Elixir’s green hydrogen play in Mongolian Gobi boosted by wind data; groundwater find

Wed 24 Aug 22, 11:44am (AEDT)
A row of wind turbines stand in the midground of a green valley
Source: Unsplash

Key Points

  • After a year of data collection, Elixir Energy’s first assessment of wind behaviour on-site finds world-class productivity potential
  • Wind turbine capacity of up to 39% places project in top quartile of operating wind farms in Australia
  • The company has also spud a groundwater well returning 0.5L/sec, half of that needed, but huge success in context of the Gobi desert

Elixir Energy (ASX:EXR) shares have climbed a modest 3.6% to 14.5c in morning trade as the company’s first assessment of wind productivity on-site returns promising results. 

For the last twelve months, Elixir has had SODAR equipment on-site recording the way wind behaves over the company’s acreage in the Mongolian Gobi Desert. 

A SODAR tower, in layman’s terms, is a low-cost wind measurement device configured to measure wind speed and duration at the height wind turbines are planned to be built at. For Elixir’s project, that’s 80 metres tall. 

Now that the company has a year of data to analyse, it sent off that data to a renewable consultancy firm. 

The bottom line: wind turbines on-site would operate at a power generation capacity of up to 39%; which places the proposed wind project on-site in the top quartile of wind farms operating in Australia. 

Wind power often a hard sell 

Most wind turbines operate at a power generation capacity between 30% and 50%. This relatively low output capacity is one of the biggest detractors to the implementation of wind energy for governments and the private sector. 

Frontier Energy (ASX:FHE), seeking to manufacture green hydrogen in Western Australia, recently decided to abandon wind altogether in favour of solar, due to this lower capacity threshold. 

Regardless, Elixir is more confident in the use of wind generation on-site than its Australian counterparts, and has installed more SODAR equipment on-site to continue seeking wind data for the region. 

Wind behaviour is influenced by humidity, surface temperatures, terrain, and proximity to oceanic and atmospheric systems, with hyperlocal variables often observed. 

What does Elixir want with wind? 

Elixir Energy is seeking to use electricity, generated by wind power, to power an electrolyser to produce hydrogen. 

This is the principal thesis of green hydrogen, named after its utilisation of power sources derived from renewables. 

In essence, the use of a diesel generator to power an electrolyser, for instance, would defeat the purpose of producing a lower-emissions fuel product in the first place. 

For this reason, brown hydrogen projects (where hydrogen is extracted from coal stocks) are often criticised, as is the case with the LaTrobe Valley hydrogen project which ships hydrogen to Japan on the world-leading h2 transport vessel Susio Frontier. 

What’s an electrolyser? 

An electrolyser is a machine that uses electricity to turn water into hydrogen gas. The machines only require two feedstocks to produce hydrogen: electricity, and, water. 

A handful of companies around the world make electrolysers, including the Dutch Nel Hydrogen; and Cummins, headquartered in Indiana, USA. 

Andrew Forrest's Fortescue Future Industries is currently seeking to establish an electrolyser fabrication facility in Queensland. 

Towards the second main input needed, water, Elixir today reports more success - one of three groundwater wells sunk on-site has returned flow rates of 30L/minute, which the company notes is half of that needed for the project economics to work as intended. 

While the company must now continue to tap the arid region for water, it notes that Rio Tinto’s well known mining operations relatively nearby have adequate water resources to operate unimpeded. 

Australians in Mongolia 

A growing number of Australian-listed companies are operating in Mongolia in recent years.

Xanadu Mines is joined in the jurisdiction (while unrelated) by a CSG energy partnership spearheaded by TMK Energy (ASX:TMK) along with Talon Energy (ASX:TPD)

Jade Gas (ASX:JGH) and Elixir Energy (ASX:EXR) both develop similar projects, while Rio Tinto (ASX:RIO) and private mining contractor Thiess also operate in the region. 

The Australian website for the Mongolian embassy notes over 50 Australian companies operate in Mongolia across all sectors.

A look at Elixir's 5Y charts shows how post-covid macro trends affecting energy markets came as a boon for shareholders
A look at Elixir's 5Y charts shows how post-covid macro trends affecting energy markets came as a boon for shareholders
Disclaimer: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Elixir Energy was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.


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Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

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