Powerhouse Energy Group Plc (LON:PHE) Chief Executive Officer Keith Allaun caught up with DirectorsTalk for an exclusive interview to discuss what’s happened over the last month, the importance in reaching their first major milestone, the growing awareness in the sector and what’s next for the company
Q1: Now Keith, when we last spoke, at the end of October, it was regarding the open days at the Thornton Science Park in Chester, can you tell us what’s been happening since then?
A1: Well, quite a bit, to be honest. One of the things that had happened at the beginning of October of course was the appointment of our new Chairman of the Board, Cameron Davies, who has joined us from Alkane Energy where he had been Founder, Chairman, CEO and built the company into a very successful publicly trading company and sold it on. We’re very fortunate to have Cameron join our Board and help provide us guidance in this next phase of development of the company.
So, what’s been going on since the open days is open days were, in our minds, a tremendous success. We had over 100 visitors come through the Thornton Science Park facility, take a look at the demonstrator G3 unit, see the operation in operation, get a sense of what was going on there, recognise that this production demonstration machine was doing everything we had originally hoped we’d do. This was the conversion of waste into a clean synthesis gas that we’ve subsequently determined can be turned into 99.999% road-fuel quality hydrogen.
So, since October, we’ve continued our testing programme, we’ve continued our demonstration and development programme and we’ve continued taking the data required through all of those programmes and feeding that into the early phases of our commercial design engineering programme. Recently, just last week, we announced the achievement of the first substantive engineering milestone which was the completion of the pre-Front End Engineering and Design (pre-FEED) component of the commercial engineering project.
I think that a lot of people don’t understand the vocabulary that’s associated with engineering, you have things like feasibility studies that aren’t even slightly about the actual feasibility of the project, what a feasibility study does is it allows you to determine what is feasible in the delivery of a project, not whether or not a project is feasible. The front end, when you talk about the front end in engineering and design, what you’re doing is you’re taking about 60% or 70% of the work off the table by getting all of the data together and getting all of the information aggregated that is necessary to determine what are the components that you then need to knit together to create your final system.
So, we’ve designed, over the past number of years, the Distributed Modular Gasification System utilising our ultra-high temperature gasification unit, the G3, and we now based on our pre-FEED completion are absolutely confident in both the design specs and in our claims for its abilities to deliver really pioneering waste to hydrogen solutions in the UK and elsewhere throughout the world.
Q2: The announcement that you made last week, what does it mean for Powerhouse Energy Group, why is it such an important milestone?
A2: Again, I think that there’s a couple of reasons why it’s an important milestone. One is it shows we can actually engage in legitimate, substantive, robust engineering. This is no longer whipping something up on the back of a napkin, this is a significant engaged engineering project run by commercial engineers who are experts in the energy waste industry, are experts in feedstock management and are experts in process design. They’re bringing the knowledge that we’ve acquired through the PHE programme over the past dozen years and they’re bringing that into a focal point which is this pre-FEED design process which gives us really the target at which we are now aiming.
So, we’ve got, as I’ve said, the pre-FEED design really takes about 70% of the work off the table and now the rest of it is, as I like to say, it’s just an engineering challenge. The rest of it is how do you integrate these various components from the feedstock loading process through the gasification, through the gas clean-up, through the generation of electricity, through the acquisition and separation of hydrogen through the PSA, through the compression of hydrogen in synthesis gas for the delivery of various components, whether that’s distribute electricity or distribute hydrogen.
So, being able to say that we’ve stuck this flag in the ground and achieved this is truly the most advanced that the company has ever been in the history of Powerhouse Energy Group. So, we’ve actually achieved this, what is considered a legitimate engineering accomplishment which allows us to now move very aggressively into the Front-End Engineering and Design component. This is, again, the acquisition of various components that we are going to be integrating into the Distributed Modular Gasification, into the DMG system, and ensuring that those work together as advertised and allowing us to deliver on time, on budget in the timeframes that we had envisioned and that we had previously announced.
So, the import of this announcement in many ways can’t be underestimated, it’s a significant achievement by the engineers, by the commercial team in acquiring all of the external data to ensure that there is indeed a market. If anything has happened over the last year that has just been incredibly heartening, it is this tremendous growth of awareness of the burgeoning hydrogen economy and the fact that hydrogen is being touted as a significant contributor to the world’ greenhouse gas problems.
