3 Reasons to add Powerhouse Energy Group #PHE to your Watchlist - Vox Markets
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3 Reasons to add Powerhouse Energy Group #PHE to your Watchlist

The content of this blog (or material associated with it) is not intended as investment advice. The writer of this blog holds a position in the company featured. Please do your own research.

Powerhouse Energy Group (PHE)
Share Price: 1.05p
Market Capitalisation: £10.12m

What do Powerhouse Energy Group do?
They turn unwanted waste into usable clean energy, with zero emissions.

If that sentence didn’t make an impact on you, read it again.

So all that stuff, which we regard as rubbish, that usually goes into landfill, is now worth something, in fact it’s essentially clean fuel.

You can visit Powerhouse Energy’s website by clicking here

3 Reasons to add Powerhouse Energy Group #PHE to your Watchlist

1. IT SOLVES TWO MASSIVE PROBLEMS

The World Bank warns that global solid waste generation is on pace to increase 70 percent by 2025, rising from more than 3.5 million tonnes per day in 2010 to more than 6 million tonnes per day by 2025. The waste from cities alone is already enough to fill a line of trash trucks 5,000 kilometers long every day.

The global cost of dealing with all that rubbish is rising too: from $205 billion a year in 2010 to $375 billion by 2025.

Municipal waste is on the rise and growing faster than the population.

Powerhouse Energy’s G3 Unit can process 23 different organic waste materials, including two that are creating some of the biggest problems to the environment, plastic and tyres.

When you see that little recycle logo on a plastic bottle or bit of packaging…. don’t believe it!

Plastic

Only around 9% of all plastic is recycled, more than 70% of the total production is now in waste streams, sent largely to landfill – much of it just litters the wider environment, including the oceans.

In fact more 8 million tons of plastic are dumped in our oceans every year.

Current trends point to 12 billion tonnes of waste by 2050 and which means by this date THERE WILL BE MORE PLASTIC IN THE OCEANS, BY WEIGHT, THAN FISH.

Tyres are amongst the most difficult items to recycle. Tyres are no longer accepted at landfill sites and virtually all end-of-life tyres have to be recycled or re-used in some way.

National supply of end-of-life tyres is outweighing demand, so if you want to get rid of your tyres and don’t have a use for them, there may well be a charge to take them off your hands.

UP TO 500,000 TONNES OF TYRES ENTER THE UK WASTE STREAM EVERY YEAR

 

This week the UK government re-iterated it’s intention to create a greener economy by underlining their target that petrol and deisel engined cars (and vans) will be banned by 2040. They are not alone in this clean energy drive, Norway are targeting 2025, whilst Germany, India, and the Netherlands are considering similar bans by 2030.

The number of plug-in cars and vans, in thr UK, could reach 9m by 2030, up from around 90,000 today.

National Grid recently warned that, by 2030, electric cars could require 3.5-8GW of additional capacity, on top of the current peak demand of 60GW. 

The extra demand will jump by more than the capacity of the Hinkley Point C nuclear power station by 2030.

By the middle of the century, when it is assumed almost all cars will be electric, that extra peak demand could be up to 18GW.

The Energy Gap

All of Britain’s coal fired powerstations will be offline by 2025 so the UK is facing an unprecedented, “energy gap”. In a decade’s time, according to engineers, with demand for electricity likely to outstrip supply by more than 40%, which could lead to blackouts.

As many as 30 new gas-fired power stations are likely to be needed to make up the supply deficit but these are not being built.

 

POWERHOUSE ENERGY’S G3 UHt UNIT – A UNIQUE SOLUTION

PHE’s G3 Unit employs what they’ve termed as Distributed Modular Gasification©.

The G3 uses an ultra-high temperature gasification technique. At temperatures exceeding 1200c it demolecularises waste and converts it to, “syngas”, efficiently (90+% conversion) with less than 1% residue, which is completely innocuous.

Synthesis gas, or “syngas”, can be used for electrical power generation, as well as to create high-quality hydrogen for use in fuel cells.

There’s a lot of discussion around hydrogen fuelled vehicles and many believe it will be the next big thing.

The likes of Anglo American, BMW, Daimler, ENGIE, Honda, Hyundai, Kawasaki, Royal Dutch Shell, The Linde Group, Total and Toyota, launched a global initiative to voice a united vision and long-term ambition for hydrogen at Davos this year.

The good thing about the G3 unit is that is can also generate electricity, which can either be fed back into the grid or used to power electric cars, buildings etc.

 

2. NO REAL COMPETITION

Currently the alternatives to the G3 unit are: Landfill, Incineration, Pyrolysis, Gasifcation and Plasma Arc.

As the G3 has several advantages over these current waste mangement systems.

– Ecological

Unlike other systems, the G3 produces no harmful emissions to the atmosphere and it has no smoke stack. So it can be located pretty much anywhere, safely.

– Mobility

The G3-UHt unit will be sited where the waste is located, which removes the need to transport waste over long distances to either a processing plant or landfill site, reducing cost to companies.

– Scalability

The G3-UHt unit, being modular, was designed with expansion in mind. One unit can process 25 tons of waste per day. The G3-UHt system allows PHE to scale with reduced risk. If they need to process 100 tons per day they just use 4 modules.

– Cost & Efficiency

The G3 is able to capture the vast majority (90%+) of the waste’s contained energy, or calorific value in the derived syngas and the unit itself can be run off the electricity it produces, making it completely self-sufficient.

The capex, per 25 ton per day unit, is around £5m, which is tiny compared to the capex of an incinerator or gasification plant or costs associated with landfill sites. It can also be operated by just two people.

 

3. MARKET CAPITALISATION

The currently market cap of Powerhouse Energy is £10m. They are loss making at the moment but are weeks away from UK certification and a couple of months away from their first public demonstration of the G3 unit.

On completion of these 2 milestones, they will received £500,000 in funding from a UK partner, involved in the development of energy and waste projects, plus an agreement to supply them with first five units.

Keith Allaun, the Executive Chairman reckons each 25 ton unit will generate between £500,000 to £750,000 in free cash flow, for the company, per year.

If these G3 units perform as well as expected, I can see a very agressive rollout based on demand alone.

The only issue I think they will have is being able to make enough of them to meet demand. So your guess is as good as mine as to how many will be in operation in 5 years time but like I said, if they are successful, I should think 20 units by 2022 could be achievable.

I’m sure you can work out the figures on this, suffice to say, it would translate into several multiples of today’s share price.

Powerhouse Energy’s G3-UHt unit is a disruptive, cutting edge, potentially game changing development, in the hot sector of waste to energy.

The reward could be massive but of course with it comes risk. No cutting edge technology is without it hiccups and as the company is loss making, they will probably need further funding before they start to generate revenue.

Having said that, the next few months are going to be very exciting for the company, as they, hopefully transition from research and development to commerciality. Should they achieve the milestones of UK certification and complete a successful public demonstration, then expect the share price to rocket (on clean energy of course).

You can hear my interview with, Executive Chairman, Keith Allaun, below:

The content of this blog (or material associated with it) is not intended as investment advice. The writer of this blog holds a position in the company featured. Please do your own research.

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The content of this blog (or material associated with it) is not intended as investment advice. The writer of this blog holds a position in the company featured. Please do your own research.