Over the last 18 months PowerHouse and its partners Peel Environmental and Waste2Tricity (W2T) have put most of the building blocks in place for commissioning the first commercial distributed modular generation (DMG) waste-to-energy plant by the end of FY20. This potentially represents the first of dozens of small sites in the UK and abroad using unrecyclable plastic that would otherwise go to landfill to generate hydrogen for electric vehicles and electricity.
In August 2019, PowerHouse signed a collaboration agreement with Peel Environmental. This seeks to develop 11 DMG facilities at sites in the UK, primarily on Peel’s land, including a project announced previously at Peel’s Protos Energy Park on Merseyside. Investors in these projects are being offered a potential IRR of over 30%. PowerHouse will receive fees for each project for carrying out tests on the proposed feedstock and providing a customised front-end engineering design. Additionally, once each plant is commissioned, PowerHouse will receive operating licence fees. Peel estimates the development costs for this enlarged pipeline of 11 sites would be at least £130m. This business model removes the need for PowerHouse to finance the construction of plants, eliminating a major dilution risk for shareholders, and potentially accelerates roll-out.
Project developers Peel and W2T have already secured a customer on the Protos estate for the electricity and hot water generated, as well as a primary feedstock and back-up supply. They are now working on securing planning and operating permits for the plant, and financing before they can proceed to the construction and commissioning phase. PowerHouse’s first contract, received in April 2019, was to carry out tests on the feedstock that will be used at this site and provide a front-end engineering design for a DMG unit using the site-specific feedstock.
PowerHouse has a qualified pipeline of over 30 sites in the UK where DMG units may be deployed. We calculate that it will reach break-even on sales of two DMGs per year. We estimate that deployment on 10 sites in a year, such as those already identified by Peel Environmental, could generate c £6m operating profit.