Frequently Asked Questions

Sunshine Hydro receives questions every day from interested investors and stakeholders. We have compiled this series of questions and answers to provide transparency and to assist in the understanding of the scope and value we provide in our quest to decarbonise our environment. We will update these from time to time as we uncover additional questions.

Business Overview

Directors have direct experience in exiting, and the Board will assess exit strategies and options that represent the optimum value for Shareholders on an ongoing basis. The most likely exit strategy is by way of a trade sale but other exit options cannot be dismissed.

We will be aggressively working to ensure we take advantage of all of the tax breaks and incentives that apply to us and to our customers and partners. We are working intensely with PPM, experts in taxes, grants and rebates, to secure a number of incentives both immediately and in the future. We also have internal staff very familiar with renewables programs including state and federal grants incentivising the development of renewables and hydrogen generation projects.

Carbon Credits are also a topic of discussion that we have a significant interest in. Our ability to offset carbon is significant and we are investigating opportunities to maximise our position in this regard.

We anticipate expanding our team, securing sales of our AESOP software as well as the acquisition of Superhybrid sites around Australia with scoping for further sites continuing around the world.

We currently have 28 projects under investigation with preliminary engineering evaluations completed. Nine of these projects have been rated as a 9/10 for preparedness. Two projects have land secured or under contract and where pre-feasibility has progressed. Four of the 9 projects are in NSW and are awaiting approvals with grant applications underway.

4 May 2022 update – Please see the press release in News regards our Flavian project.

AESOP Digital Twinning software is planned for release under open-source licensing in 2024. At this point,we believe we will have matured the software to a significant level and will have it documented sufficiently for others to benefit from its modification for other purposes. Sunshine Hydro seeks to maximise decarbonisation and we believe the software can serve a larger purpose in varying uses outside our Superhybrid modelling. In the interim, we will be providing select grants to universities and institutions that can also work to repurpose the solution. We do not see this decision significantly reducing software and consulting revenues.

AESOP has been used in the Australian market to model pumped hydro projects in over 20 sites. It is robust and well proven. Each project does require customer data input including historical and predicted wind, solar and energy flow data. For international clients, this is a service provided by Sunshine Hydro directly or clients can engage specialist engineers to provide data through AESOP engineering staff.

We have various revenue streams relating to the AESOP software.

These include a software only license as well as consulting services which allow engineers to create a virtual model of their project and run the plant virtually in order to optimise the design.

Once a project enters the Front End Engineering Design (FEED) stage a one-time fee is charged and this allows the project to be driven directly by the AESOP software. A royalty of based on a percentage of project revenues is also applied annually for the life of the project.

As we grow one of our challenges is to maintain the culture of our organisation as we grow. We are fortunate that we have high returns which can support a generous approach to attracting and retaining the very best skills and talent. Managing and balancing the dynamics of our rapidly growing team environments is a challenge we are determined to excel in.

Each project goes through a thorough process of derisking. Many items including geotechnical, environmental approvals, land access and grid access have associated risks that must be managed. Our engineers and project managers have the experience required to understand and manage these risks.

We focus on pumped hydro as an energy storage system because it is currently the most efficient, bankable, and proven technology. However, we know other technologies will evolve over time. Technologies including long term storage batteries, compressed air, massive weight movement all can play a role in our Superhybrid technology. As these technologies evolve and become proven and efficient, we need to assess the viability for effective use in Superhybrid projects.

Reaching financial close for each project is an important milestone. Typical pumped hydro projects have been known to fail at this point through lack of bankability. Fortunately, our project IRRs are exceptional, greatly increasing our likelihood of achieving financial close.

AESOP originated with our founders trying to find a viable solution to produce firm green energy. Renewable energy is intermittent. The sun does not always shine, and the wind does not always blow. Firm green energy is defined as energy that can be counted on 24/7, 365 days a year.

Generation 1: Pumped Hydro (traditional systems)

Pumped hydro systems typically store the energy when it’s inexpensive and generate when the electricity is needed. A simple supply and demand model.

Generation 2: Pumped Hydro (adding renewable energy to the mix)

Pumped hydro stations typically use renewable energy to generate electricity on a daily cycle. They store the energy when it’s available, during the day for solar, and generate for the peak use periods including dinner and breakfast times.

Generation 3: Pumped Hydro (adding AESOP and generating firm green energy)

With AESOP we optimise all energy streams and create additional revenue streams. We don’t care about the daily cycle, but we do focus in on providing firm green energy to keep the lights on. Our technology improves the financial viability of all pumped hydro systems generating significantly higher project revenues.

Generation 4: The Superhybrid

AESOP still optimises all energy streams. Hydrogen generation is added to providing an essential load and an additional revenue stream. Approximately three times the amount of firm green energy is produced increasing revenues and project returns.

