Gerry Byrne reports on Keith McGrane’s remarkable journey with Corre Energy, from being out of a job to paper wealth of €21m in four years

By 2030, the European Commission’s ambition is that 70% of Europe's electricity will be generated from carbon-free wind and solar power. Great for the planet, but will it be good for businesses and communities? Suppose the weather is calm or very cloudy while electricity demand is soaring?

In Ireland, EirGrid can quickly summon a mini tsunami of water from an artificial lake at the top of a Wicklow mountain to drive a standby turbine generator at its base. The water is pumped back up the mountain again using cheap, off-peak, power ready for the next time it is needed.

But there are no mountains in The Netherlands.

Corre Energy, an Irish-run Dutch enterprise, says it has come up with the answer: build and operate grid-scale underground renewable energy storage facilities, allied to adjacent production of green hydrogen. The company says these storage and hydrogen production facilities are can provide a balancing solution to wholesale electricity markets, and provide industrial customers with a cost-effective and consistent supply of hydrogen.

In Association with

When renewable electricity supply is high, resulting in low prices, Corre Energy will compress air into storage caverns. Conversely, when renewable electricity supplies are low and prices are high, the company will generate green electricity.

Corre Energy recently floated on the Euronext Dublin stock exchange, raising €10m net for around one-fifth of the equity. The company has no trading revenue, but it has lined up multiple contracts and agreements to progress towards its ambitious goal.

The brainchild of geophysicist Keith McGrane, one day Corre Energy will release stored air in its cavern into an enclosed wind turbine to generate electricity. The blueprint also calls for using renewable wind power to split molecules of water to generate hydrogen, using a process known as electrolysis.

Although it can be tricky to store and use, hydrogen is the carbon-free great white hope of many environmentalists seeking to displace climate-heating fossil fuels.

Corre Energy will initially use hydrogen to warm up the chilled air blowing into its turbines. It may also source this independently, and may also sell the hydrogen it stores to other users of the gas.

Corre Energy has plans for multiple Compressed Air Energy Storage (CAES) facilities, and has received investor backing on the basis that it its first project in the Netherlands will be up and running by 2025. “Thus far, from the listing on the Euronext Growth market in Dublin and elsewhere, we have raised total gross proceeds of €20m,” says McGrane. “Improving the efficiency of energy storage is not what our breakthrough is going to be. It is our ability to raise capital quickly. That is why we have gone to the stock market.”

Career Path

After graduating from UCD with a Masters in Geophysics, McGrane found his way into banking with Barclays and KBC, where he was exposed to wind farm financing. He joined wind farm generator Gaelectric in 2008 to head its energy storage division. The company snagged total grant approval, much of it from the EU, of almost €15m for a compressed air storage facility to be developed in a salt bed near Larne, Co Down. However, Gaelectric ran into financial difficulties and McGrane had to look for a new opportunity in 2017.

He maintained his enthusiasm for the CAES concept, and hooked up with Darren Patrick Green, the other principal behind the Corre Energy listing.  Green's Procorre is a consultancy firm, originally involved in property development and more recently in finance and renewable energy.

The entrepreneurs got to know each other when Green mulled an investment in Gaelectric, before deciding against it.

"I went to see Darren and I brought him through the mechanisms of electricity markets,” says McGrane. “I explained what happens when too much renewable energy is available for the electricity grid, and why storage is required.”

One of the issues surrounding renewable energy such as wind power is its intermittent character — no energy is produced when the wind does not blow or the sun does not shine. An allied issue is curtailment — too much renewable energy produced in stormy situations, or at the wrong time of day, which the grid cannot handle. To resolve these issues, renewable energy needs to be stored during times of excess supply so that it can be supplied in times of high demand.

Batteries are one method of achieving this objective. Corre Energy’s alternative is underground salt caverns, which for decades have been used to store natural gas. "The issue is less one of technology but more one of the financing of projects and the redesign of electricity markets which weren’t designed to integrate the levels of renewable energy which are expected by 2030," says McGrane.

