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News from Powerhouse Energy (AIM:PHE), the sustainable hydrogen company, about a potential agreement between DMG licensee Hydrogen Utopia International PLC (HUI) and industrial gases and engineering company, Linde (NYSE:LIN), saw shares surge over 40% earlier this month.

Although Powerhouse stated that there is no guarantee that an agreement would be finalised, shares had jumped to £5.70 by 6 September, although they have been slipping down despite the news from HUI on the fundraise of £2.2 million. At time of writing shares now stand at £4.84.

Essentially, Linde has finalised a technical feasibility study for the syngas clean-up and hydrogen extraction for the HUI plant in Konin, Poland, using the Powerhouse DMG technology.

DMG advanced thermal conversion technology

Powerhouse Energy produces electrical power and hydrogen from waste plastics. The DMG technology melts plastics until they vaporise into syngas which comprises of a mix of methane, hydrogen and carbon monoxide. The syngas is then cleaned and the resulting gas is similar in calorific value to the natural gas used as fuel for cooking and heating.

However, it is only in the last four years that Powerhouse – along with development partners Waste2Tricity – has developed the DMG technology. And last year planning permission was granted for the first commercial application of DMG technology at Protos Energy Park.

And apart from revenue of £100,000 in 2020 for initial engineering work on the Protos project, Powerhouse has had no income and until now has had very few assets – around £16,000 of intangible assets in 2019 and less in 2018.

Powerhouse Energy surviving or thriving on fundraising

As a result, it has been bolstering its balance sheet through a series of fundraisings for both operations and acquisitions. Last year the firm raised just over £5m and in January of this year raised £10m before issue costs. Powerhouse’s largest shareholder, the White family, maintained their stake of approximately 26% of equity by subscribing for new shares in both placings.

In 2020 Powerhouse bought out Waste2Tricity – this meant a rise in intangible assets to around £44 million and £53,000 in tangible fixed assets as it qualified for merger relief – and in August 2021 Powerhouse bought 48% of Engsolve, an engineering consultancy.

Shareholders keeping the faith

It is certainly a vote of confidence from current shareholders but with the company operating on a going concern basis and the fact that the outcome of these projects “is very much dependent on the rollout of UK sites over the next 5 years” as stated by auditors, Jeffreys Henry, there seems to be a lot riding on the success of DMG technology.

But this potential agreement with Linde and HUI is good news for the firm, and timely too as the UK government has just launched their plan for a world-leading hydrogen economy including a promise to invest £4 billion in the sector in the next few years.

Let’s hope this is Powerhouse’s time to shine.

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

Philippa Aylmer

Philippa Aylmer

Philippa Aylmer is a freelance writer within the investment management sector.

She began her career in the late 90s writing about emerging markets for the Euromoney titles while based in Pakistan. Since then, she has covered hedge funds, ETFs, wealth management and fintech.

As well as news, on the client side, Philippa advises on media relations and editorial strategy, writing about the topical and technical issues of investment management

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