A typical 600MW Superhybrid project produces 220MW of firm green energy, 25,000 tonnes of hydrogen, 1550MW of contingency and essential revenue generating services to the grid.

AESOP is core to Superhybrid operation and has been developed incorporating 31 algorithms. AESOP is the result of 7 years of development by a highly skilled and experienced engineering team.

A superhybrid is a system or process that combines multiple technologies that are not normally connected. Sunshine Hydro’s typical superhybrid model includes wind and solar farms feeding into a pumped hydro project which is linked to a hydrogen generation plant. All components are orchestrated to work seamlessly together using Sunshine Hydro’s AESOP control system.

Key components of a typical superhybrid model include:

  • a design process that uses AESOP to optimise performance (AESOP technology communicates with the NEM/Wind/Electrolyser/Liquefaction/Pump/Generator);
  • upper and lower water reservoirs;
  • hydro pump and generator;
  • wind and solar;
  • grid connection;
  • electrolyser (PEM generating hydrogen and oxygen); and
  • liquefaction (converting hydrogen gas to liquid).

All the components of a superhybrid solution make an important contribution and work together in this ecosystem to provide a reliable, contractible, firm green energy output.

Sunshine Hydro’s core vision is to secure 100 superhybrid project sites worldwide over the next 2 years and to play a major role in decarbonising the world and “keeping the lights on”.

Sunshine Hydro’s AESOP software is a key element of superhybrid projects and will support superhybrid projects to achieve the outcome of decarbonisation.

Sunshine Hydro works with communities who seek to decarbonise. Partnering with community groups forms part of the Sunshine Hydro strategy.

Community

Sunshine Hydro has a policy to actively engage with traditional owners and with the peak body for community natural resource management. Sunshine Hydro will continue to partner with these and other groups as projects evolve in order to deliver local jobs and resource protection to the community, and will also always include community input during design and construction.

Sunshine Hydro is mindful of the community impact its projects will potentially have and is deliberate in its intention that any impact will be significantly positive. Sunshine Hydro considers local community members to be stakeholders who are equal in importance to all other stakeholders.

Community benefits may take many forms, including:

  • compliance with strong Australian/Local Industry Participation Plans (AIP/LIPP) requirements and imposing obligations on contractors and subcontractors;
  • creating educational opportunities for school and regional universities, both during construction and operation, and creating opportunities for local businesses to gain skills and experience “on the job”;
  • use of existing local facilities for in-area activities;
  • use of land offset funds to consolidate land for national parks and areas of natural beauty or environmental sensitivity while also creating new destinations for recreational activities;
  • ensuring road upgrades benefit local traffic;
  • an improved chance that the high-capacity/high-speed internet rollout capable of supporting the Pumped Hydro Energy System (PHES) is extended to local areas;
  • direct financial benefits through a Voluntary Planning Agreement, e.g. to provide scholarships and support local sports and cultural organisations, helping to raise the profile of the project within the local community; and
  • supporting, where appropriate, traditional owners for long term cultural, social and economic advantage.

As a policy, all Sunshine Hydro owned projects will contractually deliver royalty from revenues to the local community over an above the benefits documented above.

Competition

Sunshine Hydro has looked at every component of the clean energy and green hydrogen supply chain and concluded that there are no immediate competitors for Superhybrid projects. In fact, Sunshine Hydro believes that because it is pursuing both greenfield and brownfield projects both within Australia and worldwide, most clean energy developers are likely to become collaborators and partners in the dissemination of our technology and know-how. Hydro.

In the green hydrogen market, there are many hundreds of prospective projects that have been announced by developers around the world in the past two years, representing a potential investment of hundreds of billions of dollars when including the renewable energy that will be used. None of these projects are Superhybrid projects using deep energy storage in the form of pumped hydro. Sunshine Hydro, does not consider these projects to be direct competitors. They do not they have the sources of competitive advantage that are found in Superhybrid projects.

Inevitably, there will be proponents and developers – currently unknown to Sunshine Hydro – who will observe what Sunshine Hydro is doing in the marketplace and will seek to emulate its business model.

Sunshine Hydro proposes to address such competition in three ways.

  1. Continue to develop and strengthen the AESOP software.
  2. Pursue a land acquisition strategy which involves optioning and/or acquiring 100 key sites around the world. This serves as a natural defence of its market position.
  3. Open source its software in the medium term to speed the growth of the green energy and green hydrogen market.

Market Size

The global hydrogen market in 2020 is approximately 90Mt. The NetZero 2050 Report of July 2021 published by the IEA sees the global hydrogen market growing to 200Mt in 2030 and then to 500Mt by 2050. In order to contribute to the goal of net zero emissions (NZE) by 2050 and keep global temperature rises below the targeted 1.5°C by 2050, the IEA says that 70% of the 2030 estimated global H2 production levels, and 90% of the 2050 production levels, would need to be generated from low carbon sources, principally wind and solar.

