Altech Batteries (ASX: ATC) has revealed a compelling set of numbers for its planned Cerenergy battery project in Germany, with its definitive feasibility study (DFS) forecasting a net present value (NPV) of €169 million (AU$280.86 million) and annual revenue of €106 million (AU$176.16 million) generating earnings before interest, tax, depreciation and amortisation (EBITDA) of a juicy €51million (AU$84.76 million) per annum.
The company says capital cost estimates of €156 million (AU$259.26 million) and a steady-state payback period of 3.7 years add to the project’s appeal. Most importantly, it says an internal rate of return (IRR) of 19 per cent, in addition to an EBITDA margin of 47 per cent, has prompted the Altech board – in conjunction with joint venture (JV) partner Fraunhofer IKTS – to now proceed to a final investment decision (FID).
Management says the project will be constructed in the State of Saxony in eastern Germany, with an annual capacity to produce 120 1MWh (megawatt hour) “GridPacks”.
The outcomes of the DFS reveal an exceptionally bright future for our sodium chloride Cerenergy Batteries in catering to the continuously growing grid storage battery sector.
Altech Batteries chief executive officer and managing director Iggy Tan
The JV elected to develop a 120MWh Cerenergy battery plant, with the target market focussing on the grid energy storage market. The global market is expected to grow by a 28 per cent compound annual growth rate (CAGR) in the coming decades, increasing from US$4.4 billion (AU$6.74 billion) in 2022 to US$15.1 billion (AU$23.1 billion) by 2027.
The growth in storage capacity is also expected to jump from 20GW (gigawatts) in 2020 to more than 3000GW by 2050.
Altech says its Cerenergy batteries, which are made using ordinary table-variety salt, can provide high security at low acquisition and operating costs for the stationary energy storage market.
It believes its biggest cost advantage is the reduction in the hourly kilowatt (kW) cost when the plant is running at its full 120MWh plant capacity. It anticipates a cost of just €0.06 (AU10c) per kWh for the life of the battery, compared to lithium-ion batteries at €0.149 (AU25c) per kWh.
The company says that is in part due to its batteries having no moving parts, cooling fans, heating, ventilation, or air conditioning systems and because they do not require a fire protection monitoring system.
Management believes the project’s battery production costs will reduce significantly as capacity increases to GWh production – once the first industrial and fully-automated single production line with the annual capacity of 120MWh has been put into operation.
Altech describes its sodium chloride solid state (SCSS) batteries, which are also known as sodium nickel chloride batteries, are the grid battery storage solution of the future. The battery technology has been in existence since the 1990s, finding applications in mobility, telecommunications and UPS systems.
Batteries have typically been manufactured with small cells and for small-scale power needs. But in the past eight years, Fraunhofer has pioneered the Cerenergy technology, featuring cells three-times bigger than their predecessors and tailored them specifically for grid storage applications.
The company says the differentiating factor of its product is that it does not use lithium, cobalt, graphite, manganese and copper, which mitigates the risks associated with fluctuating material prices and supply chain uncertainties. It believes its batteries present a distinct advantage over lithium-ion batteries by being entirely fire and explosion-proof and immune to thermal runaway because of two primary features.
Firstly, the batteries eliminate the use of flammable liquid electrolytes or plastic separators and instead employ a solid, non-flammable ceramic tube as the electrolyte, facilitating the transfer of sodium ions. Secondly, the battery’s chemistry precludes the presence of oxides and the generation of oxygen at the cathode, a characteristic observed in lithium-ion batteries during thermal runaway.
Altech says the enhanced safety profile positions Cerenergy batteries as an ideal choice for indoor, industrial and commercial energy storage installations. It says the battery is inherently secure, does not react with water and is particularly sought-after in sensitive environments, such as areas susceptible to flooding, where lithium-ion batteries are prohibited due to safety concerns.
The company says it has strategically forged non-disclosure agreements with major utility conglomerates in Germany that have showcased a keen interest in acquiring its 1MWh GridPacks. It says discussions with two prominent utility companies on plans to pre-sell the entire initial production supply for five years have reached an advanced stage.
Altech’s focus is to solidify those partnerships and secure offtake agreements in a bid to advance sustainable energy solutions within the German utility sector.
It appears to leave the company in a win-win situation for its planned battery plant, with both its breakthrough technology and a lovely set of numbers highlighted within its DFS.
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