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.

• – Aurora revenue upside potential grows 
• – Global decarbonisation policies driving SiBox industrial heat opportunities 
• – Cash of $4.6m 
• – R&D rebate of $1.9m in process

1414 Degrees’ (ASX : 14D) overall company strategy was updated in the first quarter of 2021 to ensure the Company’s technological and commercial efforts are focussed on the quickest path to revenue.  The team is concentrating on using 14D’s competitive advantages to accelerate development of its core silicon-based thermal energy storage technology, including:  

• – Working with client businesses seeking to decarbonise their high temperature industrial heat processes  
• – Collaborative business development for clients with variable and waste flared gas streams 
• – Applying for a series of recently announced government grant programs, both domestically and internationally, with direct relevance to 14D SiBox™ technology 
• – Actively engaging Federal and State Government decision makers to access an increasing wave of grant funding specifically aimed at longer duration storage and decarbonisation of industrial heat processes   

14D’s unique technology opens an extensive source of funding to leverage its shareholder capital.  This is driven by the increasing recognition by government, energy companies, industrial and commercial enterprises and investors of the value of energy storage, in particular thermal storage, in converting variable renewable energy into baseload heat and electricity. The momentum in global energy markets should not be underestimated, and this view is supported by recent market events in Australia: 

• – Energy industry leaders and analysts have been warning of a fallout on coal power plants from prolonged low wholesale power prices as a direct result of renewable penetration, fuelling expectations of extended temporary and permanent shutdowns.  This is precisely why the problem of variable renewables must be solved and can only happen through game changing storage solutions such as 14D’s silicon-based technology 
• – Several large-scale thermal generators have flagged the potential mothballing of some of their coal units well before their advertised closure dates.  These announcements follow the publicly announced news of EnergyAustralia bringing forward the closure of Yallourn coal fired power station in Victoria to 2028 from 2032; the decision by Origin Energy to introduce greater flexibility into the operation of the Eraring coal fired power station in NSW; and Sunset Power flagging they remain open to shifting the closure date of the Vales Point coal fired power station, dependent on the prevailing wholesale price conditions in the National Electricity Market.  These announced changes are a direct result of the penetration pace of renewable generation impacting on lower spot and forward electricity prices   

These market dynamics are highly supportive of both 14D’s thermal energy storage technology development and the potential for higher forecast earnings from the Aurora Energy Project (AEP).  

Internationally, decarbonisation continues to impact domestic government, investor and corporation policies affecting carbon intensive industries.  According to the International Energy Agency (IEA), heat is the largest energy end-use, accounting for half of global final energy consumption, significantly more than electricity (20%) and transport (30%).  In this global context, where renewable energy met only 11% of global heat demand in 2019, fossil fuels continue to dominate heat supplies.  Awareness of these imbalances is front of mind in global government policy responses, as demonstrated by the following:  

• – The European Union has warned that Australian steel and aluminium exporters won’t escape the EU’s planned carbon border levy. From July 2021 the levy will ensure the bloc’s $65/tonne carbon tax is not undercut by imports from countries with lower emissions standards, like Australia.  This policy is a direct driver for 14D’s value proposition of turning variable renewables into high temperature baseload heat to decarbonise high emitting industries 
• – Corporations continue to purchase record amounts of clean energy, approximately 23.7GW in 2020.  The rising numbers of companies making clean energy commitments is reflected in the number of companies executing clean energy Power Purchase Agreements (PPAs), demonstrating support of sustainability and clean energy, including storage.  Companies in all sectors, including hard-to-abate oil & gas production and mining, are responding to the pressure, not only by purchasing renewable energy, but also to use renewable heat to decarbonise their operations. This is still a very immature market with vast potential for 1414 Degrees silicon-based thermal energy storage technology 
• – A coalition of the world’s biggest investors is pushing companies to align capital spending with emissions reduction pledges 

Technology update 

SiBox™ 

Testing of our silicon-based thermal energy storage technology, SiBox™, continues in multiple furnaces conducting daily cycling consistent with anticipated real-life operational conditions. A number of variants of the silicon-based storage medium are undergoing tests and modelling to compare robustness, cost, energy density, and energy conductivity. The result will lead to selection of the most robust and low cost products to scale up to approximately 1.5MWh in a demonstration module. The aim is to follow-up with an approximately 75MWh device delivering 2MW for 8 hours to the National Electricity Market (NEM) on our Aurora Project, resulting in a commercial SiBox product.  

GAS-TESS 

Our engineers are reviewing the results from the gas fired thermal energy storage system, GAS-TESS installation at SA Water’s Glenelg Wastewater Treatment plant, to identify the most appropriate path to commercialisation of this unique technology. The variability of biogas production in the plant suggested a combination of engines sized for the minimum gas production with a GAS-TESS to absorb the variable component.  They compared the business cases for engines alone versus a hybrid with an upgraded GAS-TESS. The results were close, with the hybrid case marginally less favourable, and the report noted that the comparison applies to this one site and is based on a number of key high-level assumptions, particularly around engine efficiencies. A sensitivity/gap analysis indicated that improving revenue margins will increase the competitiveness of the GAS-TESS technology. This can be achieved by increasing the electrical energy conversion efficiency while decreasing costs as part of ongoing technical development of the GAS-TESS technology. 