"Storage straddles a number of different technologies that have been around for some time. But they haven't been commercialised and adapted and designed to integrate renewables on the scale that we are talking about."

Green bought into the venture, and before the flotation he held 52.5% of Corre Energy's equity. This has diluted down to 42%, while McGrane’s stake is 28%. The two executive directors are paid €250,000 salaries by the company, and Green's company, Corre Consulting, will also receive €500,000 in the coming year for consultancy fees.

Execution Risk

Though the macro background is very positive, there’s a lot of blue sky attached to Corre Energy. There is a very large element of execution risk, the capital investment required is enormous, and the market model is largely untested. Yet providing risk capital is what a stock exchange is supposed to do, and in this instance Euronext Growth is fulfilling that role.

Euronext Growth securities are not admitted to the Official List of Euronext Dublin, though the listing process is still very demanding. Corre Energy’s IPO admission document, put together by law firm McCann FitzGerald, runs to 151 pages. Of the €12m raised by Corre Energy through selling shares, €1.5m was swallowed up by broker, legal, accounting and other costs.

Shares were sold and placed at €1 a share and enjoyed an immediate pop to the 120c level, where the market cap is c.€75m. This valuation largely centres on the preparatory work for the Dutch CAES project that Keith McGrane and Darren Green have engaged in since 2018.

Investors have rewarded the duo for putting in place the pieces for the CAES jigsaw. To reach the IPO stage, Corre Energy has conducted negotiations with multiple parties, always with lawyers in tow to document contracts, facility agreements, memorandums of understanding, or heads of terms.

In relation to developing the salt caverns required for the CAES and hydrogen storage project at  Zuidwending in the Netherlands (ZW1), which is Corre Energy’s main focus, the company has tied down a partnership with Dutch company Nobian, the only company in the Netherlands with salt mining rights suitable for the creation and operation of storage caverns.

These agreements cover preparing permit applications, test well construction, drilling, cavern extraction, leaching and debrining, as well as commercial terms under which Nobian will provide services relating to the construction of the first cavern.

Corre has lined up Siemens for a design capable of integrating hydrogen into the generation phase. For the electricity output, Corre Energy has signed a ‘cooperation agreement’ with Dutch utility PZEM which may lead to an off-take agreement. Grid connection matters too, so Corre is ‘actively engaging’ with grid operator Tennet, starting with a statutory connection application process.

Funding Agreements

On the funding side, the most important agreement is with Infracapital, the European Infrastructure division of M&G Alternatives Investment Management. In March 2021, Corre Energy entered into a ‘non-binding heads of terms’ with Infracapital that would see the investment fund advance up to €17m initially towards ZW1 development costs.

When required permit and consents have been obtained, Infracapital will have exclusive rights to acquire a majority stake in the ZW1 project through the acquisition of shares in Corre Energy Storage, the plc’s main trading entity. Subject to achievement of project milestones, Infracapital will be obligated to fund up to 100% of the projected construction costs of the project, to a limit of €276m. 

Where this would leave Corre Energy shareholders is unclear. The IPO document notes that in this eventuality “Corre Energy will retain a significant minority shareholding in Corre Energy Storage”.

Other pieces of the Corre Energy jigsaw include potential funding of up to €20m from Fondo Italiano per l’Efficienza Energetica, an Italian alternative investment fund manager. The company has also sourced financing of up to €4.4m from the European Union’s Connecting Europe Facility, and will go back to that well again for subsequent CAES projects on its agenda.

"We will become revenue generating from the end of 2022 into 2023," McGrane forecasts. "That will derive from the sell-down of equity in our project in the Netherlands. When we have commercial operation of ZW1, we will see significant revenues realised in 2026.”

With a free float of only 19%, Corre Energy shares are very illiquid, and the IPO was basically the equivalent of an SME raising seed funding.

Still, to get this far has been a fantastic achievement for Darren Green, and especially Keith McGrane. Four years ago, McGrane was out of a job, and now his paper wealth is c.€21m.

Photo: Corre Energy founders Keith McGrane (left) and Darren Patrick Green