New hydrogen play Verdant Technologies launches pre-IPO raise

Renewable energy developer Verdant Technologies is moving to position itself as the largest hydrogen producer on the East Coast of Australia and capitalise on a multi-trillion-dollar opportunity.

Verdant Technologies is planning to list on a major global exchange in the first half of this year and has just kicked off a pre-IPO private placement of 12.5 million shares at 16c apiece to professional and sophisticated investors to add $2m to the coffers.

The cash will be used to accelerate critical path capital items, complete a pre-feasibility study (PFS) into the development of Australia’s first scalable hydrogen production plant, and fund network reconnection.

Verdant Technologies recently acquired Monarch Hydrogen, which is well advanced in the planning of the hydrogen production plant, which will initially aim to deliver 6.5 tonnes a day of compressed hydrogen by 2022.

The company plans to expand the facility to 60 tonnes per day by 2028.

Exploding hydrogen market

Hydrogen was already in the midst of becoming more widely accepted as a real contender in the clean green energy space, but you know things are getting serious when the likes of Fortescue’s Andrew “Twiggy” Forrest and oil majors like BP and Woodside start throwing their weight behind it.

The current global market for hydrogen amounts to about 71 million tonnes per annum, or $US177.3bn ($228.4bn).

And hydrogen is only going to get hotter, according to firms like Goldman Sachs, which sees green hydrogen supplying up to 25 per cent of the world’s energy needs by 2050, making it worth $US10 trillion globally.

Globally, places like Europe, Japan and South Korea have all prioritised hydrogen as they ramp up their shift to renewable energy sources.

And Australia is no exception, with its goal to become a major player in the global market by 2030.

Verdant Technologies plans to be at the forefront of this multi-trillion-dollar opportunity and is conducting a feasibility study to locate the Monarch green hydrogen plant at its $550m biomass 151MW Redbank power station in the Hunter Valley, NSW.

It will be the first hydrogen production plant to be located behind the meter on an existing green baseload power plant

A bankable feasibility study is slated for completion this year, with a view to reaching production by late 2022.

The project will have a construction budget of around $43m with a forecasted revenue of $20m, and EBITDA of $4-5m, based on the initial 6.5 tonnes/day output.

Redbank is currently Australia’s only generator with circulating fluidised bed technology (CFBT) recognised for its emissions control capability and proven ability to operate on 100 per cent biomass.

Verdant Technologies is currently repurposing Redbank to operate solely on waste biomass with a restart to operations scheduled for the final quarter of 2021.

This will generate enough electricity to power 200,000 to 250,000 homes, which is timely given that AGL’s 50-year-old Liddell power plant is due to close in April 2023.

Upon restart, Redbank will be one of the largest green baseload renewable energy providers in NSW and the only existing facility capable of providing continuous green 24/7 power with net zero CO2 emissions, adding to grid stability.

This article was developed in collaboration with Verdant Technologies, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.