Active Energy Group PLC (LON:AEG) has raised £11.57mln via the issue of five-year convertible loan note to existing and new investors, with the cash set to be used to accelerate the development of the company’s CoalSwitch technology.
AEG said it plans to build the first commercial-scale plant that will burn the revolutionary biomass product that can be burned by old, coal-fired generation facilities without the need for a retrofit.
It also revealed “numerous utilities” and owners of coal power stations across the world have requested the delivery of commercial batches of “drop-in” biomass fuel.
"The completion of this capital raise supports our strategy to accelerate the production of CoalSwitch and to collaborate with forestry owners around the world to increase the commercial viability of their timberland assets,” said AEG chief executive Richard Spinks.
“[Our] commercialisation strategy should capitalise on the interest we have already received from utilities and major coal fired power stations and feedstock owners from across the globe, to commercially utilise our proven 'drop in' coal replacement biomass product.”
How it works
The CoalSwitch product is made from waste wood which would normally be left to decompose following forestry operations.
This includes pulp and saw mill by-products such as bark, sawdust and thinnings, and wood which is over-age, under-quality, blow-down, beetle-kill, forest-fire damaged, or industrial waste.
CoalSwitch will be rolled out where AEG can source high volume feedstock. This may include empty fruit bunch and palm trunks in Asia, low-value hardwoods and mill waste streams in Alberta and fir tree and sawmill residues elsewhere in Canada.
Research, development and testing have taken place over the past two years with the help of the University of Utah, which has included both burn and handling tests.
From the boss
CEO Spinks told investors: "Our product can differentiate itself from other coal replacement products as it is made from forestry or other industrial process waste (including not only forestry and sawmill wastes, hog fuels and demolition wood, but also otherwise completely unusable biomass waste streams such as empty fruit bunch and palm trunks).
“We firmly believe that the product has been significantly enhanced and improved since we began working with our partners some two years ago, and continue to believe that it has the potential to transform the coal-fired power industry, whilst at the same time making a positive impact on the global and regional air quality and environmental landscapes.”
Share price and broker comment
The shares rose 6%, valuing the business at £20mln. Broker Northland Capital told investors: “AEG is positioning CoalSwitch to meaningfully contribute to the transition of coal-fired fossil fuel generation to renewable sources, notably making use of waste biomass such as sawmill residue, wood from demolition, waste palm trunks or fruit branch waste.”
There is more to the business than CoalSwitch. AEG has two other arms - TimberLands and WoodFibre.
The TimberLands division has a joint venture with three native Métis Settlements of Alberta, Canada, to commercialise more than 300,000 hectares (around 750,000 acres) of assets owned by them.
The forests are projected to contain more than 35mln cubic metres of mature timber, as well as low-grade wood suitable for a range of industrial applications. The aim of the JV is to to produce Biomass-based renewable energy fuel using the CoalSwitch technology. The partners also want to find investors in the woodland.
This is focused on the Black Sea region and specifically Yuzhny Port, near Odessa in Ukraine. From there it supplies the raw material used in medium density fibreboard.