Controversial green hydrogen to e-methane pioneer TES raises €140m in latest funding round
Admission that company needs layers of subsidies for its core business model to work has not dissuaded investors
Belgian start-up Tree Energy Solutions (TES) — which plans to produce e-methane from green hydrogen at scale — has raised €140m in its latest fundraising round, despite concerns over the viability of its core business model and its reliance on multiple subsidies.
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The new cash injection — much of which came from existing shareholders — will be used to help develop the company’s global portfolio of projects, including its import terminal in Wilhelmshaven, northern Germany.
TES plans to produce and sell carbon-neutral synthetic methane — what it calls e-NG, or electric natural gas — in a six-step process:
- Generating wind and solar power in the world’s sunniest and windiest locations;
- Using that renewable energy to produce green hydrogen via water electrolysis;
- Combining that H2 with “recycled CO2” to produce e-NG using the energy-intensive Sabatier process;
- Shipping, storing and distributing that e-NG using existing gas infrastructure (as it is chemically identical);
- Delivering e-NG directly to customers;
- Capturing and recycling CO2 from the e-NG to produce more e-NG in a closed loop.
If this all sounds like the resulting e-NG would be extremely expensive, it’s because it probably will be. But TES CEO Marco Alverà told independent energy analyst Michael Liebreich last year that it can work financially because of the multiple subsidies that the company could reap.
Offtakers in Europe would be willing to pay more for e-NG than standard natural gas, if the EU’s carbon price makes it cheaper than the fossil fuel.
However, TES is almost guaranteed significant income from its Wilhelmshaven import terminal, which will, at least initially, import liquefied natural gas (LNG) to Germany.
So the company could quite easily turn a profit simply by importing fossil gas, without ever producing e-NG.
“But they would still have a valuable asset — brown not green, but perhaps that’s the goal all along.”
Investment also came from existing shareholders, including Brussels-based investor AtlasInvest, Dutch investor Reggeborgh and London-based ship operator Zodiac Maritime.
“The fundraising is an important step on our journey to deliver affordable e-NG and hydrogen,” Alverà stated in the press release.
“This newly raised capital will be used to advance the development of our upstream and downstream e-NG projects internationally. Our sustainable business model has attracted world-class strategic and financial partners to continue executing on our projects.”
TES already has developed strategic partnerships with TotalEnergies, Osaka Gas, Toho Gas, Tokyo Gas, Fortescue and Abu Dhabi oil company Adnoc.
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