REG - EQTEC PLC - Discontinuation of Billingham Project

EQTECAnnouncement

20/09/2023 12:30

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RNS Number : 0957N  EQTEC PLC  20 September 2023

20 September 2023

 

EQTEC plc

("EQTEC", the "Company" or the "Group")

 

Discontinuation of Billingham Project

 

EQTEC plc (AIM: EQT), a global technology innovator powering distributed,
decarbonised, new energy infrastructure through its waste-to-value solutions
for hydrogen, biofuels, and energy generation, announces its intention to
cease activity on its Billingham project at Haverton Hill, Teesside, UK (the
"Project"). The decision comes amidst increasingly challenging market
conditions in the UK and following recent setbacks with the Project that make
it unfeasible for the Company to prioritise against its broader strategic
opportunities.

 

The Project was one of the Company's most ambitious to date, aiming to create
a refuse-derived fuel ("RDF")-to-combined heat and power ("CHP") facility that
would transform 200,000 tonnes per year of RDF into up to 25MW of electricity
for export to the national grid, with the potential for creating up to 34MW of
thermal energy (the "Plant"). The Company had secured all relevant permits and
permissions to build the Plant, agreed favourable heads of terms for over 250
percent of its required volume of feedstock and was pursuing discussions with
neighbouring companies about provision of private wire offtake.

 

Finalising private wire offtake terms was as an essential final step in making
the Project attractive for investors seeking larger-scale investment
opportunities, and EQTEC had been in discussion with candidate offtakers
toward formal agreements. However, those candidate offtakers' recent
announcements of their intentions to close their own Teesside operations
created a significant setback for the Company in its efforts to finalise the
investment case for the Project. Notably, nearby industrial companies
announcing closures of Teesside operations cited increasing costs of doing
business in the UK and the consequent challenges of remaining competitive as
the rationale for their decisions. The Company has experienced similar
challenges and is not in a position to fund further, expensive work on
development of the Project.

 

At the same time, and due to unprecedented demand for grid connectivity near
the Haverton Hill site, Northern Powergrid Holdings Company ("NPg") has
informed the Company that it has terminated its grid connection contract with
Billingham EFW Limited ("Billingham EFW"), which owns the land on which the
Plant was to be built. Given that the Project is overdue on its milestone to
commence construction, NPg informed the Company that it was under political
pressure to cancel the contract given strong demand for connections from new
energy projects and aggressive development around the specific grid connection
point relevant to the Project.

 

The Project's option to lease the land owned by Billingham EFW, a wholly owned
subsidiary of Scott Bros. Limited ("Scott Bros"), is contingent upon retention
of the grid connection and thus also at risk given the NPg contract
termination. The Company remains in discussion with Scott Bros about options
for recovering as much as possible from the investments made in the land and
Project. The Company has to date invested c. £4 million in the Project.

 

In line with accounting standards (IAS 36 - impairment of assets), the Company
believes that a significant portion of its previous investment into
development of the Project, less any amounts recovered as referred to above,
will be impaired. This accounting treatment will be evident in the FY 2023
audited financial statements, resulting in a reduction in assets and
recognition of an impairment expense of the same amount.

 

Jeff Vander Linden, COO of EQTEC, commented:

 

"Our exit from the Billingham project is disappointing but essential. It
represents another step in our pivot out of high-risk, high-cost development
work. We announced in our 2022 results that we had avoided potential costs
totalling €18 million across our portfolio and a good share of those were
related to the Billingham project. Despite substantial efforts to finalise our
investment case, the recent decisions by prospective, large-scale offtakers to
terminate their operations set the Project back considerably. We simply cannot
justify investment of further effort and expense to get such a large,
high-risk project to close. While it is painful for the Company to write off
large portions of investment, it underscores our strategic commitment to
engaging with projects developed by others, where we can focus on profitably
integrating and licensing EQTEC technology. Our strategic pivot effectively
de-risks the earnings profile for EQTEC, allowing other parties to manage the
challenges and risks of project development."

 

This announcement contains inside information as defined in Article 7 of the
EU Market Abuse Regulation No 596/2014, as it forms part of United Kingdom
domestic law by virtue of the European Union (Withdrawal) Act 2018, as
amended, and has been announced in accordance with the Company's obligations
under Article 17 of that Regulation.

 

 

ENQUIRIES

 

 EQTEC plc                                              +44 20 3883 7009

 David Palumbo / Nauman Babar

 Strand Hanson - Nomad & Financial Adviser              +44 20 7409 3494

 James Harris / Richard Johnson

 Panmure Gordon - Broker                                +44 20 7886 2500

 John Prior / Hugh Rich

 Instinctif - Media & investor relations enquiries      EQTEC@instinctif.com (mailto:EQTEC@instinctif.com)

 Guy Scarborough / Tim Field                            +44 791 717 8920 / +44 788 788 4794

About EQTEC

 

As one of the world's most experienced thermochemical conversion technology
and engineering companies, EQTEC delivers waste management and new energy
solutions through best-in-class innovation and infrastructure engineering and
value-added services to owner-operators. EQTEC is one of only a few technology
providers directly addressing the challenge of replacing fossil fuels for
reliable, baseload energy. EQTEC's proven, proprietary and patented technology
is at the centre of clean energy projects, sourcing local waste, championing
local businesses, creating local jobs and supporting the transition to
localised, decentralised and resilient energy systems.

 

EQTEC designs, specifies and delivers clean, syngas production solutions in
the USA, EU and UK, with highly efficient equipment that is modular and
scalable from 1MW to 30MW. EQTEC's versatile solutions process 60 varieties of
feedstock, including forestry waste, agricultural waste, industrial waste and
municipal waste, all with no hazardous or toxic emissions. EQTEC's solutions
produce a pure, high-quality synthesis gas ("syngas") that can be used for the
widest range of applications, including the generation of electricity and
heat, production of renewable natural gas (through methanation) or biofuels
(through Fischer-Tropsch, gas-to-liquid processing) and reforming of hydrogen.

 

EQTEC's technology integration capabilities enable the Group to lead
collaborative ecosystems of qualified partners and to build sustainable waste
reduction and green energy infrastructure around the world.

 

The Company is quoted on the London Stock Exchange's Alternative Investment
Market (AIM) (ticker: EQT) and the London Stock Exchange has awarded EQTEC the
Green Economy Mark, which recognises listed companies with 50% or more of
revenues from environmental/green solutions.

 

Further information on the Company can be found at www.eqtec.com
(http://www.eqtec.com/) .

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