EnergyPathways: A Nationally Significant Moment for UK Energy

How a Micro-Cap Just Secured Government Recognition for What Could Become the UK’s Most Important Energy Hub

Good Morning Team.

For those of you who have watched The Shawshank Redemption, I’ve felt a little like Andy Dufresne over these past few months, writing weekly letters to the state legislature, requesting funding to improve the library.

I know I’ve not been the only one.

The good news is that old Ed seems to have listened to reason.

Late last month, Energy Secretary Ed Miliband formally designated the company’s flagship MESH project as nationally significant infrastructure.

This landmark decision puts the energy hub in the same planning league as nuclear power stations and major offshore wind farms.

For context, this isn’t a company with billions in market cap or decades of operating history. It’s is a development-stage energy transition firm that’s been methodically building something potentially transformational.

And the government just said it matters to Britain’s future.

What Is EnergyPathways?

As a reminder, for those of you with short memories…

EnergyPathways is an integrated energy transition company developing the Marram Energy Storage Hub (MESH), a multi-faceted energy infrastructure project located in the East Irish Sea and Barrow-in-Furness.

Think of MESH not as a single facility, but as an entire energy ecosystem designed to address several critical challenges simultaneously.

The project combines several major components, each addressing distinct market needs while creating operational synergies:

First, MESH’s Long-Duration Energy Storage (LDES) system integrates compressed air, thermal and hydrogen geo-storage technologies to capture and monetise the billions of pounds in renewable energy that the UK currently wastes each year.

Every time excess wind power is curtailed, that clean energy is effectively thrown away; MESH’s LDES platform converts it into dispatchable power that can be stored and released when needed.

With a planned capacity of 400MW, it will be the largest facility of its kind in Europe, four times bigger than the continent’s current leader in Denmark.

This will enable the UK grid to absorb far more renewable output, reduce costly balancing payments and deliver genuine long-duration storage capacity for the first time.

Second, MESH will deliver Flexible Low-Carbon Power Capacity — providing multi-day, low-cost backup generation to stabilise the grid during periods of low renewable generation or high demand.

This system will offer a modern, clean alternative to the UK’s aging fleet of unabated gas-fired power stations, which are both expensive to maintain and incompatible with Net Zero targets.

By supplying flexible, dispatchable power without the high emissions or fuel costs of conventional gas, MESH will strengthen grid resilience while driving down system costs for consumers and industry alike.

Third, the platform includes Low-Carbon Hydrogen Production (MESH H₂) — a scalable technology capable of producing hydrogen at a fraction of the cost of conventional electrolysis and without generating carbon dioxide.

This system has the potential to decarbonise the UK’s existing gas supply with no emissions, enabling a cleaner, more sustainable use of domestic resources. It can also unlock currently stranded North Sea gas reserves that remain undeveloped due to emission concerns, converting them into clean hydrogen instead of fossil gas.

With a planned capacity of 640MW and 2.8TWh, MESH H₂ would become the UK’s largest hydrogen project, supporting industrial decarbonisation, transport fuel substitution and long-term energy storage.

Fourth, MESH will stimulate Next-Generation British Industries through the production of strategic, low-carbon industrial materials.

This includes high-purity synthetic graphite — a critical mineral for the rapidly expanding battery manufacturing sector — and low carbon ammonia, an essential feedstock for agriculture, clean shipping, and hydrogen transport.

Currently, the UK depends almost entirely on high-emission, imported ammonia; MESH will replace these with domestically produced, low-carbon alternatives.

Fifth, MESH will deliver Large Scale Gas Storage on a scale comparable to or greater than Centrica’s Rough facility, currently the UK’s largest.

Subject to the necessary authorisations under the Petroleum Act 1998 and the Energy Act 2008, MESH will provide up to 600 million therms (20TWh) of capacity initially, with expansion potential to 1.8 billion therms (60TWh) through integration with the Knox and Lowry assets.

In doing so, it would immediately double the UK’s existing gas storage capacity and offer a lower-cost development option compared to other proposals. This component alone would significantly strengthen Britain’s energy security, providing a domestic buffer against geopolitical instability and seasonal supply shocks.

Taken together, these five elements form a multi-technology clean energy platform that directly addresses the UK’s twin crises of energy security and decarbonisation.

MESH captures wasted renewable power, stabilises the grid, delivers flexible clean generation, produces low-cost hydrogen, supports new green industries, and restores the strategic gas reserves that Britain has lacked for decades.

