Active Energy Regulatory News (AEG)

7 March 2016

Active Energy Group Plc("Active Energy Group" or the "Group" or the "Company" or "AEG")

AEG CoalSwitch Deposition and Burn Test Results ConfirmLower Emissions, More Efficient Combustion and Fewer Deposits than Coal;Prove Technical and Commercial Viability, Further Information

AEG CoalSwitch, the renewable energy division of Active Energy Group Plc (AIM: AEG.L), the AIM-listed supplier of timberland management and development services, industrial wood fibre and Biomass coal replacement fuels, announces that late last week it received the results from the burn testing of its CoalSwitch fuel at the University of Utah (announced in the RNS dated 8 February 2016).

The University reported on CoalSwitch's technical and commercial viability for use a standalone fuel - or co-fired in high concentrations with coal in coal-fired power plants - and confirmed that it provides significant environmental and commercial advantages for industrial power generators; exceeding the Board's expectations.

The burn testing, conducted at the University's Clean and Secure Energy Institute laboratory under the aegis of Dr Andrew Fry, Director of the Industrial Combustion & Gasification Research Facility and an internationally-recognised expert in the field, evaluated the performance of AEG CoalSwitch fuel in its 100kW pulverised coal combustor, which closely replicates the full-scale facilities utilised in industrial coal-fired power plants around the world.

The five-day testing process recorded the energy output, flame stability and behaviour, furnace reaction, depositions (fouling and slagging) and emissions produced by CoalSwitch Biomass fuel (in this case, derived from low-grade Aspen/Poplar feedstock) during combustion; included real-time analysis and interpretation of its combustion, particle and deposition characteristics; and compared the results to those achieved with Illinois Number 6 coal (a typical feedstock used for industrial power generation in the US), and a CoalSwitch/Illinois coal mix under the same test conditions.

The mix tests were conducted with a 50%/50% blend of CoalSwitch Biomass fuel and Illinois coal; a much higher concentration of Biomass material than it has previously been possible to use in existing coal-fired plants without causing significant slagging and fouling issues in their boilers.

The University both confirmed the potential of CoalSwitch fuel for the power generation industry, and that it delivered significant financial and environmental benefits over current Biomass fuel solutions. Key findings included:

· CoalSwitch fuel burned at near-identical temperatures to coal.

There was only a 50oF difference between the temperature at which the CoalSwitch/coal blend and pure coal combusted (the coal burnt at 2,220 oF).

This confirmed that CoalSwitch can be co-fired with coal in power plants without any hardware furnace modifications, produces an equivalent energy output, and can improve the efficiency at which the coal component of the blended feedstock burns.

· CoalSwitch fuel burned more efficiently than coal, and produced far less ash.

The ash content in CoalSwitch was 1.69%, compared to 9.42% for the pure coal; and whilst the carbon content within that ash was similar between the two fuels in 'unstaged' conditions (when all the oxygen was introduced at the same time as the fuel), there was a 40-55% reduction from the CoalSwitch/coal blend in 'staged' conditions (typically used in industrial power plant furnaces to control NOx emissions).

This demonstrated that co-firing CoalSwitch with coal can not only deliver the environmental benefits of burning processed Biomass, but also significantly increase the efficacy of the coal with which it is burnt; providing a further compelling reason to utilise it in coal-fired power plants, even where coal continues to be part of the feedstock mix.

· CoalSwitch fuel burned cleaner than coal, and when co-fired with coal generated less Sulphur Dioxide (SO2) than the coal alone.

The reduction in SO2 in the CoalSwitch/coal blend was between 45% and 72%; higher than the laboratory team had anticipated, based on their significant experience of testing other Biomass fuel solutions in their test facility.

This resulted in far fewer ultrafine particles being released into the environment during combustion, confirming that CoalSwitch can generate fewer emissions, greatly enabling compliance with pollution and clean air regulations.

· CoalSwitch fuel was essentially free of both Potassium (K) and Sodium (Na), so combustion will not cause fouling (deposits).

The very low levels of these chemical elements inhibit the deposition precursors (compounds that contribute to chemical reactions) that are usually found in coal/Biomass fuel blends; evidenced by an 8% to 18% decrease in deposition rates in 'unstaged' conditions, and 51% to 53% reduction in 'staged' conditions.

This further demonstrated that utilising CoalSwitch in coal-fired power stations will not create deposits on furnaces or chimneys; overcoming one of the principal objections to using Biomass-derived fuels for industrial power generation in existing coal-fired power plants. In fact the coal being burned today is likely to foul more than CoalSwitch used standalone, or when blended with CoalSwitch.

· Besides reducing the amount of ultrafine particles in the CoalSwitch/coal blend, the mineral matter (ash) particle size distribution was nearly the same as that for pure coal.

However, there was a noticeable reduction in ultrafine particles (less than 100 nanometres in diameter) with the CoalSwitch/coal blend, likely due to the reduction in sulphur levels.

This demonstrated that CoalSwitch can significantly outperform existing Biomass fuels with regard to depositions that cause slagging and fouling, and which have to date prevented their wide scale adoption in coal-fired power plants; and that co-firing CoalSwitch with coal can reduce the depositions created by pure coal… an extremely important development.