Given that, in 2021, only about 0.1 Mt of the global supply of hydrogen comes from low carbon sources, it is easy to see how rapidly the supply and demand for green hydrogen will grow in order to achieve what the IEA sees is necessary by 2030 and 2050 respectively.

The IEA flagship Net Zero by 2050 report, published in May 2021, suggests the world will need 2,600 GW of hydropower capacity by mid-century to have a chance of keeping global temperature rises below 1.5 degrees Celsius. This means that over the next 30 years, we need to build the same amount of capacity that we did in the previous 100 years.

In September 2021, China’s National Energy Administration stated that it aims to double pumped storage capacity within five years, to more than 62GW by 2025. It wants to further expand capacity to 120GW in the following five years and achieve an internationally competitive industry by 2035.

Our AESOP technology can make Superhybrid from all existing pumped hydro projects and all new projects.

Further, we are not limited to pumped hydro. All forms of long term storage can be utilised to create Superhybrid projects.

Products and Applications

Pumped storage hydropower projects are very different to on-river reservoir hydropower in a number of ways. Because it is a closed loop and the water is re-used, the water storage is much smaller in size, typically being about a hundred to a thousand times smaller than the volume of water of large hydropower projects.  For example Lake Gordon in Tasmania is 12,000 gigalitres in size and our Flavian project is 12 gigalitres. The annual power production from Gordon Power Station is about 1,400 gigawatt hours. The annual production of power for the grid from our Flavian project and the wind farms which provide its power will be about 3,500 gigawatt hours, also delivered in a similar manner as a baseload power station with peaking capacity. A Superhybrid project will produce more renewable energy and use far far less water than a traditional hydro station. In addition to the grid power supplied, the Flavian project will also produce hydrogen enough to operate about 1,000 heavy vehicles.

Pumped storage hydro stations cycle the water between upper and lower reservoirs and this causes mixing of the water as it is moved between the reservoirs.  This mixing prevents thermal stratification which can prevent low oxygen levels in the lower layers of water.  By mixing the water the oxygen is well mixed. In addition air injection is typically used in hydro turbines to promote quite running and this air injection increases oxygen levels in the water.

Clearly, the long-term storage provided by the pumped hydro provides significant security, however, more is needed to guarantee power over the long term. The system uses its ability to simply turn off the hydrogen generation when appropriate to improve energy delivery. Sourcing wind from areas with varying wind patterns reduces the chance that wind energy levels drop.

Firm green energy is guaranteed under contract. A 600MW Superhybrid provides 220MW of firm green energy. The 220MW is far less than the 600MW the system can provide. This is a level where statistically the system can provide to customers 24 hours per day 365 days a year.

Hydrogen is the lightest element in the universe and is quite difficult to store in a way that can be easily used. On the plus side, hydrogen is very energy-dense. Let’s look at a comparison with diesel: for a typical car, you would need say 60 litres or about 50kg of fuel to travel 1,000km. To travel 1,000km in a hydrogen car, you would need less than 10kg of hydrogen. In addition, that 50kg of diesel would produce about 130kg of carbon dioxide, while 10kg of green hydrogen produces nothing but clean water.

Let’s get back to storing hydrogen: when used in a car, hydrogen will typically be stored in high pressure tanks. A typical small hydrogen car such as the Toyota Mirai or Hyundai Nexo have tanks able to store 5kg to 6kg of hydrogen. These tanks are very high-pressure containers (up to 700 atmospheres) that have a relatively large volume for the amount of hydrogen they hold. (About 140 litres to hold just 5kg of hydrogen)

Hydrogen can also be stored and transported in liquid form. When in liquid form, hydrogen is denser and can be stored at lower pressure. For long distance trucks and trains, it is far more economical to build insulated liquid hydrogen tanks than high-pressure tanks used to store gaseous hydrogen. Our software design takes full advantage of the production of liquid hydrogen in our Superhybrid projects.

Please note that many proposed hydrogen production facilities deal only with gaseous hydrogen. When comparing prices of hydrogen, be alert that Sunshine Hydro’s financial modelling is based on producing liquid hydrogen which has a significantly higher market price.

Liquid hydrogen production, storage and transport is a well-known technology and has been used in the aerospace industry since the 1950s.

Yes, by definition, a Superhybrid incorporates both AESOP and hydrogen generation.

It is counterintuitive to introduce a load and expect to generate more firm green energy as a result. How can we possibly produce hydrogen using electricity and yet generate more electricity as a result? This is in fact the result AESOP achieves. And in doing so, it improves the project revenues significantly.

Current Superhybrid project sizes range from 100Mw to 1400MW with an average size of 430MW.

A typical 600MW superhybrid project produces 220MW of firm green energy, 25,000 tonnes of hydrogen, 1550MW of contingency and essential revenue generating services to the grid.

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