It aligns fully with the government’s ambitions for a decarbonised power system by 2030, the Clean Energy Mission, and the industrial renewal objectives of the National Wealth Fund and Great British Energy.

Crucially, the project is structured to be financed primarily through private capital — with debt from a FTSE 100 company and equity from institutional investors — requiring no direct government subsidy but offering substantial national benefit.

MESH is, in short, a shovel-ready opportunity to transform the UK’s energy landscape.

And it’s just getting started.

Recent Funding

October initially saw 1.75 million warrants converted at 4p per share, bringing in £70,000 in gross proceeds.

Then came the main event — the fundraise.

The company secured £1.24 million in gross proceeds, split between a £594,000 placing and a £644,000 subscription, all priced at 6p per share. That’s a 1.3% discount to the market price on 10 October — a tight discount that tells you demand was already in the room.

Each new share came with a one-for-one warrant exercisable at 9p within two years. There’s also an accelerator clause: if the share price trades above 12p (on a 10-day VWAP) for 30 days, those warrants must be exercised or expire.

This structure is smart. It rewards conviction but punishes inertia. The 9p exercise price represents a 50% premium to the placing, and the 12p trigger is exactly double the raise price.

It’s a clear statement of intent: management and investors alike are expecting meaningful price appreciation as development milestones are met. And if they’re right, warrant exercises will provide additional capital to the company without another formal placing.

Of course, the raise wasn’t without dilution — but the modest discount suggests that existing shareholders understood and supported the rationale. And that’s the key point: this raise was funded principally by existing long-term investors.

That matters. In early-stage companies, long-term holders are the best informed capital in the room. They’ve sat through shareholder meetings, absorbed the updates and built direct lines to management. Their willingness to continue funding — effectively diluting themselves in the process — speaks louder than any analyst note.

Yesterday, a fencesitter threw in another £125,000 as well. Good call.

As for the use of proceeds, the focus is squarely on pre-development and FEED (Front-End Engineering Design) work — the technical and commercial groundwork that transforms a concept into a bankable infrastructure project. Funds will support:

• Technical and commercial studies for long-duration energy storage (LDES) and flexible power systems

• Large-scale low-carbon hydrogen production assessments

• Graphite production and processing feasibility

• Hydrogen storage engineering design

• Gas storage and extraction planning

This is the unglamorous but vital stage of project evolution, where engineers, geologists, and financiers converge to de-risk the model and prepare for final investment decisions.

Based on H1 2025 results, the company was burning approximately £100,000 per month. However, with the project moving into more intensive FEED work, burn rate will likely increase. Assuming burn rate increases to £150,000-200,000 per month as engineering studies intensify:

• Conservative scenario (£200k/month burn): £1.3 million provides approximately 6-7 months runway

• Moderate scenario (£150k/month burn): 8-9 months runway

• Both scenarios take the company into mid-2026

This timeframe aligns with management’s statement that the funds provide ‘sufficient funding to allow it to continue to develop the MESH project whilst it advances conversations in respect of long-term cornerstone finance.’

The implicit message: cornerstone financing discussions are expected to conclude within this timeframe, providing the major capital injection needed for the next phase.

The Path to Project Financing

Understanding what ‘cornerstone finance’ likely means is crucial for evaluating the investment case.

For a project of MESH’s scale, EnergyPathways will need to arrange project financing from institutional sources. This typically involves:

• Equity Investors - Infrastructure funds, utilities, energy transition specialists or strategic corporate investors taking meaningful equity stakes in the project company. These investors provide risk capital but expect board representation and governance rights.

• Debt Financing - Commercial banks, infrastructure debt funds, export credit agencies or development banks providing senior secured debt once projects reach certain development milestones and demonstrate clear paths to FID.

• Government Support - Potential UK Infrastructure Bank support, grants or contracts for difference that improve project economics and reduce risk for private capital.

• Strategic Offtake Agreements - Long-term contracts with energy offtakers, hydrogen purchasers, graphite buyers or gas storage customers that provide revenue visibility and support debt financing.

The Section 35 designation fundamentally changes EnergyPathways’ positioning for these conversations. Prior to the designation, cornerstone investors would be underwriting both development risk and regulatory approval risk.

Post-designation, regulatory approval risk is substantially reduced— the planning pathway is clear, the government has validated its national significance, so timelines are more predictable.

This matters enormously for institutional capital, which typically has lower risk appetites than venture capital. Infrastructure funds want de-risked, shovel-ready projects with clear regulatory pathways.

MESH now fits that profile in a way it didn’t three months ago.

