Alan Kohler has an interview with Kevin Moriaty over on The Constant Investor. Here's a few snips:
Kevin, since we last spoke you became a listed company, what sort of adventure was that?
Well, it’s quite a journey but we were largely driven by the ever-increasing numbers of people who were connecting with us on social media through website e-mail and so over two years we accumulated over 9,000, so we call them followers. By in large these are what I call mums and dads and quite a few – a lot of them were saying why can’t we get involved, why can’t we invest in this company and of course they’re not sophisticated investors. We raised about $15 million dollars from sophisticated investors over the first year and then we turned our attention to letting these thousands of non-sophisticated, they call them, investors in. I was just saying to our people that really it’s been a form of crow funding and we have listed in order to allow these people to invest and just to give you a sense of it even since listing a month ago we have taken on over thousands of new shareholders so we now have over 3,000.
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That’s okay. I think you were hoping for $40 to $50 million in the float but you only got $16.
Well we’re $30 million, yeah, but how that came about is we surveyed our 9,000 people, followers, and several thousand of those respondents said yes, we will subscribe to the flight so it doesn’t take a genius to work out that you can potentially raise a lot and you’ve got to understand the context, we were saying that we wanted to build something that would make a difference, a grid scale to the energy storage market and we’re still doing that but in order to finance that fully we needed to raise that sort of money and so that’s what we went for but we didn’t know really how much people were going to subscribe, we didn’t have any way of really assessing it until we listed, until we actually did the prospectus. Given that this is a new technology and we are dealing with not institutions and people that you can sort of mark up for millions of dollars a piece. We didn’t have any way to price it and so effectively our IPO price just – but we raised something like a bit more than half the target, the initial target anyway. We judge it as a success and now building towards the next phases which will be to build these grid scale devices.
Did you get a few people who said they’d invest but when it came time to write a cheque they squibbed it, is that what happened?
Exactly, yes.
Do you think they were put off by the 2,100 minimum?
Some of them where, some of them complained and said could you make it less and so I can tell you that a lot of these thousand people that have come in since the float are buying in quite small lots. You’re taking on people that are buying 2,000 shares and certainly less than 10,000 dollars. It shows you that our support base is very wide based and there’s nobody in the company that’s a big risk, put it that way.
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Tell us about the ones you’ve got going. There’s a pilot one I think with the SA water company, is that right?
Yes, SA Water approached us saying they wanted a solution to allow them to time shift the energy generated from their biogas production from all the digesting poo and they said we were currently using these reciprocating engines, so like huge diesel engines to generate power but they had no way of time shifting it and they used the heat from it to displace gas, it’s used in heating the big vats of waste. But they needed that more in the mornings then the evenings which is when the bugs were working harder. They said can you come up with a version of your device that burns biogas to provide the heat and then so we can generate heat and power when we need it. We developed that state government funded half of that and that will be starting commissioning in the next couple of months so that’s going to be a big plus for because there’s huge interest worldwide in the biogas burning. I mean everything from cow, dairy farms which produce huge amounts in the concentrated form through to major water utilities worldwide are interested in this sort of technology, especially that allows the time shifting.
The other one is the 10-megawatt hour electrically charged device which is our basic original model and that’s in commissioning at the moment, that’s going well, we’ll have an update for the market shortly and that’s designed to go into an Aust Core packaging factory on the east coast. We call it on site commercial testing but we’re certainly proving it works now and we’ll come out with a certification on that shortly.
Just run us through the business model. With these things do you just sell the unit to them and off they go or do you get an ongoing revenue?
Both. We’re looking at both models. Probably the gas charging units will be – because they’re being sold to utilities and so on would largely – they’ve got ready access to capital and they are looking at things like the justification for investing that is they’re going to be hours that are cheaper to run than their current reciprocating type engines or they’re currently flaring gas in which case it’s simply got no value but they want to reduce their emissions. There’s a number of drivers but we are looking at a model because these are relatively cheap to make, our machines, that we would set up effectively a service model whereby we would provide the service, say we’ll take your gas, you provide it and we will share in the sales of energy to industry or the waste treatment plant. There’s at least two models there. As far as the smaller units, the 10 megawatt hour units that I described that we’re just commissioning now, once they’ve proven in the commercial environment will attract bank-banking.
Currently, for example, the model that AustCor and others are working on, they put in solar and the storage and these packages are funded by one of four banks, Macquarie, Westpac for example, ANZ. The CEFC, it’s the Federal Governemnt’s fund for clean energy finance corporation, that’s it. They have got several billion dollars that they are using to help finance the rollout of renewable energy. They provide larger funding packages to the banks, ANZ will take on $200 million. The bank then repackages them in much smaller packages of $1 million to $5 million and effectively it provides a lease/buy arrangement for people that want to put in – currently it’s mainly solar energy and what our devices will allow them to do is to time shift the solar production. What’s happening is AustCor fire up their boilers at 3:00am at the morning so they’re hot to start a production run at 6:00 with the new shift and solar is no use at all at that hour. They want to charge that through the day and then turn them on ad provide primarily heat and some power.
When you come to a model it’s driven ultimately by not just the fact that renewable solar PB is getting so cheap now, the cost of production from it is very small, the capital as well. They want to be able to say they’ve got green packaging or at least low emissions packaging which for the packaging industry would be a big thing. There’s not just the, shall we say the energy in/energy out cost, there’s the odd-on values of being able to take the box on emissions and later if there’s carbon pricing in this country and so on of any note, which I think is likely to happen as things seem to be changing politically, then obviously these things will quality, tick the box on meeting your emissions targets and have a dollar value attached.
The next question is are you saying that your devices are cheaper than lithium batteries?
Lithium batteries don’t cart it for this. Lithium batteries have their place. If you just want power and you don’t mind replacing them and you don’t cycle too often because otherwise they need replacing quite quickly lithium batteries doesn’t cut it for industry, they want primarily heat, at least two thirds of their requirements for heat, usually up to 90% so batteries – the powers are a relatively small part. In fact some industries say to us forget the power, we’ll get that off the grid and because of our energy needs are in heat.
I see. Your devices are actually not just generating power, they’re providing heat for these factories.
Correct. In fact, the industries have come to us, they’ve driven this. Initially we thought rather naively I suppose that we would be competing with batteries but in reality batteries can’t do what we do and we do what the majority of the world’s energy spectrum needs which is we provide heat and power. There will be a place for batteries where people just want some household backup but we’re going for scale, Alan, and everything from our preference is 10 megawatts hours up and in the end the end result of what we’re trying to do will be to provide versatile storage throughout the grid at a relatively low cost which means that people actually won’t think they need batteries anymore because if you’ve got reliable power, which we don’t have at the moment here in South Australia for sure, why would people spend on these solar battery sort of complexes that have been put on houses. I don’t mind, solar can be fed back into the grid but the problem is the grid is not able to absorb and time shift it at the moment.
More in the interview: https://theconstantinvestor.com/energy-storage-through-molten-silicon-1414degrees/
