Eqtec signs deal to develop biomass project in France

Gas-to-energy technology company Eqtec announced on Wednesday that, via its wholly-owned subsidiary Eqtec Iberia, it has entered into an agreement for the development of a proposed 1.18 MW net biomass gasification power plant project in Gratens, France.

The AIM-traded firm said the deal was between Eqtec Iberia, the existing project special purpose vehicle Biomasse 31, and the owners of that vehicle, the Barthe family.

Under the agreement, Eqtec said the parties would work towards definitive legal documents under which they and the funders introduced by each party would invest in the special purpose vehicle in order to achieve financial close of the project.

The nature and amount of that investment, and the share of funding between the parties, was yet to be determined.

Eqtec said its intention was that it would have the option, but not the obligation, to invest equity capital into the special purpose vehicle.

The board said the deal reflected the key terms required for the necessary project engineering, management and documentation to be completed, to form the project’s final legal documentation.

It said the project was proposed to comprise a 1.18 MW net integrated biomass gasification power plant in Gratens, with Eqtec to provide its gasification technology with a fixed-cost engineering, procurement and construction solution.

Eqtec Iberia would act as project manager, and provide technology, equipment and services, including development services.

The company estimated that the value of its proposed technology, equipment and services contract would be around €5.5m, with a full detailed commercial offer on that basis prepared for the project.

Eqtec Iberia would incur costs of up to €0.1m for the provision of the engineering services required to obtain permitting to reach financial close, the board added, which was proposed to be repaid on financial close at a 2x multiple.

Biomasse 31 would be responsible for all project permitting and licensing, with application for certain licences and permits required before construction could begin.

Eqtec Iberia had exclusivity to develop the project up to 31 December 2020, the deal dictated, which the parties considered to be the expected long stop deadline necessary to obtain all required permits to achieve financial close and begin construction.

The board said the parties could mutually agree to extend the exclusivity period.

It explained that all parties were progressing the workstreams required to enter into final legal documentation, adding that Eqtec representatives had met with potential third-party funders for the project, and a number of pre-planning meetings had been carried out with the relevant authorities, with a number confirming their support in writing.

“It is very encouraging to sign our first agreement for a commercial project in France, with a partner so embedded in the local community and so committed to developing energy transition infrastructure throughout the country,” said Eqtec chief executive officer David Palumbo.

“We have been in discussions with the Barthe family since the beginning of the year and we are delighted that they have been strong advocates of our technology.

“In our view, France has always been a market where innovation and creative solutions in clean energy are given full support both from the public and private sectors.”

Palumbo noted that the company’s technology had already been positively reviewed by French entities, such as the National Alliance for Coordination of Research for Energy, and had obtained endorsements from the team of academics running the research pilot plant Eqtec had built at Lorraine University.

“We strongly believe that our potential market in France is only starting to open up and the project, combined with our presence at Lorraine, can act as the foundation for growth and development in the region.”

Pierre-Olivier Barthe, chief executive officer of Biomasse 31, added that his firm was “very excited” to have entered into the agreement, and described the project as “so important” for the company and the local community.

“We have been working on this for a number of years without being able to find a reliable and professional technology partner until now.

“The depth of technical understanding and capabilities of Eqtec’s technical team is, in our view, unmatched in the sector as per the excellent references that were given to us.

“Now having experienced working with them, we have no doubt that we will make a success out of this project, which we believe is the first of its type in France.”

At 1458 GMT, shares in Eqtec were up 4.44% at 0.09p.