Highlights:

• – SiBox Demonstration Module project on schedule with storage media design selected
• – Agreement executed with Woodside Energy Technologies to fund $2 million towards SiBox Demonstration Module (subsequent to the quarter’s end)
• – Aurora Energy Project strategy reviewed and development variation approvals progressed
• – Appointment of new Chief Executive Officer, Matthew Squire who commenced on 2 August
• – Cash balance at end of quarter $4.2 million

Clean, scalable renewable energy storage developer 1414 Degrees Limited (“14D” or “the Company”) (ASX: 14D) provides the following activity report and Appendix 4C for the period ending 30 September 2021.

Strategic summary

This has been a constructive quarter for the Company with the establishment of new leadership at Management and Board level as well as a renewed strategic focus on delivering shareholder value. The quarter saw an increasing demand for renewable energy solutions with record levels of capital projects and investments announced globally, coupled with a strong rise in global energy prices. It is expected that larger demands for investment in renewable energy will be recognised at the forthcoming COP 26 UN Climate Change Conference in Glasgow at the end of October. This bodes well for the Company’s strategy as we look to progress our technology, commercialise our assets and position for future projects that will require thermal energy storage solutions.

The technological and commercial development of the SiBox™, our latest Silicon based thermal energy storage technology, has been confirmed as the primary focus for the Company. After further testing of storage media we are moving ahead with the construction of the SiBox Demonstration Module. The purpose of this project is to validate the technology as a robust system for the storage of renewable energy and its re-delivery in the form of high temperature heat. This will ensure that abundant, affordable, yet intermittent renewable energy can be transformed into clean, reliable heat for a larger array of energy users such as minerals processing industries, thermal power stations and those needing a combined heat and power solution. Our vision is to position the Company’s SiBox technology as a core component of a broad range of future renewable energy projects, providing a runway of investment opportunities for shareholders.

The Aurora Energy Project north of Port Augusta is an important opportunity for the Company and we have continued to invest in its progression and development. The approvals that underpin the project have been maintained and are being amended to suit the change in scope. We are now looking to accelerate the AEP including bringing in a partner to participate in the final development activities (such as equipment selection and transmission studies) as well as share the future capital costs. At this stage we anticipate a final investment decision for the project to be in late 2022.

Technology update

The core component of the SiBox thermal energy storage technology is the storage media. It consists of a silicon-based Phase Change Material (PCM) and a means of containing the PCM. The key breakthrough of SiBox is the combination of a unique PCM and a containment design which harnesses the latent heat properties of silicon for thermal energy storage, while solving key challenges such as preventing oxidation, managing volume change during melting and solidification, and managing inter-reaction with containment materials. 14D have tested and evaluated in detail multiple storage media options and have now selected the preferred option for the SiBox Demonstration Module. This selection feeds into the final detailed design work prior to procurement of materials later this year.

The purpose of the SiBox Demonstration Module is to advance the Technology Readiness Level (TRL) of the SiBox technology and demonstrate the performance of the engineering system. This will de-risk the technology allowing it to be scaled up for larger capital investment in the future. During the quarter the Company was involved in negotiations with Woodside Energy Technologies for a potential funding agreement that included details of the project concept, schedule and scope. An agreement was entered into subsequent to the quarter’s end. This is a strong endorsement of the approach being undertaken by 1414 Degrees to advance the SiBox technology.

Investment in the SiBox concept is now set to commence with construction and commissioning expected to be completed by early 2023 and a further performance testing program thereafter.

Aurora Energy Project (AEP) – Port Augusta

A detailed review of the Aurora project’s concept and economics was undertaken during the quarter whereby it was re-confirmed that an initial 140 MW / 140 MWh Battery Energy Storage System (BESS) installation and associated works for connection to the immediately adjacent ElectraNet / OzMinerals 275kV transmission line is the optimum approach for Stage 1 of the project. The project footprint will be considerably smaller than the original solar thermal project however the plan to provide dispatchable renewable energy in future remains. An initial BESS will unlock the potential for future solar installation as well as providing further system security and support to the electricity network surrounding Port Augusta.

A Development Approval variation was submitted to the SA Department for Infrastructure and Transport in June. This variation includes provision for battery energy storage, solar photo-voltaic generation as well as thermal energy storage and the original solar thermal project. Approval will allow for the optimum use of the AEP site, which remains an excellent location for the development of large-scale renewable energy. At this stage it is expected that the Development Approval variation will be received in the December quarter facilitating the next phase of activity including ongoing engagement with all stakeholders to ensure the AEP regains development momentum.