Market Context: Where MESH Fits in UK Energy Infrastructure

To understand MESH’s potential importance, we need to examine the UK energy system’s specific challenges and how MESH addresses them.

The Intermittency Challenge

The UK is rapidly deploying wind power—offshore wind capacity has grown from under 2 GW in 2010 to over 15 GW today, with government targets calling for 50+ GW by 2030. Solar capacity has similarly expanded. However, wind and solar are inherently intermittent.

During periods of high wind and low demand, wholesale electricity prices can go negative—generators pay to put power onto the grid because it’s cheaper than curtailing generation. The UK curtailed over 3 TWh of renewable generation in 2024, representing hundreds of millions in wasted value.

Conversely, during ‘wind droughts’ (extended periods of low wind) or winter evening peaks, the UK relies heavily on gas generation to meet demand. These gas plants run at low capacity factors (operating only when needed) but must be maintained year-round, creating a costly capacity problem.

MESH’s Solution: By storing energy during surplus periods and generating during deficit periods, MESH can:

• Monetise renewable energy that would otherwise be curtailed

• Reduce reliance on inefficient, high-emission peaker plants

• Provide multi-day duration storage that batteries cannot economically provide

The UK hydrogen energy storage market is projected to reach $873.6 million by 2030, growing at 3.6% CAGR from 2024, indicating nascent but growing demand for exactly the type of long-duration storage MESH provides.

The Hydrogen Economics Challenge

The UK government has set ambitious hydrogen production targets as part of its net zero strategy, with the goal of establishing a low-carbon hydrogen economy. However, hydrogen economics remain challenging.

Green hydrogen (produced via electrolysis using renewable power) is expensive — typically £4-8/kg at current renewable electricity prices and electrolyzer costs. Grey hydrogen (from steam methane reforming without carbon capture) is cheaper at £1-2/kg but produces significant CO2 emissions.

Blue hydrogen (SMR with carbon capture) falls somewhere in between but faces technical and cost challenges with carbon capture systems.

Methane pyrolysis produces ‘turquoise’ hydrogen by decomposing methane into hydrogen and solid carbon without requiring CO2 separation or storage. Projected costs for turquoise hydrogen at scale are £2-3/kg — cheaper than green, cleaner than grey, and potentially simpler than blue.

If MESH can demonstrate commercial-scale turquoise hydrogen production at these economics, it could unlock a pathway to hydrogen deployment that doesn’t depend on massive renewable electricity buildout or expensive carbon capture infrastructure.

The Critical Minerals Challenge

The UK, like most Western nations, faces concerning dependencies on China for critical minerals necessary for the energy transition. Graphite is a prime example — China controls approximately 65% of global natural graphite production and 95% of graphite processing capacity.

Synthetic graphite production using domestic natural gas feedstock and methane pyrolysis addresses this strategic vulnerability. The market for battery-grade graphite is growing rapidly (15-20% CAGR) as electric vehicle adoption accelerates globally.

MESH’s 60,000 tpa production is modest in global terms (global synthetic graphite market is several million tonnes annually) but strategically significant for UK supply chain resilience.

The Ammonia Import Dependency

The UK imports nearly all its ammonia, with most global production concentrated in regions with cheap natural gas (Middle East, Russia, US). Recent geopolitical disruptions have demonstrated the vulnerability of this supply chain.

Low-carbon ammonia production using UK-produced turquoise hydrogen reduces this dependency while decarbonizing supply chains. With the UK ammonia market growing steadily, domestic low-carbon production creates both environmental and economic benefits.

The Gas Storage Deficit

The UK has persistently low gas storage capacity relative to consumption—roughly 1-2% of annual demand, compared to 20-30% in major European countries. This became acutely painful during recent energy crises, when the UK had minimal buffer against supply disruptions or price spikes.

MESH’s gas storage capacity equivalent to Rough facility would materially improve UK energy security. The integration with other MESH components makes the economics more favorable than standalone gas storage developments.

Section 35 Direction

The 25 September Direction from the Secretary of State is worth examining in detail because it reveals both the government’s reasoning and the practical implications for MESH’s development.

What Section 35 Actually Means

The Planning Act 2008 established the Nationally Significant Infrastructure Project regime for major infrastructure in energy, transport, water, and waste sectors that meet specific thresholds.

Section 35 provides the Secretary of State discretionary power to designate projects as nationally significant even if they don’t meet the standard thresholds.

This is not a routine designation — it’s used sparingly for projects the government deems strategically important.

Recent Section 35 directions have been issued for major energy infrastructure, large offshore wind developments, and strategically significant transport projects.

