KALiNA Power signs supply MoU with US-based data centre developer
KALiNA Power (ASX: KPO) has capped off a strong month of strategic corporate success with the signing of a memorandum of understanding (MoU) to supply natural gas-fired power to a leading US-based, AI-focused data centre developer.
The company’s 100%-owned Canadian subsidiary KALiNA Distributed Power (KDP) has agreed to incorporate CO2 capture and sequestration into its natural gas-fired power option.
The MoU has been signed to help create the framework of commercial terms from which to negotiate a binding project development agreement (PDA), with the parties also collaborating on collating the necessary regulatory requirements for each project facility.
Demand exploding
“The proposed influx of data centres into Alberta has been described as a $75-$100 billion opportunity for Alberta,” KALiNA managing director Ross MacLachlan said.
Mr MacLachlan noted that, in recognising the biggest bottleneck for data centre developers is access to electricity, Alberta’s premier recently encouraged data centres to ‘Bring your own electricity, bring your own generation. Partner with a generating company.’
“KALiNA’s low-CO2 emissions power projects are perfectly placed to meet this demand,” he added.
“We are actively engaged and look forward to concluding a mutually beneficial and substantial PDA in the coming weeks
Funding framework
Non-executive director Matthew Jenkins said completion of the PDA would establish the framework through which KALiNA will secure valuable non-dilutive project development funding.
“Importantly, the execution of long-term power purchasing agreements will provide an attractive contracting framework for project debt and equity funders.”
“The execution of these agreements will provide added confidence to parties looking to finance our portfolio of projects.”
Expressions of interest
KDP has now signed multiple non-binding MoUs with natural gas producers that provide formal expressions of interest and a framework of commercial terms under which they can work with KDP in advance of a final investment decision (FID) for each plant.
The volumes set out under the MoUs represent 40,000 gigajoules per day, sufficient to supply the daily requirements of KDP’s first 170MW project.
The tolling agreements will enable producers to convert their natural gas into two value-added products: electricity and CO2 sequestration offset credits, which may be used by tollers to reduce their corporate emissions regulations liabilities at full value.
In exchange, the tollers will pay their pro rata portion of a capital charge to KDP and their portion of all operating costs associated with each plant while assuming all commodity price risk associated with the natural gas inputs, electricity sales and offset credit products.