Is the Green eyed monster in Eqtec about to be let loose?
“…EQTEC might perhaps be best viewed as one of a cluster of green prospects worth taking a chance on. With a share price that has been hovering around 0.5p for the past two years, #EQT remains an affordable option…”
Chen Qiufan’s popular 2019 science fiction novel Waste Tide tells the story of Silicon Isle, a Chinese peninsula turned into a sprawling rubbish tip where the polyester-filmed water runs dark green and the skies are blackened with smoke and ashes rising from burning plastic and acid baths.
The book carries an additional charge because Qiufan’s Silicon Isle is a real place: the town of Guiyu, the largest e-waste site in the world, the destination for much of the two billion tonnes of waste the world generates each year.
China has introduced tough restrictions on the import of waste, presenting the rest of the world with another environmental challenge to add to all the others: just what to do with the vast amount of waste we generate.
Turning waste into energy
Waste-to-energy technology seems to offer an elegant way forward, allowing a wide range of rubbish to be processed for energy that can feed back into the grid. It’s a market that’s growing by some 6pc a year as the global economy ramps up its move towards more sustainable modes of production.
EQTEC (AIM: EQT) is one waste-to-energy pioneer positioned to take advantage. Led by Chief Executive Officer, David Palumbo, a founder of investment firm Origen Capital, and with a board including Non-Executive Chairman Ian Pearson, a Minister of State for Climate Change and the Environment under Tony Blair’s governments, the company designs and supplies an ‘Advanced Gasification Technology’ able to process more than 50 different types of feedstock to produce a high-quality synthesis gas called ‘syngas’. EQTEC sells its gasification reactors and engineering and design services to energy producers, local authorities and governments across the world.
The basic principles of gasification are well established: the process has been around for more than two centuries, often used, for example to make hydrogen from natural gas and methanol from coal. EQTEC’s 21st century technique employs a ‘fluidised bed reactor’ to apply heat, oxygen and pressure to feedstocks to transform them into a composite gas of sufficient purity for industrial use.
EQTEC’s technology works with materials including olive stones, nut shells, straw, grape bagasse, wood chips, sawdust, pine cones, forestry clippings, lignite, sludge, rubber, demolition rubble, plastics, and plain municipal solid waste (known in the industry as refuse-derived fuel).
Syngas can be turned into a synthetic natural gas through the addition of methane, and then injected directly into the electricity grid. Or it can be converted into hydrogen or biofuel, making it suitable for a range of emerging green technologies, including vehicles and power generators that run on fuel cells. The gasification process produces biochar as a byproduct, which can be used to nurture rich soils less dependent on artificial fertilisers and more able to absorb greenhouse gases.
EQTEC says gasification represents a significant advance on the most prevalent form of waste-to-energy process, combustion, through which feedstocks are simply burnt. Combustion produces carbon emissions, and fly ash carrying toxins which must be removed through expensive filters. Gasification does produce some carbon – the process can’t work without it – but only a third of that created by incineration, and it generates no fly ash or other pollutants.
From concept to commerce
Despite these advantages gasification has still to overtake combustion as the most common waste-to-energy system. Producing a clean synthesised gas from a variety of waste materials is an emerging technology that has been hard to scale up and roll out at a sufficiently competitive price. Biomass is a much more diffuse feedstock than natural gas or coal, and the purification process adds a layer of complexity. Many gasification plants still sell their produce at a premium.
These commercial difficulties were highlighted here in the UK four years ago when a large gasification project at Billingham, designed to convert virtually all of the municipal refuse produced in the city of Hull into synthetic gas, collapsed just weeks before completion, with the loss of 700 jobs.
EQTEC’s answer is to ensure each gasification project is carefully optimised for the intended feedstock and application of the syngas produced. The company’s reactor technology is designed to be modular, comprised of components that can be mixed and matched according to the nature of each project. This allows for relatively quick, low-risk construction and commissioning of plants that can scale from 1 to 25 MWe (megawatt electrical).
The company’s philosophy is exemplifed by its plant in Movialsa, Spain, which was originally designed to process local grape bagasse, and now takes olive pomace – a byproduct of local olive oil production. The resulting syngas is converted into electricity that powers the plant and is sold on to Spain’s electricity grid. The plant has operated successfully for more than nine years with a capacity of 6 MWe.
EQTEC is building another plant at North Fork, California, tailored for the processing of local forestry waste, and has plans for a plant in Greece that will use the agricultural residue of the three crops harvested during the year: wheat, corn and cotton.
The company has also entered into a memorandum of understanding with two partners, COBRA and Scott Brothers Enterprises, to take forward a variant of the abandoned Billingham project. The plan is to develop a 25 MWe plant capable of processing 200 000 tonnes each year of fuel derived from municipal waste, worth some £150 million to £180 million.
EQTEC’s most recent interim results, published in September, set out ambitious plans for the future. The company is currently assessing more than 40 tender opportunities, and has sent commercial offers to potential partners worth €205 million.
A contract has been signed for equipment sales and services worth €2 million for a gasification project in Greece; a partnership with German energy company ewerGy is opening opportunities in the Balkans; a partnership has been forged with the Carbon Sole Group for three biogas projects in Ireland; a recycling project is planned in Wales; an agreement has been secured for a waste management project in Southport; and opportunities are being pursued in South Korea, Japan, Indonesia and Malaysia. The company has commissioned the Wood Group to identify and review additional prospects.
EQTEC faces the same challenge as other gasification enterprises: turning its technology into a sustainable commercial venture. The company’s interim results announced revenue for the six months to 30 June 2020 of €0.77 million, as compared to €1.56 million for the same period the previous year, and operating losses of €1.3 million, as compared with €1.1 million. EQTEC’s cash balance to 30 June stood at €1.7 million, though a subsequent fundraise this July brought in another £10 million.
Part of the Green Deal?
Gasification is another of the emergent technologies covered on TMS that impact investors should keep an eye on. The technology is fighting to establish itself, but seems well placed to benefit from the various green stimulus packages being rolled out by governments across the world, and, here in the Europe, the EU’s Green Deal: last December the European Commission stated its intention to ‘exclude incineration from its list of activities that advance climate change mitigation’, suggesting that gasification may receive new support. The EU is already committed to boosting hydrogen.
Sustainable technologies are developing so rapidly it is hard to know which to back: EQTEC might perhaps be best viewed as one of a cluster of green prospects worth taking a chance on. With a share price that has been hovering around 0.5p for the past two years, the company remains an affordable option.
Below, EQTEC’s David Palumbo updates Proactive UK on the recent £10mln institutional fundraise and development plans ;
The author was remunerated for this article but does not hold shares in the above named company.