It's good to see the roadmap finally released, and it definitely has some nuggets in there for us DEL shareholders.
TL/DR: Big tailwinds for bioenergy. Emphasis is on distributed model particularly for agriculture, forestry, industrial applications, grid energy. DEL hasn't won ARENA funding before, but remains hopeful in to future. It's not a winner-takes-all strategy, could be multiple winners which is good for DEL shareholders.
The roadmap really positions bioenergy as a key energy source, ramping up by the 2030s but continuing to expand in certain areas into 2050. The headline figure of '20% of potential energy by 2050' can be a bit misleading, particularly as a lot of that includes road transportation (ethanol, etc). An interview on the ABC with Chief Scientist Alan Finkel had him talking about 8% of the energy mix, similar to UK levels, being more of a bit-player rather than a central core to our energy mix.
In the figure below you can see where the bioenergy currently is, and where the potential lies. Industrial heat is a clear winning strategy for Delorean, and I reckon this is a lot of smaller-medium scale distribution systems (think Brickworks, Blue Lake Mill, etc). Grid electricity is another one, but doubtful to be on the same scale as industrial heat because it is competing with fossil fuels, natural gas, solar, wind, etc. Even road transportation will need to compete with hydrogen, and the roadmap shows that they think hydrogen will be the main technology from the medium to long term future.
The roadmap also highlighted where the biomass will come from. At the moment a lot of talk on organic waste, but you can see the massive potential from forestry and agriculture. Organic waste can be larger in scale (municipal level) with a lot more competition from international players or even folks like Cleanaway. Agriculture and forestry would be smaller to medium scale typically, and I reckon a lot more opportunities with lower competition and probably higher return on investments. Midway (ASX:MWY) has flagged this in their strategy for example, and would be a great partnership (I own both, so wishful thinking there).
Just to keep things in perspective too, ARENA has funded 38 projects for $131m. As far as I am aware, no funding has been granted to Delorean by ARENA - though I think they have a $2.5m grant application for DESAO. So the ARENA announcement of ~$33m for new bioenergy funding could have direct benefit from Delorean, but probably not so material.
GLTAH.
DEL Price at posting:
23.0¢ Sentiment: Buy Disclosure: Held
