UK government awards Velocys 2 new grants for SAF, eFuels projects

Velocys plc announced Dec. 12 that its wholly owned subsidiary, Altalto Immingham Ltd., has been awarded two new grants from the U.K. Department for Transport’s Advanced Fuels Fund for its sustainable aviation fuel (SAF) project using commercial waste, as well as for an eFuels project.

The company received a grant of up to £27 million (USD$33.2 million) from the 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, is to deliver a commercial waste-to-SAF plant in Immingham, U.K.

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.

Velocys’ cash contribution into the Altalto Immingham project over the two years from April 2023 is not expected to exceed £8 million (USD$9.8 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 U.K. government’s ambition.

In line with its commercial strategy, Velocys will charge license fees for the utilization 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 (USD$2.1 million) from the U.K. Department for Transport’s Green Fuels, Green Skies competition and a series of grants totaling £934,000 (USD$1.15 million) from the Future Fuels for Flight and Freight competition, the predecessor to Green Fuels, Green Skies.

The £165 million (USD$202.9 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 U.K. government’s stated ambition of having at least five commercial-scale SAF plants under construction in the U.K. by 2025. The key objective of the Advanced Fuels Fund is to kick-start the U.K. advanced-fuels sector with the commercial deployment of innovative fuel-production technologies that are capable of significantly reducing near-term U.K. aviation carbon-dioxide emissions.

“We are extremely pleased the U.K. 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,” said Henrik Wareborn, CEO. “We welcome this clear commitment from government to having commercial SAF plants built in the U.K. 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.”

In addition to this funding, Velocys has also been awarded a grant of £2.5 million (USD$3.1 million) from the same fund, to contribute its technology to an eFuels project in the U.K. in collaboration with a number of new and existing partners.

The Advanced Fuels Fund has a specific total allocation of £22 million (USD$27 million) for the development of eFuels projects. These are fuels produced using renewable (decarbonized) electricity rather than vegetable oils or waste.

The eFuels grant will be used in conjunction with the project’s partners to conduct feasibility, technical validation, site selection and pre-FEED engineering for such a project, to make SAF from carbon dioxide and hydrogen in the U.K.

The project, to be known as “e-Alto,” will be managed by Velocys and its partners include Clariant Catalysts, Technip Energies and British Airways.

“We are very pleased to have been awarded this grant as it reflects the capability of the Velocys technology use of different feedstocks, ability to attract world-class partners, and access to a new project portfolio,” Wareborn added. “Our IP-protected technology enables the production of synthetic liquid fuels such as SAF for the airline industry, from renewable power and CO2, as well as from sustainable waste and biomass. This award also shows strong commitment from the U.K. government to accelerate the Department for Transport’s Jet Zero strategy for achieving net-zero aviation by 2050.”