The Secretary of State’s Reasoning

The Direction document provides three specific reasons for designation:

1. Scale of outputs: MESH’s combined 550 MW storage and generation capacity, 20,000 tpa hydrogen production, 60,000 tpa graphite production, and 110,000 tpa ammonia production represent material contributions to UK energy infrastructure.

2. First-of-kind deployment: Several technologies (particularly the integrated CAES-hydrogen-thermal storage system and commercial-scale methane pyrolysis) would be deployed at commercial scale for the first time in the UK.

3. Whole system approach: The integration of compressed air storage, hydrogen production, flexible power, graphite production, ammonia production, and gas storage into a single facility providing ‘whole system’ and ‘cross-vector’ solutions to decarbonization and energy security.

The document explicitly states:

‘The Proposed Development could play an important role in enabling an energy system that meets the UK’s commitment to reduce carbon emissions and the Government’s objectives to create a secure, reliable and affordable energy supply for consumers.’

This is the Department for Energy Security and Net Zero formally stating that MESH is viewed as strategically important to achieving national climate and energy security objectives.

The Development Consent Order Process

With Section 35 designation secured, MESH now enters the DCO process. This follows a structured timeline:

Pre-application: EnergyPathways will conduct extensive stakeholder consultation, environmental impact assessments, and technical studies. This phase typically takes 12-24 months for complex projects.

Submission: A comprehensive DCO application will be submitted to the Planning Inspectorate, including detailed engineering designs, environmental assessments, traffic studies, economic impact analyses and stakeholder consultation reports.

Examination: The Planning Inspectorate has 6 months to examine the application, including public hearings, written representations and detailed technical review.

Decision: The Secretary of State has 3 months to make a final decision on granting the DCO.

Judicial Review Period: Following DCO grant, there’s a 6-week period during which decisions can be challenged in court.

The entire process from application to final decision typically takes 18-24 months, with an additional 6-12 months for judicial review and discharge of any conditions.

MESH would still require separate licensing under the Petroleum Act and Energy Act for gas storage operations, but the DCO would cover the planning consent for all physical infrastructure.

Precedents and Timelines

Recent large-scale energy infrastructure projects through the DCO process provide useful benchmarks:

• Hinkley Point C nuclear power station: Approximately 4 years from submission to construction start

• Major offshore wind developments: 2-3 years from submission to construction

• Large-scale battery storage projects: 18-24 months

MESH I suspect would be towards the shorter end of this range.

Partnership Ecosystem: Who’s Building MESH?

EnergyPathways is not attempting to develop MESH alone. The company has assembled partnerships with globally recognised firms across engineering, energy, and industrial process design.

Siemens Energy Limited

Siemens Energy has been engaged to ‘carry out feasibility assessment of MESH.’ Siemens Energy is one of the world’s largest energy technology companies, with particular expertise in gas turbines, power generation and energy storage systems.

What Siemens brings: Technical validation of the power generation and storage systems, detailed engineering for the hybrid hydrogen-gas turbines, integration expertise for complex multi-technology systems, and crucially—credibility with project finance lenders.

When Siemens Energy signs on to conduct feasibility assessment, it signals that sophisticated technical review has occurred and the project is not technically fanciful.

Siemens typically doesn’t engage in feasibility studies for projects it views as commercially or technically unviable — the reputational and opportunity cost isn’t worth it. Their involvement suggests MESH has passed initial technical and commercial screens.

Wood

Wood is a global consulting and engineering company with extensive experience in energy infrastructure. The company provides engineering, design, and project management services across upstream oil and gas, downstream refining, renewables, and energy transition projects.

What Wood brings: Detailed engineering design capability, project management expertise, regulatory and permitting support, and experience with complex offshore/onshore integrated facilities.

Wood has worked on numerous UK energy projects and understands the local regulatory environment and supply chain.

Costain Group

Costain was engaged to ‘assess onshore facility options for the MESH integrated energy system.’ Costain is a UK-focused infrastructure firm with particular expertise in energy, transportation, and water infrastructure.

What Costain brings: UK-specific construction expertise, local supply chain relationships, civil engineering and site development capability, and experience navigating UK planning and regulatory requirements.

Costain’s involvement in onshore facility assessment suggests detailed work is underway on site layout, logistics, connections to existing infrastructure (power grid, gas networks), and buildability.

KBR Inc and Hazer Group

This partnership is particularly significant for the hydrogen production technology. Hazer Group is an Australian technology company that developed a methane pyrolysis process specifically designed to produce both hydrogen and high-value graphitic carbon. KBR is a global engineering and technology company that has licensed Hazer’s technology.

