PowerHouse Energy jigsaw is coming together

The pieces of the jigsaw are coming together for PowerHouse Energy Group PLC (LON:PHE) after completing an all-paper acquisition of its development partner Waste2Tricity in July.

PowerHouse, which has developed the DMG process that produced hydrogen from plastic waste, has had plenty more irons in the fire in what has been a transformative 2020.

Infrastructure group Peel Environmental signed commercial terms for the application of the DMG technology, whereby PowerHouse will receive an annual license fee of £500,000 for each DMG plant developed by Peel.

With planning permission granted in March 2020, this is the first of 11 agreed sites in partnership with Peel.

Using the DMG process, the plants will take unrecyclable household plastic waste and thermally convert it into a valuable intermediate product called syngas – a mix of hydrogen, methane and carbon monoxide.

Overseas, PowerHouse in 2020 also inked a heads-of-terms agreement with Hydrogen Utopia International for a potential licensing deal in Poland, where Powerhouse could grant an exclusive non-transferable licence for the DMG technology.

Fuel cell hydrogen

Syngas can either be burned to produce electricity or, as is the case with the Peel roll-out, the hydrogen can be separated out to power fuel cells in vehicles.

The business and technology has third-party technical validation from technical assurance company DNV-GL.

As work with Peel kicks off at the Protos ‘Plastic Park’ operation, near Ellesmere Port in Cheshire, PowerHouse chief executive David Ryan decided in November that he wanted to take personal responsibility for building the site team and delivering the project, so stepped aside to allow chairman Tim Yeo to take the company’s tiller in an executive role.

The company said the commercial use of DMG technology is due to begin at Protos by the end of 2021.

Peel is also expected to soon make planning applications for the second and third DMG sites.

Tried and tested approach

PowerHouse has said that it will stick to the tried and tested licence fee approach for the vast majority of the deals in the pipeline, though there are projects where other revenue models may apply.

Financial close for Protos and the Waste2Tricity acquisition are landmarks that were expected to make PowerHouse a more attractive investment proposition, particularly from an institutional investor perspective.

This was confirmed with a £5mln fundraise completed in the summer, which will be used to help grow the operational team, support cashflow for project activities and strengthen the balance sheet.

Critical stage 

Explaining his decision to relinquish the CEO role in order to personally take over the Protos project, Ryan said: 

“Powerhouse is at a critical stage of its development, we are a company poised for growth in the next decade.”

“I believe that putting the team in place for that delivery during the project in coming months will have the benefit of providing them with the delivery experiences to guide future decisions.”

“My challenge will be to concentrate on the key issues to deliver an operating process to specification and to nurture a younger team to deliver growth for the next decade.”

After a long time in charging mode, PowerHouse shares finally lived up to their name in 2020, rising over 500% in the year to date, but still with a number of potential value kickers still to come.