TIDMEQT
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. GBP4 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 EUR18 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 +44 20 3883 7009
Strand Hanson - Nomad & Financial
Adviser
James Harris / Richard Johnson +44 20 7409 3494
Panmure Gordon - Broker
John Prior / Hugh Rich +44 20 7886 2500
Instinctif - Media & investor relations EQTEC@instinctif.com
enquiries +44 791 717 8920 / +44 788
Guy Scarborough / Tim Field 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
.
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