UK-headed gas-to-liquids (GtL) technology developer Velocys plc has announced that its wholly owned subsidiary, Altalto Immingham Ltd, has been awarded two separate grants from the UK Department for Transport’s (DfT) totaling up to £29 million (≈ €33.9 million) for the Altalto Immingham sustainable aviation fuel (SAF) project.
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First announced in September 2017, the Altalto Immingham sustainable aviation fuel (SAF) project is being developed under an existing Joint Development Agreement (JDA) between Velocys and UK national air carrier British Airways plc (BA) to deliver a commercial waste-to-SAF plant in Immingham, UK.
Both two grants have been awarded from DfTs Advanced Fuels Fund. The GBP 165 million (≈ EUR 189.5 million) Advanced Fuels Fund provides grants to support the development of commercial-scale SAF plants that are at an advanced stage, enabling them to become ready for investment and construction.
The funding is aimed at achieving the UK Government’s stated ambition of having at least five commercial-scale SAF plants under construction in the UK by 2025.
The key objective of the Advanced Fuels Fund is to kick-start the UK advanced fuels sector with the commercial deployment of innovative fuel production technologies that are capable of significantly reducing near-term UK aviation carbon dioxide (CO2) emissions.
Funding to complete the FEED phase
The first grant of up to GBP 27 million (≈ EUR 31 million) from the Advanced Fuels Fund will allow Altalto Immingham to deliver the Front-End Engineering Design (FEED) stage of the project.
The fund will be distributed over the grant period from December 2022 to March 2025 and is conditional upon receipt of private-sector matched funding.
According to Velocys, Altalto Immingham has obtained Letters of Intent (LoI) from a number of existing and new potential partners for the private-sector matched funding requirement with the first tranche of private funding due to be in place by April 2023.
Velocys’ cash contribution to the Altalto Immingham project over the two years from April 2023 is not expected to exceed GBP 8 million (≈ EUR 9.2 million), and this sum may be reduced by bringing in additional investors into the project.
FID anticipated in 2025
The funding will be used for the completion of the project front-end engineering design (FEED), which will incorporate the technology packages of the licensors (including Velocys) and develop the basis for the Engineering, Procurement, and Construction (EPC) contract.
We are extremely pleased the UK Government has awarded Velocys this important grant which will deliver the FEED stage for our Altalto Immingham reference project accelerating the commercial deployment of Velocys’ technology and delivering cashflow. We welcome this clear commitment from Government to having commercial SAF plants built in the UK. We are delighted that a number of large commercial companies have indicated their support for the project through indications of matched funding contribution and the provision of services to progress the project, said Henrik Wareborn, CEO of Velocys.
In parallel, the commercial agreements required to support the plant will be put in place. All of these will support the Final Investment Decision (FID) ahead of the commencement of construction, which is targeted to occur in 2025, consistent with the UK Government’s ambition.
In line with its commercial strategy, Velocys will charge license fees for the utilization of its proprietary technology at the commencement of construction. Based on this timing, the commissioning of the Altalto Immingham project is expected to begin in 2027.
Altalto E-fuels pre-FEED
In the second award, Velocys has been awarded a grant of GBP 2.5 million (≈ EUR 2.9 million) from the same fund, to contribute its technology to an e-fuels project in collaboration with a number of new and existing partners (E-Fuels Project).
The Advanced Fuels Fund provides grants to support the development of commercial-scale SAF plants and has a specific total allocation of GBP 22 million (≈ EUR 25.3 million) for the development of e-fuels projects – fuels produced using renewable (decarbonized) electricity rather than vegetable oils or waste.
The grant awarded to Velocys under this e-fuels allocation will be used in conjunction with the E-Fuels Project’s partners to conduct feasibility, technical validation, site selection, and pre-FEED engineering for such a project, to make SAF from CO2 and hydrogen, in the UK.
The E-Fuels Project, to be known as “e-Alto”, will be managed by Velocys, partners include Clariant Catalysts (Clariant), Technip Energies (T.EN), and BA.
We are very pleased to have been awarded this grant as it reflects the capability of the Velocys technology use of different feedstocks, ability to attract world-class partners, and access to a new project portfolio. Our IP-protected technology enables the production of synthetic liquid fuels such as SAF for the airline industry, from renewable power and CO2, as well as from sustainable waste and biomass. This award also shows a strong commitment from the UK Government to accelerate the Department for Transport’s Jet Zero strategy for achieving net zero aviation by 2050, Henrik Wareborn said.
Velocys has previously received grants for the Altalto Immingham project of GBP 1.7 million (≈ EUR 2 million) from the DfT’s Green Fuels, Green Skies competition and a series of grants totaling GBP 934 000 (≈ EUR 1.07 million) from the Future Fuels for Flight and Freight competition, the predecessor to Green Fuels, Green Skies.