So, the fact that major transportation companies, like Toyota, Hyundai, BMW, are all making hundreds of million-dollar investments in their transportation infrastructure. The fact that they are making huge investments in the hydrogen fuel-cell technology, all of which requires distributed hydrogen which we can uniquely provide by virtue of our Distributed Modular Gasification processes, it has been a very interesting confluence of events, it’s like we are exactly at the right place at the right time. Recently, Transportation for London (TFL) announced the acquisition of a number of hydrogen fuel-cell driven buses, those buses are all going to need distributed hydrogen to operate and they need hydrogen to operate effectively at the cost of diesel and current mechanisms by which hydrogen is produced are substantially more expensive than standard diesel production.
Our DMG process allows us to produce hydrogen at a cost that is equivalent or lower than the existing cost of diesel, making this not only a viable process environmentally of course but making it a viable process economically. You can’t underestimate the value of having achieved this status of having completed the pre-FEED component of this process.
Q3: Just coming back to the point of awareness, we saw an interesting letter in the Sunday Telegraph regarding supermarket wrappings, landfill and the hauling of trees, some 3,000 miles across the Atlantic. Now, I know you’ve seen this letter, what are your thoughts on it?
A3: Really to my last point there, awareness is growing. People are cognising to the fact that only 9% of the plastic in the world is recycled, I was just watching on the BBC last night, Blue Planet 2 and they were talking about the continued degradation of our ocean from plastics and the fact that those plastics are being reduced smaller and smaller into micro-plastics that are being ingested in the oceans food chain which is then coming back into the human food chain and we do not yet know what these significant health consequences are going to be of that.
So, when I see somebody write a letter to the Sunday Telegraph touting the value of converting these waste plastics into a high-calorific value fuel from which we can extract the energy value and we can return it as hydrogen to the environment. That hydrogen, when used as a fuel, becomes a carbon-negative fuel, it eliminates plastic from the waste stream, it eliminates the use of fossil fuels, it reduces co2 emissions by many fold, the current method in which hydrogen is produced is generating something in the neighbourhood of 12-16 times more co2 than it produces hydrogen, our process generates almost no co2 in the production of hydrogen.
So, DMG has an extremely bright future and we’re now at the point where we’re at the pointy end of the stick, one of the things that we’ve glossed over from last week’s announcement is the fact that we’ve been introduced to five potential sites by Peel Environmental as initial sites in which we’d want to site our first commercial DMG facility. We’ve reduced that down to two and it’s likely in the next few weeks we’re going to be signing the heads of terms to select one of those sites for our first commercial offering.
The importance of doing that is it gives us the opportunity to begin the site civil engineering, the surveys, the evaluations, completing the planning permitting processes etc. that are necessary for us to move to the final stages. All of this stuff is happening in the timeframe and with a wind at our back, if you will, as the hydrogen economy is gaining visibility.
So, the letter to The Telegraph simply reinforces the fact that the average consumer is starting to recognise that there is value that needs to be extracted from these waste streams, there is a component of every waste stream that is not recyclable, it’s not reusable so we cannot allow it to go to incineration and we cannot allow it to go to landfills. It needs to go through the DMG process where we’re extracting the energy value of that as hydrogen which can then be used as a carbon-negative fuel to road transportation.
Q4: It really is a truly amazing technology! What should potential investors be looking out for going into 2018? What’s next for Powerhouse Energy Group Plc?
A4: Really, it’s a continuation of this process that we launched at the beginning of this year which is moving aggressively towards commercialisation. People don’t realise that the first of its kind of anything is an arduous and uphill battle, that said we’ve got a tremendous team that has overcome significant obstacles, we’ve overcome technical challenges and we’ve overcome logistical challenges.
Now, as we look towards the signing of the lease for our first commercial facility, what investors can be looking at is that we are indeed going to be breaking ground. We are indeed going to be looking at our first commercial facility being operational in the year 2018 and that everything that we’ve been saying about the UK pioneer of waste to hydrogen technology and in fact, to our knowledge, the pioneer of waste to hydrogen technology worldwide, certainly in terms of a distributed modular mechanism by which our DMG can operate in a small footprint.
We can bring the solution to where the problem exists, we can start intervening in difficult, hazardous challenging waste streams that have heretofore had no solution and we have the solution. So, I believe that investors will see the commercial progress that we’re going to be making, we’re going to be publishing a set of goals and milestones that investors are going to be able to track and hold us accountable for tracking our process, and we’re going to be seeing the fact that the hydrogen economy is going to gain even more visibility and there’s going to be more worldwide investment in the hydrogen economy and a number of these opportunities in which we’ve been working and competing.
So, in any case, I think it’s an exciting time for investors to be involved.
