Discontinuation of Billingham Project

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 David Palumbo / Nauman Babar	[phone]
Strand Hanson - Nomad & Financial Adviser James Harris / Richard Johnson	[phone]
Panmure Gordon - Broker John Prior / Hugh Rich	[phone]
Instinctif - Media & investor relations enquiries Guy Scarborough / Tim Field	[e-mail] [phone] / [phone]

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.

 

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