Seven things every investor needs to know about Provaris Energy

Industrials

Seven things every investor needs to know about Provaris Energy

With global CO2 emissions currently estimated at more than 36bn metric tonnes* per year, every developed and emerging economy needs to undergo an immense transition to meet net-zero emission targets by 2050.

Commentators agree that there is no magic bullet for a solution, but hydrogen is becoming the go-to fuel and is expected to play a vital role in the transition to a net-zero energy system.

Reports suggest that demand could grow sixfold by 2050, with its use expanding to transport, shipping, aviation, heavy industry and power generation.

Meanwhile, despite forecasts of rising demand, no business has published an intention to transport compressed green hydrogen – at scale – on an inter-continental basis.

That is until Provaris Energy. Provaris is planning to be the world’s first market-listed provider of compressed green hydrogen by sea from Australia to high-demand hubs in South-East Asia, and via key energy transition ports in Europe.

For a full insight into the business, read Edison’s latest report. Or, for an overview, here are seven things every investor should know about the company.

#1 A first mover
Recent geopolitical instability and energy security fears are accelerating hydrogen adoption. By 2050, the International Energy Agency estimates that global demand for hydrogen will increase to 528Mt, with green hydrogen’s share set to increase from 5% to 62%. Provaris has the potential to be one of the first companies to offer emission-free hydrogen production and an inter-regional green hydrogen supply chain.

#2 The H2Neo: A new class of bulk hydrogen carrier
Provaris is making material strides towards its goal of producing and supplying green hydrogen by 2026. Central to the company’s plans is the development of a new class of ocean-going delivery vessel, the H2Neo carrier, which will transport compressed green hydrogen to the regional markets in Europe and Asia.

#3 Shipbuilding schedule
With preliminary shipping approvals in place and significantly advanced in relation to engineering, management is targeting approval for construction of the first H2Neo carrier by mid-2023, with the first operation of vessels in 2026, providing first-mover advantage.

#4 From tropical Australia to markets
The company has lodged a referral submission for its proposed 2.8-gigawatt Tiwi H2 project in northern Australia, strategically located within short shipping distance of Japan, Korea and Singapore. This will be the company’s base for its green hydrogen production and exports, with the hydrogen produced through electrolysis of purified sea water and the process powered by solar energy.

#5 Climate action in action
Production volumes from the Tiwi H2 project are expected to reach 100,000 tonnes of green hydrogen per year when it commences exports in 2026. This production is equivalent to saving c 1.3Mt per year of CO2 emissions.

#6 European markets ideally suited to embrace compressed hydrogen
In addition to the Asia market opportunity, Provaris is supporting a number of hydrogen producers targeting key markets in Europe, with import demands of 10Mt per year required by 2030.

#7 Rate of return modelled
Edison’s IRR modelling for Provaris is based on two fleets of different-sized H2Neo vessels, one of 430t and one of 2,000t – the long-term target vessel size. The 430t vessel fleet offered IRRs of 10–12% with the larger vessels offering average IRRs of 16–17%.

For more information visit Edison’s profile page for Provaris Energy and read the latest update.

*Source: IEA, Global Energy Review 2021

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