Low emissions power company Enerji is in discussions with four potential new clients after announcing its inaugural pilot plant had produced electricity for the first time, its new chief executive says.
New boss Colin Stonehouse, who has been in the job six weeks, took over from former chief executive Greg Pennefather, who is disputing his termination.
In a meeting in Perth attended by about two dozen people, most of whom were shareholders, Mr Stonehouse received a round of applause for his new ideas for the future of the company, saying it had achieved an exciting milestone with its $5.5 million pilot plant producing on target results from an initial operation.
Enerji’s pilot plant which took two years to develop, and is hosted at Horizon Power’s Carnarvon power station, converts waste heat from the plant into electricity and reduces greenhouse gas emissions.
Mr Stonehouse revealed Energi is in active discussions to provide similar commercial waste heat technology solutions for two mining companies, a state government power company, and a biomass plant.
Horizon Power manager of generation projects Brett Whisson said Horizon Power had agreed to facilitate Enerji’s pilot plant trial at the Carnarvon power station until the station is decommissioned after the new Mungullah power station starts later this year.
The full-scale pilot project, which was funded entirely by Enerji, is designed and constructed to produce 700kW of electricity, which is enough to power 988 homes in Carnarvon.
The plant has been integral to the company’s development of intellectual property which will allow it to produce modular versions at a reduced price for future commercial operations. Enerji also plans to reuse as many components from the pilot plant as it can when the power station at Carnarvon is decommissioned.
Enerji’s initial demonstration at the plant carried out on Wednesday only produced 10 kilowatts of electricity, which was exported to the grid as part of a power purchase agreement between Enerji and Horizon Power signed in 2010.
Speaking at the briefing Mr Stonehouse, who has an engineering background, is a power project development consultant and held previous roles including as general manager of power development and commercial at Alinta Energy, outlined his new plans for Enerji.
They included a restructuring of the business into three stand alone categories, reinforcing the commercial side of the business and hiring new engineers to do work that was previously outsourced.
“I think that we’re a young vibrant technology company and I want to build a team that goes to that point,” Mr Stonehouse said.
“We have already put in place a couple of key appointments that help with that. I want to really reinforce and build our commercial and analytical capability because notwithstanding the professional pride that all of us engineers feel, it’s really commercial and analytical and finance issues that make these projects succeed or fail.”
He said the company had already developed a competitive advantage against other waste heat system providers, but also had an advantage over other alternative power generation technologies because it was easier and less costly to add on to an existing system.
“We are an early mover in this technology, it’s been used before in industrial applications...but we really are leading the push into the power sector...into remote areas. In terms of scale, what we’re doing is larger than other people before so we have quite a distinct advantage there. We’ve already developed quite significant IP,” he said.
Enerji buys waste heat power systems from manufacturers Opcon Powerbox and heat exchangers from manufacturers Airec, creating its business around services integrating those technologies to host electricity suppliers and the electricity grid, a process Mr Stonehouse said accounted for about two-thirds of project costs, compared with one third for the price of Opcon and Airec’s technology.
From a funding perspective Mr Stonehouse said it was working with clients to share costs on developing Intellectual property and making sure every project was cash positive, until Enerji could pursue debt financing.
“There’s potential to do a lot of exciting work and all of that work really has to be on the basis that its self-funding. It’s not something that we’re asking people to dig into their pockets and pay for without getting some return for it. I think we should be prosecuting a strategy where these things are done because they create value and they pay for themselves,” he said.
“Projects I expect going forward will need to be funded by some combination of debt and equity.
“It’s not viable today because we haven’t got the secure revenue streams to be able to satisfy the normal criteria for getting into a debt funding structure, but as soon as we have off-take contracts that are reliable and long-term this is going to be a very interesting thing for us to look at,” he said.
Along with a shared funding structure, Mr Stonehouse said the government research and development rebates made up a very important source of funding for Enerji, and it was looking at applying for government grants from agencies such as the Australian Renewable Energy Agency, Commercialising Australia, AusIndustry and the Clean Energy Finance Corporation.
Mr Stonehouse said clients were approaching Enerji for their services, because they saw its service as desirable from both a sustainable and economic standpoint.
“We take what is fundamentally undesirable, that is waste heat and excess atmospheric emissions, and from that we create two valuable products,” he said.
Mr Stonehouse said Enerji was now looking at fine-tuning the hot water system at the pilot plant and in the medium-term would look at providing waste heat recovery systems to power stations producing 7-40 megawatts.
An initial review of power stations in Australia and nearby Pacific islands, including Christmas Island, had shown more than 40 sites which could use Enerji’s technology.
Enerji’s share price was back to this week’s average of 0.5 cents today after rising to 0.6 cents yesterday.
