Velocys' Subsidiary Receives £27m Grant for its Sustainable Aviation Fuel Project
The sustainable fuels technology company Velocys plc said that its wholly owned subsidiary Altalto Immingham Ltd. was given 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 goal of this project, which is being developed under an existing Joint Development Agreement between Velocys and British Airways PLC (British Airways), is to build a commercial waste-to-SAF plant in Immingham, UK. The grant will enable Altalto Immingham to complete the project's Front-End Engineering Design (FEED).
The grant funding will be given out over three years, from December 2022 to March 2025, and is dependent on matched funding from the private sector. Altalto Immingham has received Letters of Intent from both old and new potential partners to meet the need for matching funding from the private sector. The first tranche of private funding is expected to be in place by April 2023.
The amount of cash that Velocys will put into the Altalto Immingham project over the next two years, starting in April 2023, is not expected to be more than £8 million. If new investors join the project, this amount could go down.
The grant funding will be used to finish the project FEED, which will combine the licensors' technology packages (including Velocys) and set up the Engineering, Procurement, and Construction (EPC) contract. Parallel to this, the commercial agreements required to support the plant will be established.
All of this will contribute to the Final Investment Decision, which is scheduled to take place in 2025, in line with the UK government's ambition. Velocys will charge licence fees for the use of its patented technology at the start of construction, under its commercial strategy. Based on this timeline, the Altalto Immingham project will be ready for commissioning in 2027.
Velocys got a £1.7 million grant from the DfT's Green Fuels, Green Skies competition for the Altalto Immingham project. They also got a series of grants totalling £934,000 from the competition that came before Green Fuels, Green Skies, called Future Fuels for Flight and Freight.
The £165 million Advanced Fuels Fund provides grants to fund the advanced development of commercial-scale SAF plants, allowing them to be ready for investment and construction. The financing is intended to help the UK Government meet its declared goal of having at least five commercial-scale SAF facilities under development in the country by 2025. The Advanced Fuels Fund's main goal is to jump-start the UK advanced fuels sector by commercialising innovative fuel production technologies capable of considerably decreasing 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 the government to having commercial SAF plants built in the UK. We are delighted that several large commercial companies have indicated their support for the project through indications of matched funding contributions and the provision of services to progress the project.”