Uncharted waters: This coal explorer is moving into hydro power
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In the running for 2019’s ‘Biggest Small Cap Curveball’ is Pacific American Coal (ASX:PAK), which told investors today that it will be moving into hydro energy.
Right now, Pacific American’s flagship project is Elko, an advanced coking coal asset in British Colombia, Canada.
Elko is a stone’s throw (figuratively speaking) from Riversdale’s Grassy Mountain project, which was subject to a lucrative takeover from Hancock Prospecting in March.
The company – which wants to change its name to Pacific American Holdings — maintains that Elko is still the number one focus, but renewable energy represents a “low risk, high impact entry” into a new growth business.
Pacific American and private Austrian company Global Hydro Energy will form a 50:50 JV called Global Pacific (GP) Hydro, focused on hybrid and micro grid projects as well as pumped hydro in Australia, PNG and the Pacific Islands.
Global Hydro Energy is a well-established name in hydro power plant tech, with products like this super-transportable 1MW SmarT power station:
Pacific chairman Geoff Hill says private companies have been mainly targeting solar and battery projects, while large hydro projects are being targeted by multinationals and governments.
This leaves the small and micro size projects as a primary opportunity for GP Hydro.
Target markets for this type of tech will include government, industrial users (like miners), and remote communities, Hill says.
The initial investment committed by Pacific to establish the JV is $US50,000, but further commitments of up to $US500,000 could be provided if the JV achieves certain clearly defined milestones.
The company is hoping this deal will encourage a different type of investor and, in general, make it easier to attract project funding.
It doesn’t matter how good a coal project looks on paper, financing development is just getting harder. Renewables projects, on the other hand, don’t have the same barriers.
“With the global focus on alternative energy, global investment in clean energy exceeded $300 billion for the fifth year,” Hill says.
“The energy sector in Australia is also moving its focus to clean energy with $9.5 billion invested in clean energy in 2018.”
The company was approached for additional comment.