There has been some exciting and positive news from Getech (GTC) this morning, a company where I am invested and one that I have covered here on a few occasions now.
The news concerns its increasing presence across the Hydrogen space, which having been spoken of by the company over the last year, today brings some real structure to the potential for GTC and investors going forward.
Via its wholly owned subsidiary H2 Green, the company has signed a major agreement to develop what will be its first clean energy hub at the port of Shoreham, on south coast.
The deal is exclusive to GTC with the firm focus being on the development of Hydrogen, Ammonia and new onshore wind and solar development capacity.
It is certainly positive news and something investors had been keeping an eye out for, which provides further credibility to the story and the path ahead.
In order to find out more on the story I have been fortunate enough to speak with CEO Jonathan Copus once again, to hear more on this deal, along with the prospects ahead and what investors should be looking out for in the future.
“This is exciting news and an exciting opportunity for us” says Copus “and we have been working with Shoreham for some months.
“We have got to a stage now, where we are there and can really see this vision for the hub”.
Going on, the CEO adds that it is particularly exciting because it is very scalable and the project will now build up through a series of phases.
“The first focus will be on core vehicles, followed by all of those that are coming in and out of the port and then, this really interesting step which will link Shoreham and the project up to International Hydrogen markets through Ammonia”.
Copus adds that the thing about the Hydrogen projects is that you scale the investment with the demand that you have and that all of the related equipment on this side is of a modular nature.
“You then build to satisfy the demand, but probably build a bit more than you can see as by establishing the facility you are effectively planting a seed and breaking down the barriers to others adopting Hydrogen.”
With over 800 heavy goods vehicles entering the Shoreham port on a daily basis the project looks to be a great start in the programme of developing assets across the Hydrogen space for the company.
Elaborating further on this, Copus adds, that in talking about a project which is in excess of eight tonnes and moving to ten-fifteen tonnes then you aren’t going to be building that in day one, where there will be a pathway.
In terms of funding the project he says that the strategy remains the same, in financing it at the asset level which isn’t too capital intensive and which isn’t unusual in such situations.
From there, he builds out the developing picture where he comments, “in the past we have talked about three groups of potential funding partners who we are talking to. One of those is strategic investors and these are people who are established in the utilities and energy markets and who want to gain exposure and scalability to Hydrogen”.
The CEO adds that these kind of companies already tie in with the wider GTC business as existing customers related to other projects, so it isn’t a case of having to seek out potential interested parties, thus putting GTC in a solid position from the outset.
Whilst that is just one area concerning the development/funding process, Copus reiterates what he has previously mentioned, in that the area will attract infrastructure funds too. “You can already see these sort of funds getting involved in the kind of projects and they generate good returns, so they should fit very nicely with the demand profile for these types of funds.”
Thirdly, Government is also likely to feature prominently, where Copus says that GTC screens all of its projects and the economics without the need for subsidies. “It would be very unusual though in any growing energy system for Government not to get involved with capital investment or other structures that they put around this”.
So, with three angles to assist in driving the Hydrogen projects onwards to fruition, GTC is looking increasingly well placed to proceed and at pace too.
In relation to GTC’s own financial position, Copus says that they previously went to the market where £2.5m was raised and given they are busy across not only Hydrogen but Geothermal and Strategic Minerals he trusts that people will recognise the capital discipline across the business.
“You can see from our fist half results that we are putting more money to work in these opportunities, but at the same time in the core business we are very careful with shareholders money”.
As positive as the news today has been though, no doubt investors will be keen to hear of how things are progressing in relation to previously announced news across the Hydrogen space.
The CEO elaborates, “the first thing here is that Shoreham is a great and a really, really good project and I think for the first time it really demonstrates how one of these green energy hubs will work.
This one project alone is addressing the needs of large volume customers and is very scalable, but we as a company, our ambition is not to own just one energy asset. It is about owning a whole portfolio of these and Shoreham has already shown us that this is a repeatable model that we can take from place to place.
We are very busy across an expanding portfolio of opportunities and we said at the time of the H1 numbers that we are looking at things right across the UK and it happens to be that the first project we are delivering has come from a different set of conversations.
We really are very, very busy across these sort of things looking at the customer needs and how the data plays a part in that moving forward in the Hydrogen space”.
Regarding an agreement in place across rail, Copus says that this is highly important as rail is a big volume customer, but so too is marine as with Shoreham which has a connection with ammonia and international markets.
The building out of the asset is also extremely exciting with Copus explaining that at Shoreham there is a steel handling operator along with timber handling and a power station, highlighting the potential for the scaling up.
There is also, he says, a water treatment works which he says is important as a by-product of Hydrogen aside heat is oxygen which can be put through the water treatment works and which in turn makes it more efficient amongst other benefits.
“Polution of rivers and the seas has been a hot topic of late, so this is a solution that can actually play a part in that”.
Copus also adds that local solutions and partnerships are highly important in the Hydrogen space for GTC as are MOU’s (memorandum of understandings) that have been struck.
He does however acknowledge that on announcing an MOU, it can be seen as kind of interesting, but at the end of the day it is really just an MOU and what does that really add up to.
Elaborating he says that what Shoreham has done though is to really put the Hydrogen concept into a firm context and Copus says that it really is a big piece of news for GTC. “It won’t be the last bit of news on Shoreham though as there will be lots of that from here through the initial process and beyond, some of that will be about the finance side of it, others will be about the customers.
There should therefore be plenty for shareholders to look out for in the months ahead with the pace of news flow likely to accelerate throughout next year and beyond.
Copus describes it in terms that there should be a rich path of news flow as they expect to multiply the opportunities, which should then translate into multiples of news, that in turn, will also increase the value proposition.
The plan going forward is to be as open with shareholders in terms of communication as possible, particularly in relation to commercial deals as permitted.
As I write, the shares in GTC are trading around 36p with a 25% gain on the day, but moving up and down as some elect to take profit, but in doing so leaving something for the next person who may now be coming on board.
From a personal perspective I’m sitting tight as the announcement today clearly highlights the reality and vision coming through and which looks like gathering some serious momentum.
In a note this morning, broker Cenkos provide for some numbers that are interesting, based on a single Hydrogen facility, which it cites as generating £5.8m in revenue and £2.2m in EBITDA per annum for GTC.
That may be some way off yet, but it provides for a taste of things to come and the huge potential going forward giving a glimpse of the upside once assets come on stream and scale up.
But, as I have mentioned here before, GTC isn’t all about the Hydrogen as opportunities around Geothermal and Mining for specialist minerals is also providing for increasing growth prospects for the company.
Copus sounds upbeat and excited on these aspects of the business too, particularly around the Globe offering and its first Geothermal product titled Heat Seeker where the CEO adds, “there will be more to say on the mineral space as we release that”.
He also says that there are multiples of minerals around that can be used and implemented in the development of new products which complement the requirement for the likes of copper and manganese, so there is plenty for GTC to focus on and increase sales from its traditional but improved offerings.
One swallow certainly doesn’t make for a summer, but it does provide for an expectation of what is to come and to that end GTC looks like a company not only on an exciting path, but one that could now deliver handsomely for investors in the coming years.