Provaris Energy Ltd (ASX:PV1) could sign offtake agreements for green hydrogen from its Tiwi H2 project in the Northern Territory as early as next year, heralding a 'game-changer' for the company’s compressed hydrogen solution, according to a research report by Edison Investment Research Ltd.
The research firm said it was confident about the commercial viability of Provaris’ ambitious projects given the company’s key achievements in the third quarter and the next milestones expected to be achieved in the fourth quarter and into 2023.
“Our modelling, which produced internal rates of return (IRR) of 9.7-18.7% from a range of scenarios and vessel sizes, remains robust,” Edison said.
“Successful offtake discussions would be an opportunity to revisit our IRR assumptions and are likely, in our opinion, given the exponential growth in demand for green hydrogen forecast by the International Energy Agency.”
For now, the research firm’s assumptions for Provaris remain relevant and are unchanged.
The following is an extract from the research report:
The Q322 update from Provaris neatly summaries not only the significant progress made in the period but highlights further progress already made in the early weeks of Q4 and other key announcements that are likely to be forthcoming before year-end, including the potential Approval for Construction of the novel H2Neo compressed hydrogen carrier that would make Provaris Energy the genuine first mover in the space.
Several key steps achieved in last quarter
In Q322, Provaris completed its Tiwi H2 Concept Design Study, which is important because it establishes a clear pathway for the project to proceed to technical, commercial and economic studies. It also entered a memorandum of understanding (MOU) with Total Eren to cooperate on the commercialisation of a compressed H2 supply chain, with projects already identified from Total Eren’s portfolio of development projects targeting import demand from Europe and Asia.
Expect significant steps in Q4 and beyond
Already in the current quarter, Provaris has carried out a joint marketing exercise with Total Eren and has already announced key appointments for an early works programme at Tiwi H2 to advance detailed design and environmental approvals. We anticipate the key de-risking shipping milestone of Class Approval for Construction shortly.
Looking out further, the next key milestone would be the signing of agreements to show progress towards offtake and/or shipping contracts, which is likely to be achieved in 2023.