Global Energy Ventures Ltd (ASX:GEV) recently signed a Memorandum of Understanding (MoU) with Province Resources Ltd and Total Eren to support a technical and commercial feasibility study on the export of green hydrogen from the HyEnergy Project.
Under the terms of the MoU, GEV will undertake a feasibility study to evaluate the technical and commercial feasibility of exporting green hydrogen from the HyEnergy Project in Western Australia's Gascoyne region.
The scope includes transport from the onshore hydrogen gas production facility to an offshore ship-loading buoy and then on to nominated Asia Pacific markets utilising GEV’s compressed hydrogen shipping solution.
Edison believes that if the study is successful, it could open the door to commercialising clean compressed hydrogen shipping from Australia to South-East Asia and similar operations in Europe, giving GEV a first-mover advantage.
The research firm’s 18 cents per share valuation implies an upside of 157% on GEV’s current share price of 7 cents.
Extract from Edison’s initiation of coverage on July 23, 2021:
Global Energy Ventures (GEV) is one of the first transport companies to offer the prospect of genuinely emission-free hydrogen production and inter-regional hydrogen transport solutions.
Its innovative C-H2 Ship design has been approved and is in the early stages of development and construction prior to an expected launch in 2026, most likely serving markets in South-East Asia, but with exciting applications in offshore energy production in Europe too.
Our scenario models suggest IRRs of between 10% and 19%.
C-H2 Ship
The C-H2 ship would have twin, 1,000 tonne capacity tanks in the hold that will be pressurised to 250 bar.
The vessel will ultimately be powered by a fuel cell that will create energy from green hydrogen stored in the ship’s hold, implying zero emission fuel for transportation.
Therefore, the C-H2 Ship has ‘green cargo’, and the cargo itself offers zero-emission fuel for transportation. With the exception of the vessel construction, this solution could have zero carbon emissions and could be a vital differentiator for GEV as it helps corporates towards decarbonisation targets.
Extract from Edison’s Signing of MOU update on August 23, 2021:
The memorandum of understanding (MOU) recently signed between GEV and the HyEnergy Project partners will potentially confirm the validity of GEV’s own scoping study.
The study highlighted the cost advantage of compressed hydrogen shipping, the technical feasibility of GEV’s compressed solution and confirmed the potential production costs of green hydrogen in Western Australia.
If HyEnergy’s own scoping study concludes with a positive outcome, it could prove to be the catalyst that genuinely kick-starts GEV’s compressed hydrogen transportation solution.
We maintain our existing financial forecasts.
Market opportunity: Renewable energy imbalance
Australia is blessed with plentiful renewable energy sources (wind and solar) and relatively limited local demand given the population.
By contrast, several countries in South-East Asia have pledged to decarbonise their economies but have challenges in achieving targets given the geographies.
GEV is looking to address this imbalance by transporting surplus energy in the form of green hydrogen from northern and western Australia to areas of high demand in its novel compressed hydrogen vessels.
Valuation: NPV calculation implies attractive IRRs
Our original modelling suggested potentially attractive IRRs from a range of scenarios which fit with this potential project in terms of the location, scale of production and timing, being around 2026 for first shipments.
The cost of the study is expected to fall within existing forecasts, which already include expected fundraises to develop both the vessels and to finance studies such as this one.
There are, however, considerable risks to achieving the expected returns including funding, hydrogen availability, hydrogen pricing, the fact that the hydrogen market is at an early stage of development and that the vessel design is novel.