– 1414 Degrees’ GAS-TESS is operating as an embedded generator on the National Electricity Market (NEM)
– Electrical energy can now be exported and sold to SA Water
– Heat energy continues to be supplied to SA Water site
SA Power Networks (SAPN) has officially recognised the 1414 Degrees GAS-TESS as an embedded generator, allowing it to connect into the distribution grid supplying SA Water’s Glenelg Wastewater Treatment Plant. The electricity will be sold to power the site until SA Water obtains an export licence.
The GAS-TESS has been returning heat energy in the form of hot water to the Glenelg Wastewater Treatment Plant since 25 May. The pilot project has also been exporting electricity to the site for test purposes, allowing our team to refine operational processes and procedures in the lead up to approval of the SAPN connection.
Financial settlements under the commercial arrangement with SA Water will commence once SA Water has commissioned metering equipment measuring the gas supplied to heat the GAS-TESS. This will initiate first revenues for the 1414 Degrees storage solution.
Approval as an embedded generator on the NEM is important for 1414 Degrees’ plan to connect its electrically charged TESS-IND to the NEM, storing and regenerating renewable electricity on the network in preparation for earning revenue from grid scale operation.
1414 Degrees is pleased to report progress with the GAS-TESS implementation at the Glenelg Wastewater Treatment Plant.
The full suite of ten biogas burners are commissioned and performing above expectations. The silicon storage reached operating temperature and the turbine started generating electricity on Saturday 25th May. It is supplying hot water from the turbine exhaust to the treatment plant, augmenting the continuous hot water supply from the biogas burners exhaust. Electricity is being delivered to our load bank pending SA Water completing the approval processes to connect to the National Electricity Market.
Image: It might look like a white dot but this is the best picture we can get of the white hot heat inside the GAS-TESS.
Following the South Australian Minister for Energy and Mining initiating the biogas flows into the 1414 Degrees GAS-TESS at Glenelg on May 1, the device is heating up. The first stage of heating must be gradual to ensure the containment is thoroughly dry. Once this pilot project is at operating temperatures it will recover stored energyas hot air at 850°C to run thegas turbine.
This is the first time such a device has been built and operated. It is already evident that the burners are very effective and biogas flows will need to be carefully managed to ensure temperatures don’t rise too quickly. When operating temperatures are reached the device will be used to generate electricity for sale to the SA Water plant and the National Electricity Market (NEM). Since the wastewaterbiogas must be burnt as it is produced, the GAS-TESS must be able to operate continuously, with the ability to both charge the heat store and discharge at the same time. It will therefore provide a continuous supply of hot water from the burners and a second, intermittent, supply when the turbine is operated.
SA Water and 1414 Degrees have partnered to test the commercial model for the GAS-TESS. To do this 1414 Degrees will buy the gas at the market price of methane and sell the electricity at the actual NEM price.
The ability of the GAS-TESS to timeshift energy means that 1414 Degrees will operate the turbine to earn the highest NEM price on a daily basis. NEM prices vary daily and seasonally therefore the financial picture will take some time to emerge. The value of the heat in the form of hot water will be assessed using time-dependent gas prices.
The company will report actual revenues and modelled heat value on a quarterly basis.
SA Water plans to compare the value of the GAS-TESS withits current electricity generating engines, which do not allow time shifting to take advantage of peak demand pricing. Even more crucially, SA Water and other utilities will be able to compare operating costs for the two solutions. The GAS-TESS is expected to have much lower operating costs than the current engines which require expensive maintenance and pre-cleaning to counteract the harmful components in the biogas. 1414 Degrees is aiming to prove the commercial case by the end of 2019. Several GAS-TESS units would be needed to replace all current engines and provide redundancy to ensure continuous gas disposal.
Executive Chairman of 1414 Degrees, Dr Kevin Moriarty said that the device had attracted a lot of commercial interestfrom wastewater treatment utilities looking for a lower treatment cost and time shifting of electricity generation. He added, “There is a huge marketin water utilities that are already generating electricity from their biogasand there is aneven greater untapped global biogas resource.Although the Glenelg pilotwill be earning the first operatingrevenues for 1414 Degrees, its main value is proving its unique functionalityto drive fast growthof sales and services in 2020 and beyond.”
South Australian energy innovator 1414 Degrees strides ahead with its unique patented thermal energy storage system (TESS) powered by biogas. The gas started flowing today from SA Water’s Glenelg Wastewater Treatment Plant, the company’s first commercial pilot site.
South Australian Minister for Energy and Mining, Dan van Holst Pellekaan, launched the GAS-TESS by releasing the biogas from the wastewater digestors.
Executive Chairman of 1414 Degrees, Dr Kevin Moriarty said “This marks a pivotal phase in the commissioning process, firing the burners for the first time and heating up the thermal energy store. Importantly, we will pay for the biogas we use and sell electricity at market prices to test the revenue model.”
The GAS-TESS will enable SA Water to time-shift the use of its biogas to produce electricity and heat on demand, rather than use the biogas as its generated.
