News and Announcements
Southern Green Gas creates exportable fuel solution for global renewable energy markets worth $40 billion
- Published November 25, 2019 12:00AM UTC
- Publisher Wholesale Investor
- Categories Company Updates
Renewable electricity’s share of global electricity markets is growing strongly, today worth US$40 billion per annum.
Southern Green Gas is developing renewable methane which can be exported through existing gas infrastructure. This would allow users to generate on-demand renewable electricity using existing power stations.
Southern Green Gas aims to be first to market, protected by a strong intellectual property position.
Southern Green Gas Investment Highlights
Problem
Many countries in the northern hemisphere have high cost sources of renewable energy. With Australia’s low cost and large solar resources, a significant export industry could develop if this energy could be exported. SGG’s solution is renewable methane, made in Australia from hydrogen (produced with solar energy) and CO2 extracted from air. Being similar to natural gas in composition, it can be transported through existing gas infrastructure. This gives SGG a cost and speed-to-market advantage.
Market Size
SGG’s target market is the existing renewable electricity markets in Japan and Korea, which is equivalent in size to twice Australia’s total electricity market. Renewable methane opportunity is for the development of projects to supply this demand. A 10% market share would require $6 billion investment, with the intention for this to be funded by SGG’s joint venture partner APA.
Opportunity
- Renewable methane is the best solution for exploiting Australia’s competitive advantage in solar
- It leverages existing gas pipeline and LNG infrastructure to access global markets
- It is easily converted back to renewable hydrogen for supply to fuel cell vehicles
Positioning
SGG’s initial sales and marketing focus is on major participants in the Japan and Korean energy industry. These include power and gas utilities that purchase LNG (such as Kogas and Tokyo Electric) and trading houses. SGG’s Managing Director was directly involved in the BHP joint venture with Mitsubishi Corp to introduce methanol to the fuel markets in Japan. It was called M Fuel and involved demonstrating new production technology at the methanol plant in Laverton Melbourne.
Milestones
SGG has signed a joint development agreement with the $11billion APA Group, which owns the majority of gas pipelines in Australia. The joint initiative is part of their New Energy pursuit as detailed in their 2019 Sustainability Report.
SGG has completed a major milestone as the first stage towards the full renewable methane module. In September this year, SGG successfully commissioned the world’s first renewable hydrogen production facility, with the only inputs being sunlight and air.
Team
Managing Director Rohan Gillespie has 35 years experience in the energy, resources and infrastructure sectors. He has created and led a number of start-ups. Over the last three years, he led a commercialisation initiative for the key facilitating technology of CO2-from-air.
Founder and Advisor Mike Oppenheimer had a 40 year senior executive career with BHP and Ferrexpo, in various roles of gas and resource business development, as well as methanol technology commercialisation.
Strategic Partnerships
The APA Group is a key strategic partner for SGG. Their intended role to build-own-operate the renewable methane projects allows SGG to employ a “capital-lite” business model. Along with a Federal Government agency, APA is proposing to provide $2.2m of non-dilutive funding for further progressing the renewable methane product development.
Competitive Advantage
- Lowest cost from production module integration and economies of manufacture.
- First mover position protected by a strong intellectual property portfolio.
- Complete sustainability with water for hydrogen production extracted from air.
Revenue Model
SGG revenue model is to earn development fees associated with the renewable methane projects. Typically this is 3-5% of capital cost.
Exit Strategy for Investors
IPO planned for Q3 2020. Trade sale to one of the major energy companies active in Australia.
About Southern Green Gas
SGG is joint venturing with the $11billion APA Group, which owns the majority of gas pipelines in Australia. The joint venture is part of their New Energy initiative as detailed in their 2019 Sustainability Report.
SGG now seeks $0.3m-$1.0m in pre-IPO funding, primarily to fund the remaining portion of the renewable methane module development, followed by a further $5m (to be confirmed) at IPO to fund full commercial rollout. The IPO is scheduled for Q3 2020. The pre-IPO funding is being raised via the issue of ordinary shares at $0.50 per share. This represents a pre-money valuation of $4m.
Company Updates
Forget Startups: Why Magnetic Alliance is Betting on “Boring” Mid-Market Turnarounds
While Australia’s venture capital scene spent years chasing unprofitable tech startups and speculative high-growth plays, Mark Lim was quietly taking a radically different path. The Managing Partner of Magnetic Alliance Capital sees the nation’s richest investment opportunities hiding in plain sight: inside thousands of unglamorous, profitable, but operationally sluggish mid-market businesses. Speaking on Wholesale Investor’s […]
The asset class where the market has no vote
Litigation funding returns are decided in a courtroom, not a cycle. Knightsbridge’s Head of Capital is careful to call that a different risk rather than a lower one, and his answer to it is spread, not concentration. Most alternative assets still answer to something. Property answers to rates. Private credit answers to defaults. Even the […]
The listing fee vendors pay whether the house sells or not
Australia’s property portals collect more than $2 billion a year while national listings sit flat. An Australian-built AI platform is targeting the economics, not just the interface. An Australian vendor listing a home pays a vendor-paid advertising fee on top of agency commission. Rama Dwarapudi, Founder and Chief Executive Officer of RealSearch, puts a typical […]
Backed By Leading Investment Groups and Family Offices
