Current Status

With the approval of the Investment Tax Credits for 50% of the cost of Carbon Capture, Utilisation and Storage (CCUS) projects by the government of Canada this paves the way for KPO to continue to move forward with the plans for an initial four ~200MW gas plants with CCUS in Alberta, Canada.

Ellis 1 & 2, Gilby 1 and Alsike 1 are currently in pre-FEED stage with the land secured for at least three of the projects. I presume Alsike is the laggard in that respect based on my research.

KPO also have Saddle Hills project which has approval as a 64MW gas plant/waste heat project. The announcement of the Clean Electricity Regulations last year saw KPO consider modifying the project as a simple peaker 22MW gas plant, however this decision is awaiting the publication of the final regulations in case the exemption for peaker plant size is reduced from the proposed 25MW.

Additional credits are in the pipeline for the CCUS related projects with the Alberta government proposing a 12% credit on the cost of the CCUS part of the gas plants and the Canadian government considering extending the investment tax credits to cover the portion of the gas plant that powers the CCUS part.

Funding to enable the company to complete the pre-FEED and FEED process is being handled by PwC from July 2023 on a success fee basis, ie no cost to KPO if no deal secured. Funding has been a challenge with the delay in legislation for the ITC which has just passed this week.

The teaser for the PwC funding process suggested a net cost of ~CAD$601m for each ~200MW gas plant with CCUS, gross cost being ~CAD$917m. If the other two proposed credits get through then this could further reduce the net cost to ~CAD$517m.

With certainty around the initial significant tax credit now behind us this should allow more certainty for the sake of getting funding to progress the pre-FEED and FEED stages of the ~200MW projects.

I'm expecting an update of some sort from the company this week to at least update the market on the regulatory situation.

Below is the teaser put out by the company in mid 2023:

Project Genesis - Teaser.pdf