Crown Sponsorship

Crown Sponsorship

South Australian Government Crown Sponsorship for the Aurora Solar Energy Project has been extended to support construction of a battery and the Company’s thermal energy storage system (TESS-GRID).

Crown Sponsorship indicates that the project is sponsored by a State Government agency, in this case, the Department of Energy and Mining, as a development of public infrastructure under section 49(2)(c) of the Development Act 1993. This was previously provided for the original project scope of 150MW concentrated solar power and 70MW solar and has now been extended to include 70MW of battery storage and 2MW thermal energy storage. 1414 Degrees acquired the project through its purchase of SolarReserve Australia II Pty Ltd now renamed SiliconAurora Pty Ltd.

This government support is welcomed as it will assist in development approvals for the project.

Fourth Quarter 2020 update

Fourth Quarter 2020 update

  • – Positive Aurora Project business case projects revenues up to $60m with 14D TESS
  • – Proprietary SiBox technology confirming robust and efficient energy storage solution
  • – Key CEO and director appointments boost board and management

 

The quarter delivered major commercial and technological advances for your Company and our ability to deliver for shareholders has been enhanced by key board appointments: Jamie Summons as Managing Director, and Peter Gan as a non-executive director. Their extensive management experience in finance, energy markets and renewable generation will be a major boost to your Company’s governance and capability.

The successful SPP capital raising allowed us to commission expert modelling of a combination of batteries, TESS and PV to model a 182MW hybrid silicon power plant on our Aurora Project, projecting net cash flows growing to $60m as it delivers multiple services to the National Electricity Market and off-market derivatives.

Our core SiBox thermal energy storage technology continues to confirm its potential for game changing energy storage. Our team has mapped out a pathway to a very competitive levelised cost for electricity storage using the SiBox technology at our Aurora Project. The SiBox technology can also uniquely provide heat solutions for very high temperature industrial processes.

We are progressing cooperative commercialisation agreements with several key industry partners to secure substantial investment in SiBox development and applications. The Company is an Affiliate Partner in the Heavy Industry Low-Carbon Co-operative Research Centre (HILT CRC) bid to engage with target companies and explore how SiBox technology can help decarbonise heat for industrial processes and high temperature hydrogen production.

 

Technology advances

The new SiBox thermal energy storage technology developed by your Company’s technical team contains many improvements that build on previous research and development and lessons learnt from the operation of TESS units, as illustrated on the following page. In-house testing and engineering of each of these sub-systems, supported by our partnerships with key specialist external companies, has continued to confirm their benefits for delivering a robust and competitive technology.

In the quarter, activity was focussed on verifying the robust performance of the SiBox storage media. This included executing an agreement with a top-tier European supplier to contribute their expertise in manufacturing and supply of storage media for the SiBox. Pre-manufacturing samples from this supplier are currently being tested in our research facility and their laboratory.

The SiBox heat store will be the basis for all scaled up devices, so building a single heat store cell is a major objective in 2021. Its design, incorporating new heat transfer models, will be validated in performance tests over the coming year. Following this we plan to assemble 40 of these cells into a heat store module that will be integrated with an energy recovery system to form a TESS-GRID system for the Aurora site. Demonstration of the SiBox technology at Aurora will enable it to be scaled up for commercial applications requiring long duration heat or electricity supply from renewables. As illustrated in the figure below, this process of scale up with validation is expected to deliver a competitive levelised cost of storage (LCOS).

In parallel with the SiBox development program, further research and development will also drive down the cost and increase performance of the thermal energy storage technology. R&D will commence in early 2021 on the next generation of storage media in partnership with the University of Adelaide.

 

GAS-TESS

The GAS-TESS team and Glenelg WWTP operators having been working through final approvals of the solar PV, reciprocating gas engines and GAS-TESS as an integrated generation site. The main activity has been evaluating scenarios to determine the most favourable configuration for operating a variable biogas production facility with a combination of GAS-TESS and reciprocating gas engines. This hybrid power plant is projected to maximise the economic return on investment in generating technology by improving the utilisation of variable biogas production and minimising flaring.

 

Aurora Solar Energy Project

During the quarter the Office of the Technical Regulator (OTR) assessed the Aurora Solar Energy project plan and granted a certificate of compliance.

ElectraNet was contracted to develop the electrical specifications to enable the Project to connect to Electranet’s transmission network. ElectraNet will also carry out a due diligence assessment on the draft generator performance standards (GPS) and customer performance standards (CPS) for the Project to comply with the National Electricity Rules.

The siting of the battery (BESS) and thermal storage (TESS) systems was finalised for submission to the South Australian Government for a variation to the existing development approval. The siting provides for future expansion while conforming with the existing development approvals. As shown on the map, the siting avoids high-value vegetation following recommendations of a Flora and Fauna Survey prepared by ESB Ecology and corresponds with the Cultural Heritage Clearance Survey Report.