Corporate

Matthew Squire joined the Company as Chief Executive Officer on 2 August 2021. Since joining he has met with several stakeholders and undertaken reviews of company resourcing and governance procedures to ensure the Company is focussed on achieving commercial outcomes and progressing the development of its technology.

The Company was also very pleased to recruit two employees, Callum Phelps and Sam Ovens-York who will join the R&D and SiBox Demonstration Module teams fulltime from December following their completion of undergraduate studies at the University of Adelaide’s School of Mechanical Engineering.

All staff worked remotely during the July seven day lockdown in South Australia due to Covid-19.  There was no material interruption to the Company’s operation or business from the pandemic during the quarter.

Financial

At quarter end the Company held $4.179 million in cash and continues to focus on cashflow management to maintain liquidity and ensure the timely delivery of its projects. $1.520 million of net cash outflow was used in the Company’s quarterly activities which included approximately $380,000 of one-off legal fees and relocation costs.

As required by ASX Listing Rule 4.7C3, the Company notes that $147,000 was paid to related parties during the quarter. These payments were salaries, fees and superannuation paid to Directors.

Events subsequent to 30 September 2021

On 13 October 2021 the Company executed agreements with Woodside Energy Technologies Pty Ltd (Woodside), a subsidiary of Woodside Energy Ltd, to support further development and potential partnership in the future commercialisation of 14D’s SiBox technology. Woodside will contribute up to $2m to the circa 1 MWh demonstration module. These contributions will be made on the completion of specific project milestones by 14D. The first milestone is due for completion in November with construction and commissioning anticipated to be completed in January 2023. This will be followed by a rigorous testing and performance monitoring schedule throughout the year.

Following completion of the prescribed program Woodside will make a decision whether to participate further in the direct investment of the technology. Should Woodside choose to do so, 1414 Degrees and Woodside will create a Special Purpose Vehicle (SPV) to hold the SiBox intellectual property (IP) for its future development. Negotiations around the structure of the SPV will not occur until after Woodside have made a decision to participate further. 1414 Degrees’ interest in the SPV will not be less than 51% with Woodside’s interest being dependent upon it’s investment as a proportion to an agreed fair value of the technology. Further details of the arrangement with Woodside were provided in the Company’s ASX announcement on 13 October.

​1414 Degrees (ASX: 14D) is pleased to announce it has signed agreements with Woodside Energy Technologies Pty Ltd (Woodside), a subsidiary of Woodside Energy Ltd, to support further development and potential partnership in the future commercialisation of 14D’s SiBox™ technology.

1414 Degrees provided an update to the ASX, outlining progress on key milestones during the period ending 30 June 2021:

• New leadership at Management and Board level, with the appointment of Matthew Squire as Chief Executive Officer and Tony Sacre as Chair of the Board. These appointments significantly enhance the commercial, strategic and governance capabilities of the Company.
• Relocation into new premises, uniting all staff, particularly the technical and commercial teams, for the first time.
• Renewed technical, commercial, and business development focus on heat and combined heat and power applications, as informed by prospective customers and where SiBox™ is able to demonstrate its unique, competitive advantages.
• An updated development plan for the Aurora Energy Project that will ensure we gain the maximum return on investment from this site, financially and strategically, to support the development and demonstration of the SiBox™ technology.

​The Board of 1414 Degrees has appointed oil and gas executive Matthew Squire as its Chief Executive Officer.

Mr Squire has extensive experience in the oil and gas, power generation and broader energy sector working for Australian and international publicly-listed companies including Beach Energy, QGC, BG Group, Santos and Origin Energy.

Most recently he was General Manager – Corporate Development and Strategy for Beach Energy with responsibility for business growth and development.

With over 20 years’ experience in the energy sector and many in senior leadership roles, Mr Squire has been directly involved in some of the largest energy transactions in Australia.

Most notably, these include commercial leadership of Beach Energy’s $1.5 billion acquisition of Lattice Energy and a core part of the business development team that established BG Group’s circa $20 billion QCLNG project in Queensland.

Mr Squire’s areas of expertise include commercial negotiations of long-term joint venture relationships and energy sales agreements as well as being highly experienced in M&A and business development having led many corporate and asset transactions.

1414 Degrees Chair Tony Sacre (previously Interim Chair) said Mr Squire’s appointment added further strength to the company’s growth plans.

“Matt is ideally placed to lead the future direction of 1414 Degrees as we strive to make clean energy affordable and available to all,” Mr Sacre said.

