Velocys (VLS ), the sustainable fuel technology company, issued an update on the grant awarded to it by the UK Government's Department for Transport in December 2022 of up to £27m for the Altalto Immingham Sustainable Aviation Fuel (SAF) project.
Velocys said it has completed the work necessary to claim the first £7m tranche of the grant up to 31 March 2023. Additionally, the project has obtained the first tranche of matched private funding from its existing private sector participants. Further drawdown of the grant is subject to meeting certain project milestones, with matched funding requirements to be met over the 2 years to 31 March 2025.
In March 2023, Velocys announced the appointment of an investment bank to assist in obtaining the matched funding from private sector investors, which is on track to be in place by Q4 2023. Velocys' cash contribution to the Altalto project over 2 years from April 2023 will be £8m, expected to be recovered at the early development stages when project investment is available from 3rd parties.
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Velocys has secured the first £7m tranche from the DfT for the Altalto project as well as matching private funding. The Altalto project aims to deliver a commercial waste-to-SAF plant in Immingham, UK.
Based on today's announcement, we would expect the remaining DfT tranches to be distributed and find matched private funding by Q4 2023.
The DfT grant and matched funding will enable Altalto to complete the crucial FEED stage of the project with engineering giant Bechtel. Following the completion of FEED and a successful final investment decision, construction will commence in 2025 with full commercial operation expected in 2028.
Velocys's £8m expected spend on Altalto over the next 2 years, including a £1m contribution to this first tranche of private funding, is expected to be recovered following receipt of early 3rd party investment.
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