In the next quarter, a key focus is the grid connection studies to demonstrate GPS compliance to ElectraNet in an Application to Connect. Concurrently, Expressions of Interest are being sought for tenders for engineering and construction of the first stage of the project. This will provide firmer capital estimates for development of the project.

 

Aurora Project business case

Late in the quarter, the Company reported a positive business case for development of the first stages of its Aurora Solar Energy Project on the National Electricity Market (NEM). Independent consultants modelled spot energy prices and Frequency Control Ancillary Service (FCAS) revenues from the operation of a hybrid power plant comprising 70MW of solar PV with a 70MWh/70MW battery (BESS) on the high voltage transmission line to the Davenport substation in Port Augusta. The hybrid plant simulations were then extended to include a (nominal) 1414 Degrees 1GWh/42MW Thermal Energy Storage System (TESS-GRID) operating with the BESS and PV. Each device has separate inverters and operates through a Power Plant Controller to optimise dispatch of solar PV, BESS and TESS to the transmission line. The BESS and TESS charge and discharge with grid electricity or from the PV.

According to volatility in any particular year, net revenues from operating in the NEM spot market could range between A$25m and A$30m for the PV-BESS stage. The projected net earnings almost double with the TESS, ranging between A$45m and A$60m. Net earnings include provision for plant operating costs estimated up to A$3.5m for the project when all devices are operational. Electricity markets are volatile and may be greatly influenced by policy changes so these earnings estimates are indicative.

Capital cost of the first stage of development, including inverters, substation and connection to the high voltage transmission is estimated at A$199m. The second stage with TESS-GRID (and CSP) will utilise the same connection as the first stage PV-BESS. Further financial modelling will be undertaken to optimise the hybrid plant size, and this is likely to lead to adjustment of storage capacity and MW of output, potentially reducing capital outlay. Capital cost for supply of a TESS-GRID to the project will be estimated following completion of the pilot phase in 2024. The target is $210,000 per MWh for a storage and energy recovery system.

 

Finance

At quarter end 1414 Degrees held $5.7m in cash following the Share Purchase Plan closing over target with $3.176m. An approximately $1.3m R&D tax rebate is pending. The payroll continued to be supported by JobKeeper receipts which will be continued until the end of March 2021 with the company’s enrolment in the second extension of the JobKeeper 2.0 program.

 

Corporate

Your company continued its corporate strengthening to meet key strategic goals of revenue generation and technology development. During the quarter, Jamie Summons was appointed Managing Director and Peter Gan as a non-executive director. Jamie brings a strong finance and energy market background to his new role. Peter brings extensive experience in listed companies and finance. Their term commenced in January 2021.

 

The new year will be very productive for shareholders as we move to tap the many revenue streams available to our Aurora Project. We also expect significant developments in SiBox applications through partnerships to support processes such as high temperature hydrogen production.

Crown Sponsorship

Aurora business case projects up to $60m annual net revenues

1414 Degrees is pleased to report positive business case for development of the first stages of its Aurora Solar Energy Project on the National Electricity Market (NEM). 

The Company engaged independent consultants to model spot energy prices and Frequency Control Ancillary Service (FCAS) revenues from the operation of a hybrid power plant comprising 70MW of solar PV with a 70MWh/70MW battery (BESS) on the high voltage transmission line to the Davenport substation in Port AugustaThe hybrid plant simulations were then extended to include 1414 Degrees 1GWh/42MW Thermal Energy Storage System (TESS) operating with the BESS and PV. Each device has separate inverters and operates through a Power Plant Controller to optimise dispatch of solar PV, BESS and TESS to the transmission lineThe BESS and TESS charge and discharge with grid electricity or from the PV. Capital cost of the first stage of development, including inverters, substation and connection to the high voltage transmission is estimated at A$199m. 

According to volatility in any particular year, net revenues from operating in the NEM spot market could range between A$25m and A$30m for the PV-BESS stage. The projected net earnings almost double with the TESS, ranging between A$45m and A$60m. Net earnings include provision for plant operating costs estimated up to A$3.5m for the project when all devices are operational. Electricity markets are volatile and may be greatly influenced by policy changes so these earnings estimates are indicative.  

It is the Company’s view that policy and energy market trends are increasingly favourable for projects with energy storage, and the TESS business case assumes some revenue from the provision of long duration synchronous storage and generationIn contrast to a gas peaker plant, the TESS can also profit from both low and high price markets. However, the business case as modelled is not yet optimised for the TESS because the unique operational characteristics of the TESS with the BESS and PV require 1414 Degrees to create its own dispatch model to optimise the revenues from FCAS during charging and revenues from the provision of long duration storage and discharge with inertia. The new dispatch model to be built over the next 12 months will allow optimisation of TESS sizing, cost, and revenues to accommodate current and future market trends. It is anticipated that there will be substantially higher price volatility and new market mechanisms in place for supporting long duration storagefurther supplementing TESS revenue from arbitrageFCAS and derivatives (e.g. price caps). The ~1GWh TESS is scheduled to be commissioned in 2028 when the increasing requirement for long duration firmed generation is projected to result in favourable pricing signals. In addition to electricity storage, the TESS can supply substantial additional thermal energy that could be monetised but is not included in the current Aurora Project business case.  

