Altech sees 47% margins in DFS for EU grid-scale battery factory plans

Boasting a project value of €169M (A$281.4M) and a production apacity of 120 1MWh GridPacks per year, Altech Batteries’ (ASX:ATC) CERENERGY EU-based battery energy storage manufacturing strategy has travelled closer to fruition.

These figures were lined out in the company’s DFS for CERENERGY released on Wednesday – and prompted the Altech board to decide to proceed to the funding phase.

Discussions on financing are already underway with a 5 year offtake deal reportedly heading to close in the background.

What are CERENERGY batteries?

CERENERGY is one of Altech’s flagship products. Ultimately, the company is designing modular energy storage batteries designed to be fit together to become more powerful per customer needs.

What’s more, the company is using its own in-house battery tech which it says is superior to Li-ion battery performance not using that same technology.

Altech reports its batteries are better performing than ‘conventional’ Li-ion; that they are environmentally safer and pose less risk of thermal runaway, and most importantly – reportedly, the CERENERGY batteries can “maintain its charge level for months without loss.”

The batteries can also reportedly operate better in extreme cold, key for Europe, but also extreme heat – suggesting the batteries could become more desirable as average summer temperatures continue increasing.

Altech Batteries can be seen as battery value-adders, given their research has greatly led to improved performance on Li-ion batteries in lab tests conducted in Saxony, Germany, compared to other Li-ion batteries available commercially.

Backing the project – and facilitating those tests – is world-leading German materials science research institution Fraunhofer IKTS.

Impressive margins in DFS

For investors, however, perhaps most interesting is the margins attached to the project, per the DFS.

Altech underlines a case for the company to achieve whopping margins at no less than 47%. The IRR is calculated to reflect 19% with a capital cost of A$259.6M.

These margins would be in relation to forecast earnings of up to €51M (A$84M) per year.

At the same time, the company expects the grid storage market to grow at a CAGR of 28% – and Altech says the cost of storing power in a CERENERGY battery is lower than that of a Li-ion grid-scale battery, such as Tesla’s megapacks.

Altech’s DFS spells out the case it can get costs down to as little as €0.06/kWh, compared to €0.149/kWh – the cost which Altech cites for storage in a Li-ion grid-scale product.

All in all, Altech Batteries is heading towards a positive FID.

ATC shares closed on Wednesday at 7.3cps.