SYDNEY, AUSTRALIA: Vulcan Energy Resources (ASX: VUL), has agreed to acquire an operational geothermal renewable energy power plant in the Upper Rhine Valley at Insheim, Germany.
Vulcan Energy will acquire 100% of the shares in the entity which owns and operates the plant. A new Germany subsidiary of Vulcan, based in Karlsruhe, will be the owner and operator of the Insheim Plant.
Purchase price of approximately €31.5 million, utilizes a portion of proceeds from the recent A$200 million capital raise, the acquisition of the Insheim Plant establishes Vulcan as an operational renewable energy business.
Owned by regional energy supplier Pfalzwerke AG, the plant currently has the technical ability to produce a maximum of 4.8MW renewable power, equivalent to approximately 8,000 households, with an additional ability to produce heating. The plant is producing 2.9 MW of electricity on average.
It is anticipated that the Insheim Plant will be a source of revenue for Vulcan, having reported sales of €5.8 million and an EBITDA of €2.9 million for the financial year ending 31 December 2020.
The plant presently capitalises on the Feed-in Tariff for geothermal power. The acquisition also includes 100% ownership of the Insheim production licence surrounding the Insheim Plant.
Following an MoU signed in November 2019, Vulcan had already completed the Maiden Indicated Lithium-Brine Mineral Resource Estimation at the Insheim license in January 2020, reporting an Indicated Mineral Resource of 722,000 t of contained Lithium Carbonate Equivalent (LCE), with a lithium brine grade of 181 mg/l Li2.
The Insheim Plant currently pumps lithium-rich brine to the surface for geothermal energy generation before the brine is reinjected into the reservoir.
Vulcan will formally take over the plant from 1 January 2022 and will retain all existing local employees as part of the transition. Vulcan also plans to invest in the expansion and modernisation of the power plant.
Vulcan’s Managing Director Dr. Francis Wedin commented: “The acquisition of the Insheim Plant is consistent with Vulcan’s strategy to acquire and upgrade existing brownfield renewable energy and brine infrastructure and to de-risk and grow our Zero Carbon Lithium Project.
Funded with a portion of the proceeds from our recent $200 million capital raising, which was strongly supported by existing and new institutional investors, the acquisition demonstrates our willingness and ability to capitalise on strategic opportunities to ensure timely project development.
This is a significant, first step in establishing Vulcan as a revenue generating, renewable energy producer. German State and Federal policy increasingly supports decarbonising heating and power grids, with a focus on decentralised, renewable energy, and Vulcan intends to build a number of distributed geothermal renewable energy plants across the Upper Rhine Valley region.
Vulcan subsidiaries GeoThermal Engineering GmbH and gec-co (Global Engineering & Consulting-Company GmbH) have already been successfully active in Insheim for many years. We will capitalise on our local knowledge and expertise to continue to make a positive contribution to the energy transition in the region, while discussions with multiple local stakeholders to provide renewable heating to communities and renewable power to the German grid are ongoing.
Combined with our brine offtake agreement with the Landau plant, we will work to assess the feasibility of integrating lithium extraction from these areas into our development plans. The Vulcan team remains focused on developing our world-first dual renewable energy and Zero Carbon Lithium™ business, with phase 1 production to supply the EU battery market targeted for CY2024.”