AIM-listed EnergyPathways, an energy transition company, has announced 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.'
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Source: EnergyPathways
