Velocys plc (VLS.L), the sustainable fuels technology company, announces that its wholly owned subsidiary, Altalto Immingham Ltd., has been awarded a grant of up to £ 27 million from the UK Department for Transport's ("DfT") Advanced Fuels Fund for the Altalto Immingham Sustainable Aviation Fuel ("SAF") project. The purpose of this project, which is being developed under an existing Joint Development Agreement between Velocys and British Airways PLC ("British Airways") is to deliver a commercial waste-to-SAF plant in Immingham, UK. The grant will allow Altalto Immingham to deliver the Front-End Engineering Design ("FEED") stage of the project.
The grant funding will be distributed over the grant period from December 2022 to March 2025 and is conditional upon receipt of private sector matched funding. Altalto Immingham has obtained Letters of Intent 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 into the Altalto Immingham project over the two years from April 2023 is not expected to exceed £ 8 million, and this sum may be reduced by bringing in additional investors into the project.
The grant funding will be used for the completion of the project FEED, which will incorporate the technology packages of the licensors (including Velocys) and develop the basis for the Engineering, Procurement and Construction ("EPC") contract. In parallel, the commercial agreements required to support the plant will be put in place. All of these will support the Final Investment Decision ahead of 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 utilisation of its proprietary technology at commencement of construction. Based on this timing, commissioning of the Altalto Immingham project is expected to begin in 2027.
Velocys has previously received grants for the Altalto Immingham project of £1.7 million from the DfT's Green Fuels, Green Skies competition and a series of grants totaling £934,000 from the Future Fuels for Flight and Freight competition, the predecessor to Green Fuels, Green Skies.
The £165 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 emissions.
Henrik Wareborn, CEO, said:
"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."
