For Altech Batteries Ltd (ASX:ATC), 2024 has been a year of ticking off the milestones for its sodium-chloride solid-state (SCSS) battery project – known as CERENERGY – with the successful completion of definitive feasibility in March followed by the launch of a prototype in October, and more recent news on funding, with several financial institutions expressing interest in contributing to the project.
A breakthrough new battery technology
Altech’s main focus is the planning, design and construction of a 120-megawatt-hour (MWh) plant in Germany to produce the CERENERGY modular energy storage batteries – whose technology has been innovated by joint venture partner, Fraunhofer IKTs.
Crucial to this technology is the use of table salt, which facilitates construction of a battery without lithium, copper, cobalt, graphite or manganese elements; a battery which – unlike the regular lithium-ion type, can tolerate a wide range of temperatures, and last for 15 years.
On this basis, the company argues that SCSS batteries will be the grid battery storage of the future.
On October 1, Altech told investors that it had completed a first prototype of the CERENERGY battery, which had been installed in Fraunhofer IKTs’ test laboratory in Dresden, and was undergoing daily testing, with early results indicating its ability to maintain exceptional thermal stability – an important measure for evaluating high-capacity energy storage systems.
Also being assessed at the lab were CERENERGY’s efficiency, stability and overall performance under real-world conditions.
An expansive approach to project funding
Since then, Altech’s main moves to develop the project have been around funding, starting with a share placement earlier this month which enabled it to raise $4 million by issuing 66,666,667 ordinary shares at 6 cents each.
Part of the funding was plugged into development of a longer-term financing strategy and bank due diligence for CERENERGY, with the first stage of this announced on November 22.
An important milestone was the development of an ‘invitation document’ which German subsidiary Altech Batteries GmbH (ABG) sent out to various financial institutions to check their interest in providing debt funding for the project, with several expressing enthusiasm.
Altech CEO and managing director Iggy Tan said he was pleased with the outcome.
“We recently appointed a debt advisor – one of the top accounting firms in Germany – which a lot of experience in funding these types of green projects and an extensive network of banking contacts,” he said.
“The process has been about onboarding these debt advisors and we have now completed an investment document which we call the ‘teaser’ and have also established a project data room for the due diligence process.
“The teaser has gone out to 10 investment banks in Europe, including two venture debt funds and the positive news is the feedback is very positive. These banks have come back and indicated they would be interested in the debt funding side of this project.”
Seeking strategic investors
Dept funding was only the first stage in a three-stage process, Mr Tan said, adding that after that came the grant component and finally equity funding.
“With regard to the grant component, there’s a lot of money in the EU as well as Germany looking to help projects like ours in the green transition,” he said.
“In the coming months, we’ll report the outcomes of these grants.”
Regarding equity funding, Altech planned to invite a strategic partner to join them in the project, and then sell them a minority interest.
This would provide two key advantages, according to Mr Tan.
“There will be an injection of funds to the project immediately, and we can use that to order long lead items for the project,” he said.
“And secondly, we’re looking for the strategic partner to add value to the whole process of establishing this first 120 MW plan as well as the future giga factories.”
Preferred partners for this would include large utility groups, data centre operators, investment funds and corporations that are heavily involved in the green energy transition.
Securing project offtake
With a definitive feasibility study (DFS) ticked off earlier in the year, and the success of the CERENERGY prototype also pointing to a positive future for the project, Altech has also made some prime moves when it comes to offtake arrangements.
“What we’re trying to do is get the first five years of our project sold so that it will help the funding process,” Mr Tan said.
“We announced recently (in September) the first offtake of 30 MW per annum to a company called ZISP (Zweckverband Industriepark Schwarze Pumpe). This is essentially the industrial park that we exist in, and they have EU funds to convert the power in that path to renewable energy from coal fired power.
“They have funds available and their project is to start converting the renewal power to renewable energy and as part of that they need grid storage batteries. So essentially they’ve signed up for 30 megawatts per annum for five years and we’re in the process of getting more offtake.”
Altech has been trading at 4.8 cents.
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