“He is highly experienced in growing shareholder value via sustainable profitable investments, with a proven track record of successful business development outcomes for some of Australia’s largest companies in our sector.

“The Board of 1414 Degrees is pleased to welcome Matt to this role.”

Mr Squire said he was looking forward to developing and expanding 1414 Degrees’ technology and position in the clean energy market.

“1414 Degrees has a unique product combining energy storage with renewable generation at a time when the market is transitioning,” Mr Squire said.

“There is a growing need for innovative energy storage solutions and 1414 Degrees is well placed to meet this demand.

“I look forward to working with the 1414 Degrees Board and team to create energy solutions that are clean, affordable and build shareholder value.”

Mr Squire holds a Bachelor of Mechanical Engineering (Hons), a Bachelor of Economics and a Graduate Diploma of Applied Finance and Investment.

He will be based in Adelaide and starts with 1414 Degrees in August.

1414 Degrees (ASX:14D) is pleased to report that it has identified the pathway to commercialise its modular SiBox technology and will build a demonstration module. This follows twelve months of testing of SiBox storage media under a variety of operating conditions in laboratory furnaces.

SiBox is the latest generation of 1414 Degrees proprietary silicon based thermal energy storage technology. The demonstration module will accelerate the commercialisation of SiBox as a competitive clean energy product; advance the Technical Readiness Level (TRL); and provide confidence to large scale industrial and utility customers. The module is designed to be replicable to build any scale of energy storage device.

The $2m 1 MWh demonstration module is scheduled to be commissioned in September 2022. A comprehensive test program will enable the Company to build a multi-module 75 MWh commercial pilot, scheduled to be commissioned in 2025, as previously announced. The Company is progressing partnerships and grants for the full commercialisation process.

Successful delivery of the project will initiate a cost-effective pathway to future integration into industrial applications as shown in the SiBox cost reduction pathway below.

About the technology

14D’s SiBox technology harnesses the exceptionally high latent heat of molten silicon to store energy in the form of high temperature heat. SiBox presents a paradigm-shift in how thermal energy is stored and recovered. The heart of the SiBox technology is a robust storage media solution that protects the silicon-based phase change material from degrading, while storing and transferring heat efficiently and cost-effectively. SiBox consists of modular sections of the new storage media, heating elements and a heat exchanger to recover the stored thermal energy in the form of hot air in a closed loop.

14D SiBox: how it works

Single product

The SiBox module is designed to be tailored for specific applications with minimal design or operational changes, providing the potential to fast-track commercialisation with a single product capable of servicing multiple heat and/or electricity applications.

Decarbonising

SiBox offers a unique solution to the challenge of decarbonising heat: it can use intermittent renewable energy sources to produce the high temperature heat needed by industry, with the temperature able to be customised for different applications.

SiBox’s operating temperature of more than 1000°C far exceeds the capabilities of current commercial TES alternatives, such as molten salts (<600°C). Most high temperature process heat >800°C in Australia (730 PJ/y) is provided by fossil fuels such as natural gas, coal and diesel. SiBox is the only close-to-commercialisation technology capable of decarbonising this industrial sector.

In addition to ultra-high temperature heat, the output from SiBox also facilitates long duration renewable electricity storage to enable the clean energy electricity networks of the future.

Competitive

Globally energy suppliers and users are grappling with how to adjust to and manage the energy transition with least cost and least risk. Validating the technical and commercial advantages of SiBox with the demonstration module will give manufacturers and networks the confidence to innovate and adopt a new technology. Reliable energy in the form of heat or electricity is crucial for their successful operation in competitive markets, being able to view, monitor and test a SiBox module at actual scale and operating conditions, will enable them to invest in subsequent large-scale deployments and enable 14D to progress commercialisation of SiBox as a clean energy product.

South Australian Government Crown Sponsorship for the Aurora Energy Project has been extended to support an increase of the battery storage component.  It has previously been extended to support construction of the 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 essential infrastructure’ under section 131(2)(c) of the Planning, Development and Infrastructure Act 2016.

Crown Sponsorship was provided for the original project scope of 150MW concentrated solar power and 70MW solar and was extended in February 2021 to include 70MW of battery storage and 2MW thermal energy storage. Crown Sponsorship has now been approved to increase the battery storage component from 70MW/70MWh to 140MW/140MWh in the initial stage, increasing to 140MW/ 280MWh in later stages. 1414 Degrees acquired the project through its purchase of SolarReserve Australia II Pty Ltd now renamed SiliconAurora Pty Ltd.