SA Water’s CEO Roch Cheroux commented, “SA Water is working to reduce operational expenses to maintain low and stable water prices for our customers. Time shifting of heat and electricity output from the GAS-TESS is expected to provide more control over heat flows to maximise our biogas generation and result in reduced costs of our energy requirements.”
“Partnering with us to pilot this world first technology demonstrates visionary leadership for SA,” Dr Kevin Moriarty explained. “The wastewater management industry is watching closely, as are many other heat dependent industries looking to reduce energy costs, save jobs and lower environmental impacts.”
Globally, biogas is an increasingly important source of energy, from wastewater management to agri-business and landfill gas.
Dr Kevin Moriarty states “Renewables are about more than wind and solar. It’s time to put our vast sources of biogas to more efficient and sustainable use. Naturally occurring biogas has the potential to lower the cost and increase the stability of energy with reduced demand on fossil fuels.”
The GAS-TESS is co-funded by the South Australian Government’s Renewable Technology Fund (RTF) and 1414 Degrees shareholders. The development of the technology was assisted with a grant from the Federal Government’s Department of Industry, Innovation and Science.
“This shows South Australia is leading energy technology development, something the Marshall Government is fully committed to. 1414 Degrees’ TESS is the result of collaboration within our state’s entrepreneurial ecosystem, leading to global opportunities for SA. This new thinking is solving problems and creating opportunities as we transition to a new energy environment. It will take innovative companies like 1414 Degrees to ensure energy security,” said Minister for Energy and Mining, Dan van Holst Pellekaan
Executive Chairman Dr Kevin Moriarty said “We have a clear vision to scale our clean TESS technology to gigawatt hour capacity and stabilise renewable generation. Our progress today marks another step forward.”
1414 Degrees’ energy storage systems will support grid stability by feeding power back into the grid at peak times and provide heat for industrial purposes, thereby reducing costs for consumers and creating a more reliable source of power.
The Company commissioned its 10MWh electrically charged TESS-IND in late 2018, which was verified by international certification agency Bureau Veritas. The initial prototype was successfully demonstrated in 2016.
Click here to read the South Australian Minister for Energy and Mining, Hon Dan van Holst Pelelkaan MP’s update.
– Early cash flow potentialfor TESS-IND connected to National Electricity Market
– Focus on research discipline for large scale storage development
– Strong cash position, $12m
1414 Degrees is pleased to provide its March 2019 quarterly update.
This quarter has seen solid progress with the GAS-TESSfully installed and integrated into our first commercial site and commissioning underway. Assembly of the next TESS-IND is plannedfor third quarter of 2019, with all long lead time items such as turbine and heat exchanger now ordered. Our business development team have been analysing energy requirements and modelling cash flowsatlarge industrial customer sites. Theyhave identified opportunities to generate early cash flows in a staged approach by connectingour electrically charged devices to the National Electricity Market (NEM). Cash flow discipline maintains a strong cash position of $11.97m plus down payments on equipment for the next TESS build.First operatingrevenues are expected withGAS-TESS commissioning.
There is scope for separate business models for the gas and electric chargedTESS devices based on customer profilesand energy sources. The latter can both charge and discharge to the NEM to generaterevenue from grid stability services and trading, whereas the GAS-TESS stores and time shifts energy generated from biogas.However, manycustomers are seeking lower-cost, reliable energysupply andpreferto avoid the upfrontcapital and managementcost of owning technology. This is advantageous for the TESS technology at this commercialisation stage because its low capital cost can be financed and amortised withina supply and maintenance contract with a reliable counterparty.
This model can be appliedto previously announced smaller industrial customers (Pepes Ducks or Abbe Corrugated), but also to retailers like Enova Energyand large manufacturing or refining companies who areintensive heat users.Locating a TESS next to anindustrial heat user provides 1414 Degrees withmultiple potential revenue streams including long term contracts for heatand electricity supply toindustry, firming renewable generationon the NEM, and providing grid stability services.
To further this opportunity, 1414 Degrees is preparing to implement the energy services and solutions model outlined in the prospectus. This involves creatingspecial purpose vehicles (SPV) for each customer site, in partnership with finance and engineering services entities. Since manysites proposed by industrial customers require gigawatt hours (GWh) of energy storage to replace their gas or coal fuel, we are proposing to stage the first installations so that the site can progressively reduce its current heating equipment and supply contracts while 1414 Degrees scales up its technology. The 1414 Degrees TESS is relatively easy to integrate into many factories and refineries because the TESS heat output can be matched to connect into the existing infrastructure.
Opportunities for TESS in the agriculture sector have been enhanced in a report by global engineering company, ARUP. ARUP compared 1414 Degrees TESS with concentrated solar power (CSP) and concluded that the TESS would be more economical than CSP as a replacement for fossil fuelled greenhouse farms. This is good news for Smartfarm developers and other industries looking to decrease costs and increase renewable energy use.
