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Sodium nickel chloride – the alternative to lithium batteries

Altech Batteries Limited (ASX:ATC) Managing Director Iggy Tan provides an update on the company, discussing funding pathways and the results of the DFS.

Paul Sanger: I’m Paul Sanger for the Finance News Network and today I’m talking to Altech Batteries (ASX:ATC). Altech Batteries trading under the ASX code “ATC”, with a market capitalisation of around $120m is a specialty battery technology company that has a joint venture agreement with world-leading Germany battery institute Fraunhofer to commercialise the revolutionary CERENERGY sodium-alumina solid-state battery. CERENERGY batteries are a game-changing alternative to lithium-ion batteries that are fire- and explosion-proof, have a lifespan of more than 15 years and operate in extreme cold and desert climates. The battery technology uses table salt and is lithium-free, cobalt-free, graphite-free, and copper-free. Joining me today is Altech Batteries CEO and MD Iggy Tan. Iggy, welcome back.

Iggy Tan: Thanks for having me, Paul.

Paul Sanger: That’s our pleasure. Now, Iggy, you’ve just announced some very positive results from the CERENERGY DFS. Can you tell us about these results and what they mean for the company?

Iggy Tan: Well, as you know, Paul, we signed a joint venture agreement in late 2022 and we’ve been working very hard on this definitive feasibility study for a 120 megawatt grid storage battery project. The results are very promising. The capital cost is around 156 million euros, but it generates close to 51 million euros in EBITDA. The net present value at a discount of 9 per cent is close to 169 million euros, which in Australian terms is about $280m. So, very promising results. The margin for the product is around 47 per cent. Consequently, based on these promising results, the Altech Board and also the Fraunhofer organisation have unanimously decided to proceed to the next stage, which is financing of the project.

Paul Sanger: And just on that front, Iggy, it’s great that the board is obviously is pressing ahead with the project. How does the company plan to address the funding needs moving forward now?

Iggy Tan: The funding of any project is probably one of the hardest stages in the process. The funding will… It’s made up of three components essentially. The first component will probably be debt, and the debt, whilst we have been talking to many of the European banks and they’re very interested, we’ll probably be looking at some kind of bonds, green bonds. As you know, the project will be accredited as a green project. We have nearly 50 per cent of the carbon footprint compared to a lithium-ion battery. And so we most likely will be looking at a component of debt using green bonds.

The other component of the funding will be grants application. As you know, much like the IRA in the US, there is a lot of money in Europe swirling around, looking for green projects to support. And we have already commenced the application of various grants in Europe, and so it looks very promising, and until we get a result we can’t say how much that grant component is.

And then finally there will be an equity component, and we have already appointed a couple of advisors to look at potential equity investors in this project.

Paul Sanger: And you mentioned obviously you’ve already applied for grants. It’s probably worth just highlighting, Iggy, that these grants don’t materialise overnight. They take time. There’s a detailed process that it has to go through. So, there’s a pathway, but it can take time to meet all the criteria and get those grants through. Is that a fair assumption?

Iggy Tan: Yes, and essentially we have commenced the process close to six months ago, and we’re in constant communication with the various grant bodies, and we’ve had various EU commissioners come to site, and they’re very excited about the project. So we remain very optimistic on the grant part of the funding process.

Paul Sanger: As you should be. Now, in my intro I kind of highlighted some of the benefits of the CERENERGY battery, but could you give me a bit more detail on the cost benefits associated with the CERENERGY battery compared to a lithium-ion battery, and it’s an important point here.

Iggy Tan: Yeah, so we talk about the overall benefit of our battery over the lithium battery, and we call that the levelised costs of storage. So, essentially if you take all the investment costs of a battery, the ongoing maintenance costs and even the replacement costs over the life of the battery, you actually want to do that analysis over that life of the battery. And our batteries run about 6 euro cents a kilowatt hour over the life of the battery, whereas a lithium-ion battery probably runs around 13 euro cents per kilowatt. So, when you compare those numbers, it is very economical for our batteries. They last twice the life of a lithium battery. And one of the other benefits, as you mentioned before, it’s totally fireproof. It operates in a very wide temperature range. It can operate around down to -40 degrees and up to desert conditions. So, a very versatile battery. And also because we don’t have all the critical minerals, like lithium, cobalt, graphite, copper and manganese, it means we’re not susceptible to all this price volatility that’s happening in that space.

Paul Sanger: It’s a very compelling case. Now, we talked about funding pathways. Just to turn the question a little differently, what’s the current progress regarding offtake discussions, and when can we anticipate updates in this regard? And, additionally, can you provide insights into the expected end-users and their characteristics?

Iggy Tan: Yeah, so the commercial plant will be looking to produce 120 one-megawatt grid packs, and essentially our basic battery model is about 60 kilowatt. And 18 of those 60 kilowatt batteries go into essentially an open-style container. And it’s all pre-assembled so that we can actually deliver these grid packs to the customer’s site just on a back of a truck. And installation is very simple. It’s just unloading it onto the deck. And we have a plug-and-play feature where, immediately after the delivery of the battery, you can have one megawatt connected to your grid. So, very simple installation and delivery. And we are looking at 120 megawatts of these grid packs per annum that we’re going to produce.

Part of the process is also looking for an offtaker. We are in discussions with a couple of German utilities. They have announced that they are moving to renewable energy. So, one particular company has announced they’re going to install nine gigawatts of renewable energy. And, as you know, with renewable energy, you have the basic problem that you are producing electricity during the day when the sun’s shining, but you’re not producing any electricity at night. So, essentially, if you have very large batteries on the grid, you can store that energy during the day and then transfer it to the night-time, which in the industry is called “energy shifting”. So, the grid storage sector is a very exciting sector. It’s growing at 28 per cent year-on-year. And even Elon Musk has said that the future of their growth in their batteries will come from the grid storage sector.

Paul Sanger: Iggy, the announcement today, the DFS, is obviously a pivotal point for Altech Batteries. Many thanks for your time today, and we’ll be keeping a very close eye on Altech over the coming weeks and months.

Iggy Tan: Thank you for your time, Paul.

Ends