1414 Degrees TESS includes its new scalable SiBox thermal energy storage technology coupled to a turbine-based energy recovery system (ERS). The TESS is capable of charging either from the grid or the on-site solar generation. This creates remarkable flexibility to service regulation and contingency FCAS markets and buy and sell energy on the NEM according to price signals. The bundled long duration storage and generation capacity would enable the fully developed project to sell more competitive power purchase agreements (PPAs), financial derivatives and grid support services under proposed regulatory market changes.  

An alternative operating regime bundles the selling flexible power purchase agreements is not considered in the current model because large-scale energy storage that can charge from, and regenerate to, the grid at high current will operate to advantage with price signals for energy and ancillary services. In addition to the modelled scenario the Aurora Project site has potential to install more solar PV and/or concentrated solar (CSP) generation, both of which could be firmed through the TESS-GRID to provide competitive PPAs. 

Approximately 12 months after commissioning the first stage PV and BESSthe Company intends to commission and test a TESS pilot of 75MWh/2MW capacity using its new SiBox storageFollowing verification of its operational performance in the pilot the 1414 Degrees TESS-GRID could be expanded up to several GWh providing 100-150MW of long duration electricity generation. The large energy storage capacity will contribute to supply security in the National Electricity Market to meet the challenges of increasing intermittent renewable generation. 

Indicative layout of Aurora Solar Energy Project Stage 1:

 

New Director Appointed

New Director Appointed

1414 Degrees is pleased to announce that Peter Gan will join its Board as a Non Executive Director commencing 4 January 2021.

Peter has held Managing Director, CEO, Company Secretary, and other senior management positions in a variety of listed public and private companies. His roles have spanned multiple industries including technology start-ups, financial services and energy markets in Australia, USA, UK, Netherland, Belgium, Ireland, China, Hong Kong and South East Asia.

Peter’s previous experience includes Managing Director of ASX listed Green Pacific Energy Ltd; Envirogen Pty Ltd; and UK based Grantham Asset Management, more recently, Peter was Executive General Manager – Strategy and Investment for the AIMS Group prior to taking up the Company Secretary role at the Sydney Stock Exchange. He is currently CEO of Royal Wins Ltd.

Executive Chairman, Kevin Moriarty, said “Peter’s significant skills in capital markets and corporate management along with his extensive experience with ASX listed companies and the energy industry will be an asset to the Board and the Company.”

 

Aurora Solar Energy Project advancing

Aurora Solar Energy Project advancing

Following strong support from shareholders in the recent oversubscribed SPP, 1414 Degrees has accelerated development of its Aurora Solar Energy Project at Port Augusta. Project managers and engineering firms are proceeding with design of the substation and advancing the transmission connection agreement. Key equipment suppliers have been selected for the major components comprising PV, batteries, inverters and power management system.

The size of the first stage of the hybrid plant will consist of 70MW of PV with a 70MW/70MWh battery system (BESS). The BESS can charge off the grid or from the PV, and both can participate in grid stability markets. Financial modelling is well underway to determine the most advantageous business case for interoperation of the PV and BESS, followed by 1414 Degrees TESS.

 

New Managing Director Appointment

New Managing Director Appointment

The Board of Directors of 1414 Degrees is pleased to announce the appointment of Jamie Summons to the new role of Managing Director. Jamie will join the Company on 4 January 2021.

Kevin Moriarty, Executive Chairman welcomed the appointment stating: “We have undertaken a thorough selection process, which identified several excellent candidates, and I have great pleasure in announcing Mr. Summons as the new Managing Director of 1414 Degrees. His extensive financial experience, strategic vision and energy market familiarity will boost 1414 Degrees’ capabilities. It is my intention to move to the non-executive chairman role after a transition period.”

Jamie comes to 1414 Degrees with multi-faceted experience gained from senior management positions at TXU, Energy Australia, Barclays Capital and, most recently, at Swiss Re, where he was responsible for Swiss Re’s weather and energy business across Asia Pacific. He has an in-depth understanding of the challenges and opportunities for companies in today’s volatile economic climate.

His diverse range of skills in people management, strategy, energy trading, business development, and M&A will enhance 1414 Degrees’ technical and commercial future while his experience with renewable energy joint-ventures, connection agreements and network risk modelling will benefit the Aurora Solar Energy Project.

Mr Summons said: “I am honoured to be appointed Managing Director of 1414 Degrees and look forward to working with the team to drive the company forward.  I see great potential in our technology and its revenue outlook.

The energy industry is undergoing a transformation and we are in the right place and at the right time – low-cost, long-duration storage is needed to deliver secure and reliable renewable electricity and heat.”