GAS-TESS business plan
Smaller industrial sites of GAS-TESS and TESS-IND customers are also expected to prefer energy supply contracts over the purchase of technology, however larger water utilities could prefer to purchase GAS-TESS with performance and maintenance contracts.
Given the keen interest in the GAS-TESS, 1414 Degrees is very focused on commissioning and demonstrating successful operation at the Glenelg site. The demonstration period will be conductedon a semi commercial basis, whereby SA Water will sell biogas to 1414 Degrees for its value at the National Electricity Market price at the time of supply, and 1414 Degrees will provide hot water and sell electricity to SA Water at the NEM price. The GAS-TESS can time shift the biogas energy togenerate and sell electricity at the most advantageous price.This will generate revenue and input cost from the point of commissioning, however it should be understood thatthe revenue will be indicative of energy efficiency and time shifting value only, whereas the primary valueproposition of the GAS-TESS forwaste water utilitiesderives fromincreasedasset utilisation with reduction of high operating costs from eliminating pre-treatment of the biogas and fully combusting toxic corrosive and abrasive compounds. 1414 Degrees’ revenue potential from operations and maintenance will be assessed during the operational stage.
TESS-IND/ TESS-GRID business plan
The positive revenue potential of connectingour electrically charged devices to the NEM has been internally analysed, with further modellingby CQ Partnersand Flow Power, and reviewedby KPMG.Accordingly, 1414 Degrees is conducting afeasibility study to connect a TESS-IND to the NEM at our Southlink workshop, where it can buy, store and discharge electricity as engineersoptimise its operating parameters to maximiserevenue.Following this, the device would be relocated to a NEM connected sitethat could also sell heat and realise its full efficiency.For example, energy retailer Enova EnergyLtd has introduced1414 Degrees to a heat user where a TESS-IND would assist Enova Energy in providing security of supply at a competitive cost.
All long lead time items such as a turbine and heat exchanger for the next TESS-IND have now been ordered, and assembly will start in the third quarter of 2019. The device will utilise the existing infrastructure and control systems used for the successful TESS-IND commissioning in 2018. As would be expected, our engineers have modified the design to reduce cost and increase efficiency.
Large scale energy storage
My recent participation in the Global Energy Solutions Summit for the National Governors Association in Washington DC, and meetings with a venture capital company in Los Angeles and with the British Government Department for Business, Energy and Industrial Strategy (BHEIS) in London all confirm interest in very large industrial scale energy storage. I have previously reported that Australian corporates were seeking to reduce costs and decarbonise their energy supplies, however it is clear that these objectives are not confined to Australia.
Unfortunately, there is still low awareness of the potential benefits to the electricity market as a flow onbenefit fromreducing carbon-based heat supply to industry. The overwhelming focus is on the electricity market because the increasing renewable supply is creating many new problems that biaspolicy towards the electrical efficiency of energy storage, favouring pumped hydro and batteries. The Washington conference alerted participants to significant environmental issues with large scale adoption of batteries and pumped hydro.Few have considered the potential of technologies like to 1414 Degrees TESS to simultaneously stabilise the grid and electrify industry by reducing its dependency on gas and diesel. It is therefore clear that 1414 Degrees must demonstrate the efficacy of its technology in the NEM and be ready for demand from utilities and industries to scale up to the gigawatt hour size.
There is clearly demandfrom industry and governmentsfor large scale energy storage. The cost per kWh of TESS storage diminishes with scale because more silicon can be held within a smaller surface area as the vessel size increases, and 1414 Degrees has already advanced the design of a device aimed at storingfour foldthe energy in the same space as the current models.
In contrast with the 1414 DegreesTESS or pumped hydro storage whose cost per unit of storage can decrease with scale, the cost per unit of cellular battery storage is fixed. Lithium batteries have a limited capacity life and will introduce many environmental challenges if used in large numbers, with the result that only pumped hydrois a sustainable contender for a very large power storage, but neither batteries nor hydro power can supply the heat needed by industry.However,TESS is a contender at this scale of storage because it is compact, can be located at industrial sites and can operate at a low unit cost of energy. These factors mean it is an attractive solutionfor big industryneedinglarge storage capacity in order toswitch fromgas to renewable heat for processing.
The size of the market for thermal energy storage is much greater than that for electricity alone, so the capability of the TESS to provide grid stability services as well asindustrial heat presents a compelling commercial opportunityfor the TESS technology at very large scale.
Our engineering team proved their innovative skills by demonstrating effective heat transfer to and from silicon phase change storage.However,it has become clear that scaling the storage technology requires a high level of research disciplineto ensure the most productive use of our resources. To accomplish this 1414 Degrees has recently employed two more staff with PhD research qualifications, and I am working with them to ensure focus and rigor in our innovationsto service this very large market.
While we maintain close focus on commercial operation of the current projects, we’re also preparing for a big future. I am grateful to our supporters, shareholders and especially our very hard-working 1414 Degrees team. I look forward to reportingcontinuing solid progress in my next review.