Energy giant Santos has placed an initial commercial purchase order (PO) with Synertec Corporation Ltd (ASX:SOP), moving the Australian technology company closer to the commercialisation of its Powerhouse technology.
In fact, through this order, Synertec will begin generating revenue from this technology from April 1, 2023.
In July last year, Synertec and Santos developed a Goods and Services Contract (GSC) outlining the key commercial terms beyond the prototype and reference point for the potential future roll-out of Powerhouse units.
Unique technology
Powerhouse is a unique proprietary technology that allows the utilisation of 100% renewable energy through predictive intelligence to power industrial-scale applications in remote locations.
Santos issued its initial commercial PO under the GSC for the Powerhouse unit installed at Myalla (the current commercial-scale field trial site) with the term to start in just a few weeks on April 1, 2023.
This isn’t the only commercial milestone.
Synertec deployed the Powerhouse unit to site for commercial-scale field trials and reported the following:
- successful operation through a number of extreme weather events, delivering over 90-days of reliable emission-free 100% renewable power supply;
- enabled the replacement of fossil-fuelled generators and reduction in carbon emissions;
- demonstrated a significant reduction in costs for the field owner; and
- gas previously used to fuel the generators is now directed into the Australian gas network, increasing revenue for the field owner.
"Robust operational performance"
“It has been exceptionally rewarding to see Powerhouse deliver such robust operational performance, through a multitude of extreme weather events, during the commercial scale field trial,” Synertec managing director Michael Carroll said.
“The performance of Powerhouse’s predictive intelligence system has ensured that the remote site has reliable, 100% renewable power, underpinning the technology’s ability to provide base-load power to remote sites at substantially lower operating cost for the operator.
“Synertec and Santos have been working collaboratively towards this milestone for almost two years and it is pleasing to see Santos place an initial commercial purchase order and agree commercial terms under the GSC, which allows the parties to develop an accelerated roll-out strategy for potential future orders of Powerhouse units. We will continue to progress a procurement plan with Santos to meet their operational requirements.
“More broadly, the large target market we see for Powerhouse across both domestic and international remote sites requiring reliable base-load 100% renewable power provides a significant growth opportunity for Synertec and one that has the potential to significantly elevate our financial profile in the coming periods.”
The company notes the field trial phase is now finished and Synertec will continue to support Santos with a large-scale commercial roll-out of Powerhouse units across the latter’s extensive operations.
The company is also looking at further commercialisation opportunities for Powerhouse across the energy, mining and other sectors in Australia and the USA.
About the PO
The order made by Santos is the first commercial order received by Synertec for the Powerhouse technology and is the start of its revenue-generating phase.
Notably, the GSC signed by the companies sets the framework under which Santos can provide future commercial purchase orders to Synertec for the supply of Powerhouse units.
The agreement between the two is for seven years, with the option to extend by agreement by Santos.
The GSC facilitates several potential long-term benefits including:
- a financial platform for Synertec that will enable the accelerated roll-out of Powerhouse units to Santos;
- flexibility and efficiency for Santos to direct the supply of new Powerhouse units, as well as rapid re-deployment of Powerhouse units in use to alternate sites in response to operational requirements;
- agreed rental pricing terms with mechanisms to account for inflation and performance; and
- certainty of operational performance of Powerhouse units over the term of the GSC as Synertec intend to build, own, operate and maintain the Powerhouse units provided to Santos.
What’s next?
Syneterc is now looking to scale up.
Not only is it progressing discussions for the large-scale commercial roll-out of Powerhouse to other Santos-operated sites targeting H2 FY23 for this development but it is also evaluating the learnings from its field trial for future applications.
Further knowledge of what the Powerhouse technology can do is likely to facilitate scalable and efficient production of the system.
Key benefits of Powerhouse include:
- reduced carbon emissions through 100% renewable energy (without requirement for fossil-fuelled backup);
- flexible, scalable, portable and re-deployable infrastructure;
- increased safety and operational efficiency with reduced maintenance and remote operability;
- potential for removal of, and/or reliance upon, mains power connections in remote areas;
- commercial, cost-effective solution.
The milestones can be seen below:
