Renewable energy start-up MGA Thermal picks up $5.7m to scale its steam energy business

A Newcastle duo plan to scale up development of thermal blocks capable of helping power industries, after securing an extra $5.7m from investors.

MGA Thermal executive chair Erich Kisi and chief executive Mark Croudace.

A renewable energy start-up from Newcastle is running hot among investors, having picked up an additional $5.7m to scale up the development of its thermal blocks that are capable of producing steam at up to 500°C.

MGA Thermal’s system simultaneously can charge and extract from those blocks, allowing it to produce steam hot enough to manufacture furniture, process minerals and produce food and beverages.

It is a system that MGA Thermal chief executive Mark Croudace describes as an “elegant solution to a very large problem”, and one that investors are increasingly jumping on the bandwagon to support.

Steam constituted about 23 per cent of the nation’s total energy demand, but most people didn’t realise just how carbon-intensive it was, Mr Croudace said.

“Industry uses at least 400-500 per cent of the energy that residential does,” he said. “The bulk of that energy that they’re using is to make the products that we live with, work on and use every day, and about 60 per cent of that energy used is in the form of heat.”

MGA Thermal’s $5.7m raise is an extension to an earlier $8.25m round. The total pre-series B round now amounts to $14m.

That funding has come from existing investors Main Sequence and Melt Ventures, as well as a new injection from JEKARA. To date, it has raised a total of $28.8m. Mr Croudace said MGA Thermal expected to raise an amount several times that in a full Series B round later this year.

MGA Thermal's blocks store heat energy.

The start-up, which once wanted to be an energy source for early-stage companies, now wants to be a direct replacement for major companies.

“I’m starting to think that there is another industrial renaissance occurring and it is all around decarbonising large-scale global industries,” Mr Croudace said.

That had been the shifting focus over the past 12 months, he said.

“The use case that we are now very proactively focused on is all-round industrial decarbonisation,” he said.

The business is fielding inquiries from clients who are seeking to decarbonise up to 6000 tons of steam an hour, Mr Croudace said.

A project of that size, which would require four to six gigawatt hours, was not out of bounds for the start-up, Mr Croudace said, but would require a system about the size of a rugby league field, and one that was about six storeys high.

A single MGA Thermal block weighed about 10kg, was slightly larger than a shoebox and can store 2 kilowatt hours, he said.

MGA Thermal is looking to start sales of its systems with about 3700 blocks, about the size of a 40-foot shipping container, capable of producing 5 megawatt hours.

The industries it’s targeting are mineral processing, chemical manufacturing, furniture and food and beverages.

“All of those sectors use enormous amounts of heat, typically in the form of steam. They want that steam 24 hours a day and at a constant quality,” Mr Croudace said.

MGA Thermal’s blocks and extraction system are capable of running 24 hours a day, requiring charging over a three to nine-hour period, depending on its use case, Mr Croudace said.

“We’re heating our blocks up to around 650°C. And when they’re at that temperature, they’re glowing white hot,” Mr Croudace said.

The reason they’re heated so high is because of the temperature of steam required from clients. “The steam our clients are looking for is a lot hotter than the steam that comes out of your kettle at home … the steam that most are looking for is typically between around 20 and 500°C,” he said.