrates the North Sea's carbon capture, hydrogen,
wind and oil and gas resources. The climate crisis demands that the transition
happens at pace and, if we get it right, this chapter can truly be the best
and cleanest yet…..In this new chapter, the sector will play a pivotal role.
Oil and gas will continue to be part of the energy mix for decades as we
transition, and domestic production can and must keep getting cleaner. The
world-class supply chain, with its track record of tackling some of the most
complex engineering challenges on earth, will be crucial in delivering
decarbonised production and the CCS, hydrogen and floating wind projects the
country needs. The North Sea has played a major role in the world's energy mix
for decades. Its global leadership of the energy transition has only just
begun."

 

DESNZ Clean Power Action Plan DESNZ: "We have high ambition. That means 43-50
GW of offshore wind, 27-29 GW of onshore wind, and 45-47 GW of solar power,
significantly reducing our fossil-fuel dependency. These will be complemented
by flexible capacity, including 23-27 GW of battery capacity, 4-6 GW of
long-duration energy storage, and development of flexibility technologies
including gas carbon capture utilisation & storage, hydrogen, and
substantial opportunity for consumer-led flexibility. Over the period to 2030,
security of supply will be protected with the maintenance of an expected 35 GW
of unabated gas reserve capacity. Growing our clean energy system in this way
will see once-in-a-generation levels of energy investment - an estimated £40
billion on average per year between 2025-2030,

 

MESH can make a meaningful contribution to delivering the UK Government's
"Clean Power by 2030" target. The key elements identified by Government to
back up wind capacity are CCS, energy storage, hydrogen and decarbonised gas
power generation. Much of the national portfolio of such projects depend on
government subsidies and regulatory pricing that will be passed onto
consumers. MESH provides a commercially competitive solution which can be
delivered within the short timeframe available as well as support a just
transition.

 

With the first phase of MESH being developed as an integrated gas storage
project, the two relevant licensing regimes to be considered are: the Energy
Act 2008, for the evaluation, development and operation of offshore gas
storage and the Petroleum Act 1998, for any recovery of indigenous gas from
the storage operations and project.

 

 

About MESH

 

MESH is a new large scale energy storage facility that is expected to provide
a secure and dependable supply of natural gas and green hydrogen for the UK
market for over 20 years. MESH is an integrated energy system solution. It is
electrifying and integrating existing infrastructure, connecting gas storage,
hydrogen storage, offshore wind and decarbonised power generation to establish
a new major decarbonised energy hub for the UK.

 

MESH is expected to be the UK's largest long duration energy storage facility
combining natural gas and hydrogen storage It will be able to store in excess
of 20 TWh of energy. MESH remains on track to achieve Final Investment
Decision (FID) by the end of 2025, with operations expected to commence at the
end of 2027. This timeline delivers on the Government's 2030 Clean Power
ambitions and will ensure a reliable and secure supply of energy for the UK.
 MESH has been designed as a fully decarbonised and electrified zero emission
facility that is to be powered by the renewable wind farms of the UK Irish Sea
region. EnergyPathways aims to play its role in supporting the Government in
accelerating UK's energy transition.

 

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/link/WPG7wP
(https://energypathways.uk/link/WPG7wP)

 

Enquiries:

 

 EnergyPathways                                        Tel: +44 (0)207 466 5000, c/o Buchanan (Financial PR)

Ben Clube / Ben Hodges

                                                     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

 Global Investment Strategy UK Limited (Joint Broker)  Tel: +44 (0)20 7048 9000
 Callum Hill / James Sheehan

 

For further information on EnergyPathways visit www.energypathways.uk
(http://www.energypathways.uk/)  and @energy_pathways on X (formerly
Twitter).

 

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