A green jet fuel plant set to be built on the Humber Bank has received government backing of up to £27 million, with a clear timetable laid out for production to start.
The Department for Transport’s Advanced Fuels Fund is to match private investment into the delivery of front-end engineering design for Altalto Immingham, the £350 million fully consented project from Velocys Plc, backed by British Airways.
It will see domestic waste converted into a fuel that can be mixed with standard fuel, dramatically lowering aviation emissions, while creating scores of high value jobs, and hundreds in the build-out. Planning permission was received in May 2020 for the huge operation, with technical work and capital investment seeking taking place as government policy has been shaped.
Read more: Velocys buoyed by transatlantic policy backing for green jet fuel
To be distributed between now and March 2025, the company said it has obtained a number of letters of intent from potential partners to meet the requirements of the first tranche of funding, anticipated in April. Velocys' own commitment will be pegged back to below £8 million over the period, possibly lower as additional investors come forward, the company has told the City.
Chief executive Henrik Wareborn said: “We are extremely pleased the UK Government has awarded Velocys this important grant which will deliver the FEED stage for our Altalto Immingham reference project, accelerating the commercial deployment of Velocys' technology and delivering cashflow. We welcome this clear commitment from the Government to having commercial SAF plants built in the UK.
“We are delighted that a number of large commercial companies have indicated their support for the project through indications of matched funding contribution and the provision of services to progress the project."
Altalto has been worked up under a joint development agreement with BA, with Shell having also been on board in the early phases. It later decided to pursue its own strategy. A scalable project, with potential to increase capacity on a site sitting at the heart of the local authority's South Humber Industrial Investment Project on Hobson Way, the plant would also be built to plug into the area's carbon capture and storage proposals.
Mr Wareborn said the grant funding will be used for the completion of the project ‘FEED’ as the advanced engineering design is known. It will incorporate the technology packages of the licensors - including Velocys for its proprietary technology - and develop the basis for the engineering, procurement and construction contract. In parallel, the commercial agreements required to support the plant will be put in place. They will support the final investment decision ahead of the start of construction, planned for 2025, “consistent with the UK Government's ambition,” the company said. Based on this timing, commissioning of the Altalto Immingham project is expected to begin in 2027.
Velocys has previously received grants of £1.7 million from the DfT's Green Fuels, Green Skies competition and a series of grants totaling £934,000 from the Future Fuels for Flight and Freight competition, the predecessor to Green Fuels, Green Skies.
As reported, the £165 million Advanced Fuels Fund provides grants to support the development of commercial-scale sustainable aviation fuel plants that are at an advanced stage, enabling them to become ready for investment and construction. The stated ambition, when launched by then Transport Secretary Grant Shapps - now Business Secretary - is for at least five commercial scale plants to be under construction in the UK by 2025.
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