In 2019, GCP Infrastructure Investments Limited ("GCP"), an investment company advised by Gravis, provided finance to the Slieve Rushen onshore wind farm, a 54MW project located in County Fermanagh, Northern Ireland. The asset consists of 18 x 3MW Vestas V90 turbines and receives ROC payments alongside merchant PPA revenues.
Generation assets located within the single electricity market, which operates across the island of Ireland, are subject to energy export restrictions imposed by the national grid operator in the form of 'Dispatch Down'. Dispatch Down is imposed when there is a national oversupply and generation needs to be reduced, and when location-specific restrictions apply. Over recent years the total Dispatch Down applicable at Slieve Rushen has ranged between 8 and 15%. This reduced output is part of the valuation of the asset, and so anything to utilise this lost output would create added value for the project. Furthermore, Gravis have sought to explore opportunities to guarantee longer term revenue streams by creating a second life for the asset.
Located approximately 1.5km south of the Slieve Rushen wind farm is one of Irelands most significant industrial centres. Mannok is one of the largest producers of cement and building products in Ireland, and manufactures a range of building products. The cement manufacturing process has burnt approx 100,000 tonnes of coal a year historically along with other fuels. Furthermore, the Mannok transportation fleet consumes approx. 4 million litres of diesel a year.
Electrification of fossil fuel activities (for example: replacing petrol in cars with batteries) can often provide the most effective way to decarbonise processes. However, in heavy industry, such as the cement kiln process at Mannok, which requires heating products to a temperature of 1,400 degrees celcius, electrification is more difficult to achieve. Alternative or clean fuels are required to reduce the carbon emissions from both industrial processes and the transportation of products. CO2 regulations in Ireland and the UK (in the form of the UK and European carbon trading mechanisms, where pricing has recently exceeded €100 / tCO2e), are creating a financial incentive for decarbonisation and as such, Mannok have sought to reduce their carbon emissions by 33% by 2030.
In partnership with Mannok, Gravis have explored using the unused electricity from the Slieve Rushen Wind Farm to create green hydrogen, a clean fuel which can be used as an alternative for either the cement production process, or for displacing the diesel used by its transportation fleet.
In practice this will involve installing a private wire cable directly from the Slieve Rushen Wind Farm substation, which would feed an electrolyser. This is technology that can split water into hydrogen and oxygen through the use of electricity. These products can then be stored on site and the hydrogen can be used at a refuelling station for fuel cell heavy goods vehicles; or blended with alternative fuels to displace the coal and other fuel products used in cement manufacturing.
In 2021/22, Mannok and Gravis contracted a feasibility study to determine next steps. This identified the most cost-effective option as a private wire connection from the wind farm to a 5MW electrolyser and refuelling station. This initial project would look to displace 70% of the fleet's fuel consumption from diesel to hydrogen, and require an investment in the vicinity of £20M. Subsequent extensions to this initial project could then also follow, which may include:
- Additional wind and Solar PV generating capacity;
- Further Electrolysis capacity to produce a greater capacity of Green Hydrogen;
- The production of new synthetic fuels;
- Carbon Capture and Storage processes
A depiction of the entire energy valley concept is presented below::
In late 2022 an application was submitted to the UK Government’s Net Zero Hydrogen Fund for development financing to take the project concept to a final investment decision. On the 30th March 2023 the Mannok / Slieve Rushen Hydrogen Valley project was formally recognised as a successful applicant under the scheme, and shall now receive the requested financing to take the concept to a ready to build stage. As a result, alongside Mannok, Gravis will now commence working on the development of a pioneering hydrogen production facility that will support the decarbonisation plans of vital UK and Ireland industry, as well as create future potential financing opportunities for GCP Infra. We believe this project reflects Gravis ongoing commitment to finding new and innovative ways to support the Net Zero transition.
The full list of successful applicants can be found here:
Net Zero Hydrogen Fund strands 1 and 2: summaries of successful applicants round 1 (April 2022) competition - GOV.UK (www.gov.uk)
Photographs produced by Gareth Wilson
Important Notice. Gravis 2023.
This report is published for general information only and is not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Gravis for any loss or damage resultant from any use of, reliance on, or reference to the contents of this document. As a general report, the views and opinions contained herein may not necessarily represent views expressed or reflected in other Gravis communications, strategies or funds. Reproduction of this report in whole or part is allowed with proper reference to Gravis.