The conclusion is that further investigation could promote the commercialisation prospects of the GAS-TESS. A key influence will be market research to identify and characterise broader potential applications for the GAS-TESS, and engagement with industry partners to further inform the GAS-TESS business case and collaborate on future opportunities. 

Technology Collaborations 

Our R&D collaboration project, funded through the Innovation Connect program, with the University of Adelaide on further improvements to 14D’s silicon-based thermal energy storage technology is well underway. We have also collaborated with Deakin University on optimising heat transfer design within the SiBox™. The outcome of the HILT CRC bid, for which 1414 Degrees is an Affiliate Partner, is still outstanding. 

Aurora Project update 

Stage 1 of the Aurora Energy Project (AEP) will be a Battery Energy Storage System (BESS). Doubling of the previously announced 70MWh battery is under investigation, dependent on transmission and connection options. EPC and vendor finance proposals from four tier one providers are under consideration and we expect final decisions to be made in the near term. 

As previously announced, the Aurora Energy Project can provide a significant revenue stream to fund the development of the SiBox™ technology and achieve commercialisation.                           

The wholesale electricity market dynamics described above continue to support the Project’s business case with greater revenue potential.  Key positive drivers for significant revenue upside include record national uptake in 2020 of approximately 3GW of distributed PV, with homes and businesses around Australia installing 317MW of systems in March – an all-time high for national monthly installs.  In South Australia it is now delivering a significant proportion of the state’s electricity needs, causing periods of negative market demand with resulting low to negative NEM prices. This is expected to become increasingly common, providing upside to the projected arbitrage revenue for Aurora.  Additionally, the PV take–up rate will continue to exacerbate grid instability and drive–up Frequency Control Ancillary services (FCAS) price volatility, providing revenue upside for Aurora. 

As mentioned previously, the announced early generator shutdowns and unit cycling should lead to increasing wholesale price spreads, benefitting revenues from Aurora Energy Project storage.  

Finance 

At quarter end, the Company held $4.6m in cash and continues to manage cashflow to ensure the timely delivery of its projects. The Company’s R&D tax rebate has seen an uplift to approximately $1.9m receivable and was lodged with the ATO in April this year. Payroll was further supported by the second extension of the JobKeeper 2.0 program, which ended at the end of March this year.  

Corporate 

With a strengthening post-Covid economy, the Company decided to consolidate its team in a single location. The Southlink facility will be decommissioned in the coming months, and all operations moved to Melrose Park. This will facilitate team collaboration and commercial advancement of our products, including the GAS-TESS and SiBox solutions.  

• – Internal modelling is identifying the lowest risk plant configurations with the highest returns
• – BESS size could double to 140MWh in Stage 1
• – Offers of vendor finance received
• – Potential for Federal Government funding of $110m
• – Final BESS business case will be reported in the near term

1414 Degrees Limited (ASX:14D) (Company) is pleased to provide an update of its Aurora Energy Project (Aurora) in the National Electricity Market (NEM).

The Company has restructured its Aurora project team to ensure optimal delivery of the project. Additional energy market expertise has been brought into the team, particularly to refine the business case modelling of spot energy prices and Frequency Control Ancillary Service (FCAS) revenues. The revised modelling to identify the highest return-lowest risk outcome for 14D shareholders has been promising and the key outcomes to date are:

• – Postponing solar PV generation from the first stage of Aurora development would substantially reduce the capex from the previously announced $199m and remove the requirement to sell Power Purchase Agreements (PPA’s) which are currently at historic lows
• – BESS size could be increased to 140MWh (subject to transmission connections), for higher revenue streams from:
  • – Merchant generation: Current low wholesale energy prices support charging the BESS from the NEM
  • – FCAS: The BESS will be positioned for further revenue upside from merchant and FCAS as thermal power stations continue to exit the market due to renewable penetration and low wholesale electricity prices

Further Aurora project financing updates:

• – Engineering, procurement, and construction (EPC) vendor financing has been offered, management is reviewing the economic and practical benefits of these offers
• – The Federal Government budget reaffirmed $110m in contingent financing for a thermal storage project in Port Augusta
• – A BESS with merchant earnings is attractive to potential project financiers in the current wholesale electricity market conditions

Several options are under evaluation for connection to 132kV or 275kV high voltage transmission lines to the Davenport substation in Port Augusta. While having these options adds some complexity to the business planning, they add flexibility to manage cost, constraints and connection efficiency.

The BESS business case with investment options is approaching completion and will be reported in the near term. Modelling and development of a hybrid power plant with Thermal Energy Storage System (TESS) is continuing.

In Stage 2 of the Aurora project 1414 Degrees intends to commission and test a TESS pilot of 75MWh/2MW capacity using its new SiBox™ technology.