· The CoalSwitch/coal blend had a lower LOI (Loss on Ignition) than the pure coal, leaving far less unburned carbon in the ash.

The total unburned carbon flow rate for CoalSwitch was much more favourable, due to the reduced total ash content and lower LOI (Loss on Ignition, a measure of unburned carbon) carbon in that ash. The unburned carbon flow rate was reduced by 34% to 50% in 'unstaged' conditions, and by 65% to 74% in 'staged' conditions.

This confirmed that CoalSwitch fuel burned more efficiently in the furnace and, consequently, released more of its energy; and had a lower LOI - a key issue for power plant operators, to which they devote considerable resources.

Dr C Drew Tait, who led the testing process for AEG CoalSwitch, noted "The very low concentrations of Potassium and Sodium in CoalSwitch fuel can inhibit the fouling precursors usually found in coal/Biomass blends. Our unique technology specifically targets these mineral contaminants for removal during the preparation process, and is expected to have a favourable impact on deposition by fouling."

"These outstanding results confirm that the AEG CoalSwitch fuel manufacturing process - which works with any fibrous- or wood-based Biomass material - removes the vast majority of minerals, salts and other contaminants that have prevented renewable Biomass-derived fuels from entering the energy mainstream. "

Philip Scalzo, AEG CoalSwitch Chief Technology Officer, added: "Even after eight years of developing and assessing CoalSwitch fuel, the results of the University of Utah deposition tests exceeded our expectations; and we look forward to sharing them with the numerous power plant owners and operators that have expressed real interest in integrating CoalSwitch fuel into their feedstock."

The test findings will not just enable the AEG CoalSwitch team to progress its ongoing discussions with a number of international power generation utilities, but will have a considerable positive impact upon Active Energy Group's other trading divisions, in line with the company's long-term strategic vision.

Richard Spinks, CEO of Active Energy Group Plc, said: "The results of the CoalSwitch testing prove that our faith in the technology and our investment in it over the past twelve months were fully justified. They demonstrate that, for the first time to our knowledge, the glass wall between coal and Biomass usage within existing power generation plants has been shattered."

"Raw Biomass material, after processing via the patented AEG CoalSwitch technology, can be directly introduced into the mainstream fuel mix, which has global implications for the environment, the economy and the power generation industry. We are understandably very excited about the results of these tests and delighted for our partners in the United States who continued to develop this unique process in the face of considerable industry scepticism."

 "Moreover - and in line with the long-term strategy of the Group - this confirmation of CoalSwitch's viability will now flow through to AEG's other businesses."

"The value of the forestry resources under the management of our AEG TimberLands division are likely to be enhanced, as the low-grade and waste timber can be utilised for the production of high value CoalSwitch fuel, the very reason that we created our CoalSwitch fuel for this test with low-quality Aspen/Poplar (which forms the majority of Alberta's Boreal forestry species mix); and it will likely give us further traction in securing new forestry management and development deals in Europe, North America and elsewhere."

"It will also enable us to actively plan to locate high-volume CoalSwitch manufacturing plants at a number of international locations - including in Alberta and at our AEG WoodFibre facility at Yuzhny Port in Ukraine, which currently supplies the Turkish MDF manufacturing sector - from where we will both process raw timber into wood fibre for CoalSwitch fuel production and produce finished Biomass fuel for power plants across Europe, a market in which we have considerable experience from our time supplying wood chip."

"On behalf of all Active Energy Group's stakeholders, I congratulate the entire AEG CoalSwitch team on the success of the fuel evaluation process, and I look forward to reporting on further developments in due course."

- ENDS - 

ABOUT ACTIVE ENERGY GROUP PLC:

Active Energy Group Plc is a London Stock Exchange AIM-quoted company (AIM: AEG.L). Headquartered in the UK, it is a fast-expanding international business that has experienced exceptionally strong growth and diversification into complementary industry sectors since the current management team assumed responsibility in mid-2012.

The Group has considerable expertise across the entire timber industry supply chain - from forest to factory and fuel.

Its three trading divisions, which operate as independent business units but work together to optimise resources and opportunities, are focussed on providing environmentally-sensitive solutions to specific global market sectors:

· AEG TimberLands: Forestry Asset Management and Development

· AEG WoodFibre: Industrial Wood Fibre for Medium-Density Fibreboard (MDF) Manufacturing

· AEG CoalSwitch: Advanced Biomass Coal Replacement Fuels and Fuel Processing Systems

Active Energy Group Plc operates from four international locations:

· Ukraine, where it is the largest producer and exporter of wood fibre for the Turkish MDF manufacturing sector.

· Canada, where it has entered into a joint venture with several indigenous Métis Settlements to commercialise in excess of 300,000 hectares of their lands, which contain valuable forests and natural resources.

· The United Kingdom and United States of America, where it develops advanced Biomass fuels and fuel processing systems that convert waste wood and industrial/agricultural residues into coal replacement feedstock for clean energy power generation in a joint venture with Biomass Energy Enhancements LLC.

Active Energy Group Plc is led by a highly experienced management team, supported by forestry, timber processing and renewable energy experts within its trading divisions. All possess a proven track record in the industries and regions in which the company operates and from which its revenues are generated.

The Group has grown significantly in recent years, and has established a firm foundation, excellent reputation and international customer base upon which to deliver lasting value to all stakeholders.

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