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Shares in bioscience energy company Eqtec (LSE:EQT) are moving, with a big jump yesterday morning. The company is an AIM-listed energy stock which remains well south of its 52 week high of 3.17p.

What is Eqtec?

Eqtec started life in Spain in the 1990s and has developed a core of expertise in biomass and waste thermochemical gasification. It merged in December 2017 with Irish firm React Energy plc. The company represents the combination of decades of clean energy expertise, both in raw technological know-how and in engineering and project management expertise. It now works on developing the infrastructure for decarbonisation, including reducing volumes of waste.

Eqtec is active in three main areas – processing plant and agricultural biomass, forestry and wood biomass, and also municipal solid waste. It has been active in California, where it is involved in processing dead trees, which represent a significant fire risk, into biomass that can potentially generate energy for millions of homes in the state.

Why is the Eqtec share price on the move?

Last week the company said that it would be investing an additional $2.8m in the North Fork forestry waste to energy project in California. This will increase its stake in the project to 49%. The project is being developed via a $4.5m convertible loan facility. It is planning to build a 2MW biomass to energy plant using its proprietary technology.

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Construction work at the project is underway, but the company has reported delays due to fires in the locality over the summer months, not to mention the pandemic in the US. The plant will be processing forestry waste in the area that could otherwise serve as fuel for wild fires that have wracked California.

What to watch out for

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All eyes seem to be on this project, which could really prove to state authorities the value of the Eqtec offering. It is important that this plant goes live and is seen to be meeting its objectives, and generating power. CEO David Palumbo has said the project “will be a first for us, yet one for which we are seeing growing demand.” But pioneering projects like this can encounter unforeseen teething problems.

Much is also going to depend on whether state authorities will embrace the technology. From our perspective, that seems like a no-brainer, as Eqtec could kill two birds with one stone in California, namely the wildfire threat and power shortages, not to mention adding to the fight against climate change. Further delays to the project could have an immediate impact on the share price.

The company is also taking on debt – note the convertible loan facility – so that will be one to keep an eye on.

What do we think of Eqtec shares?

This is a small company with a sub-£150m market cap and it is going to be volatile. We have seen some big swings in the share price in the last 12 months, but that goes with the territory in the AIM space. The share price has been driven partly by a large number of buy orders in the last week, which due to a lack of liquidity, seems to have caused the sudden price rise.


Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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