Thursday, September 28th 2023

Active Energy Group lands monumental deal.

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Renewable energy and forestry management business Active Energy (LSE:AEG) powered higher today after securing a much-anticipated agreement to manage an enormous 5m hectares of land in Canada. Shares rose 10.5pc after the firm announced that its subsidiary Timberlands International had signed a memorandum of understanding (MoU) to acquire a controlling interest in PowerWood Canada.

PowerWood Canada is a private Canadian company that holds forestry assets in Alberta, Canada, under Forestry Management Agreement and Deciduous Cutting Rights issued by the Crown Province of Alberta. The MoU will enable Active to secure feedstock and support the proposed roll-out of its CoalSwitch technology in the Province of Alberta.

CoalSwitch is a direct drop-in coal replacement biomass fuel that can be mixed in any ratio with coal fines or completely replace coal in existing coal-fired power stations, without retrofit. The company’s plants squash and dry waste wood to remove water and unwanted chemicals, creating pellets that burn very similarly to coal but without as much pollution. Total Market Solutions spoke to Active’s chief executive Richard Spinks about the technology at length in a podcast earlier this year.

PowerWood Canada’s contracts enable it to harvest 300,000 tonnes of merchantable timber and residue annually from a total forestry area of around 5m hectares in mature, established, natural forestry in Northern Alberts. Active Energy plans to construct a 25 tonnes per hour CoalSwitch plant at the site and has offtake agreements in place for when production begins.

The firm believes CoalSwitch can significantly improve forestry economics due to its ability to utilise timber processing waste, forestry residues, and aspen, the dominant species in the area. Active’s chief executive Richard Spinks said he expects the PowerWood arrangement to lead to other governmental and private sector forestry owners signing commercial agreements within the near future.

He added: ‘This MoU represents a further step forward in our focused strategy to secure long-term forestry assets and guarantee feedstock volumes to support our planned roll-out of CoalSwitch plants in Canada and Europe. The MoU will see us utilise at least 300,000 tonnes of fibre annually and highlights the scale of the opportunities available to the Group. We believe we have an excellent platform in place from which to scale up our activities and build Active Energy into a leading producer of environmentally friendly, second generation biomass fuels worldwide. I look forward to providing our shareholders with further updates in due course.’

Active believes CoalSwitch has the potential to act globally not only as an emissions reductant but as a sulphur capture and reduction compound. Unlike many of the other technologies competing to replace coal, CoalSwitch’s similarities to the resource itself mean it does not require a significant overhaul of power plants and industrial processes. CoalSwitch does not require chemical binders, which are traditionally used in the global reclaimed coal sector. The firm also believes that the technology could lead to additional savings for power plant operators, as it does not require intensive desulphurisation and has low ash content.

Thanks to the energy density of the product and its ease of shipping, its overall energy efficiency could even rival coal itself. Today’s deal has been five years in the making and could be an extremely exciting catalyst for Active Energy by opening up the door for further future agreements as the global movement to reduce carbon footprints continues.

You can hear Richard Spinks speak in a recent interview here

The author was not remunerated nor holds shares in the company mentioned