Australian cleantech company signs letter of intent for gas-powered data centers with CCS

KALiNA Power Limited has signed a memorandum of understanding (MoU) in the form of a detailed, non-binding term sheet with an unnamed “significant, well-funded US-based data center developer” to develop natural gas-fired power plants incorporating carbon capture and storage (CCS) and artificial intelligence (AI)-focused data centers.

KALiNA’s wholly owned Canadian subsidiary KALiNA Distributed Power (KDP) signed the letter of intent with the data center developer. The letter of intent outlines the framework of commercial terms on the basis of which a binding project development agreement (PDA) can be negotiated, the company said in a press release.

Pursuant to the proposed terms of the PDA, the parties will cooperate to satisfy the necessary permits and regulatory requirements for each project facility.

Ross MacLachlan, KALiNA’s Executive Director, said, “The planned influx of data centers to Alberta has been described as a $75-100 billion opportunity for Alberta. The Premier of Alberta has recognized the benefits and has been clear that the biggest bottleneck for data center developers is access to electricity, so he recently called on data centers to ‘bring their own power and generate their own power generation. Partner with a power generation company.’ KALiNA’s low carbon (carbon dioxide) emission projects are perfectly suited to meet this demand. We are actively involved and look forward to completing a mutually beneficial and substantive PDA in the coming weeks.”

Matthew Jenkins, Non-Executive Director of KaLiNa, said: “This is a unique opportunity for KALiNA. The completion of the PDA will provide the framework within which KALiNA will receive valuable, non-dilutive funding for project development. Importantly, the completion of long-term PPAs will provide an attractive contractual framework for project lenders and equity providers. The completion of these agreements will provide additional confidence to parties seeking to finance our project portfolio.”

Toll MoUs

Earlier this month, KALiNA announced the signing of tolling MoUs with natural gas producers for its project development portfolio of power plants in Alberta that include carbon capture and storage.

KDP has now signed several non-binding letters of intent with natural gas producers containing formal expressions of interest and a framework of commercial terms under which each processor can work with KDP to enter into definitive processor agreements prior to a Final Investment Decision (FID) being made for each plant.

The quantities specified in the MoU amount to 40,000 gigajoules (GJ) per day and are sufficient to meet the needs of KDP’s first 170 megawatt (MW) project of approximately 36,300 GJ per day.

The MoUs provide a framework for entering into definitive tolling agreements once capital and operating costs are determined during the Front-End Engineering Design (FEED) work to be completed for each plant prior to a FID.

MacLachlan said, “The announced tolling letters of intent with creditworthy counterparties provide additional confidence to parties seeking to finance our project portfolio. Canada’s recent Investment Tax Credit (ITC) legislation (Bill C-59 2023) was finally passed with significant incentives for our projects. These incentives and the certainty provided by the passage of the legislation were important catalysts in formalizing these tolling letters of intent. We continue to actively engage with other natural gas producers and are optimistic that additional volumes will be added for our remaining projects in due course.”

Australia-based KALiNA Power Limited describes itself as a cleantech company with two core business areas. Its energy project development arm is based in Calgary, Alberta and is developing a portfolio of natural gas power plants that use carbon capture and storage.

Meanwhile, the company’s technology development arm is further developing various applications of its KALiNA Cycle technology for global use in international markets, the press release said.

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