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.