The Vulcan Energy Resources Ltd (ASX: VUL) share price will be on watch today after announcing the acquisition of a geothermal plant located in Germany.
VUL share price
Vulcan purchases first plant
The geothermal plant located in the Upper Rhine Valley at Insheim is Vulcan’s first operational plant purchase.
It is currently owned by Pfalzwerke AG, which Vulcan will purchase for €31.5 million (AU$49.7 million).
The purchase will be entirely funded by existing cash reserves from the recent AU$200 million capital raising Vulcan completed.
The maximum capacity at Insheim is 4.8MW of renewable power. This is enough to power the equivalent of 8,000 households with an additional capacity to produce heating.
Currently, the plant is producing 2.9MW of electricity on average.
The acquisition also includes the production license surrounding the Insheim Plant.
Vulcan will retain all employees at Isheim and plants to invest in the modernisation of and expansion of the facilities.
In addition to announcing the plant acquisition, Vulcan has signed a brine offtake agreement with IKAV Group.
Vulcan will have the right to extract lithium from the brine produced at IKAV’s Landau plant and return it for reinjection.
As a result of the offtake agreement, Vulcan will be able to expand its Definitive Feasibility Study.
New plant, new revenue
In 2020, Insheim Plant reported sales of €5.8 million and an EBITDA of €2.9 million.
The bump in revenue will be welcomed by Vulcan who recorded sales of just €143,000 euros in its most recent quarterly result.
Commenting on the acquisition, Managing Director Dr. Francis Wedin said:
“This is a significant, first step in establishing Vulcan as a revenue generating, renewable energy producer. German State and Federal policy increasingly supports decarbonising heating and power grids, with a focus on decentralised, renewable energy, and Vulcan intends to build a number of distributed geothermal renewable energy plants across the Upper Rhine Valley region”.
Volkswagen joins the party
After announcing agreements with automakers including Renault and Stellantis, Vulcan also recently disclosed a partnership with Volkswagen.
Volkswagen owns a stable of car brands under its umbrella including Volkswagen, Volkswagen Commercial Vehicles, ŠKODA, SEAT, CUPRA, Audi, Lamborghini, Bentley, Porsche and Ducati.
The automaker will purchase between 34,000 to 42,000 tonnes of battery-grade lithium hydroxide from Vulcan when the plant is operational in 2026.
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