What this partnership brings: Access to proprietary methane pyrolysis technology that has been demonstrated at pilot scale, engineering support for scaling to commercial capacity, intellectual property rights to deploy the technology, and importantly—technology that addresses one of MESH’s most innovative and highest-risk components.

The MOU for ‘strategic engagement’ suggests EnergyPathways is working toward a technology licensing agreement that would allow MESH to use the Hazer/KBR process. This is standard practice in energy projects using novel or proprietary technologies.

Zenith Energy

Zenith was engaged as the ‘well engineering department for EnergyPathways.’ Zenith is a specialised oil and gas services company with expertise in well design, drilling, and subsurface engineering.

What Zenith brings: Specialised expertise in designing and drilling the wells that will connect the offshore platform to the subsea salt caverns, subsurface engineering for the cavern development (critical for ensuring structural integrity and safe operation), regulatory compliance for well design and operations, and experience with UK offshore regulations and procedures.

The well engineering is not trivial (drilling into and developing salt caverns for high pressure gas storage requires specialized expertise).

What the Partnership Ecosystem Signals

Collectively, these partnerships tell an important story: EnergyPathways has convinced serious, established firms to commit resources (both staff time and reputation) to MESH development.

These are not pay-for-play arrangements where companies will do a study for anyone willing to pay. Tier-one engineering firms like Siemens Energy and Wood are selective about projects they associate with — they have more opportunities than capacity and carefully screen which projects receive attention.

The fact that multiple global and UK firms have agreed to conduct detailed feasibility, engineering, and technical assessments suggests:

1. Technical credibility: Internal technical reviews found MESH plausible and worth detailed study

2. Commercial potential: These firms see potential for follow-on EPC (engineering, procurement, construction) contracts if the project reaches FID

3. Strategic alignment: The firms view energy transition infrastructure as strategically important and want exposure to innovative projects

From an investor perspective, the partnership ecosystem provides important external validation that MESH is not a purely promotional exercise but has undergone technical scrutiny from sophisticated engineering firms.

Balancing Opportunity Against Risk

The Bull Case

Government Validation: The Section 35 designation is a genuine inflection point. The UK government has formally determined that MESH addresses critical national needs for energy security and decarbonization.

Streamlined Regulatory Pathway: The DCO process provides certainty and fixed timescales unavailable through conventional planning. This substantially reduces regulatory approval risk, which was the primary existential risk pre-designation.

Technical Credibility: Partnerships with Siemens Energy, Wood, Costain, KBR, and Hazer provide external validation. These firms have conducted due diligence and committed resources to MESH development.

Multi-Revenue Stream Integration: Unlike single-purpose infrastructure, MESH generates revenue from energy storage, flexible power generation, hydrogen sales, graphite sales, ammonia sales, and gas storage. This diversification reduces exposure to any single market and creates operational synergies that improve overall economics.

Strategic Timing: The UK faces an urgent need for energy storage and grid flexibility as renewable deployment accelerates. Government policy strongly supports exactly the type of infrastructure MESH represents. The timing of development aligns with the period when the UK will face the most acute storage and flexibility shortfalls.

First-Mover Advantage: If MESH successfully demonstrates commercial-scale turquoise hydrogen production and integrated CAES-hydrogen storage, it establishes technical and commercial precedents that could be replicated across other UK sites or internationally, creating significant intellectual property and operational know-how value.

Asymmetric Valuation: At a £13 million market cap for a project the government has designated nationally significant, with hundreds of millions in potential capital expenditure if fully developed, there’s substantial upside if development milestones are achieved. A successful path to FID could support multiples expansion of 5-10x or more.

Cornerstone Finance Positioning: The Section 35 designation fundamentally improves EnergyPathways’ positioning for cornerstone financing discussions. Infrastructure investors and project finance lenders can now underwrite a project with clear regulatory pathway, government validation, and predictable timelines—substantially reducing risk premiums and improving terms.

Existing Shareholder Support: The October fundraise coming principally from existing long-term shareholders demonstrates continued conviction from those with the most information about the project. The willingness to fund at effectively no discount despite significant dilution indicates confidence.

Experienced Management Navigation: CEO Ben Clube has successfully navigated MESH through the complex and uncertain process of securing Section 35 designation, demonstrating an ability to work with government, manage stakeholder relationships and advance the project through critical gates.

Realistic Expectations

A balanced view acknowledges that development-stage infrastructure investing involves accepting risk in exchange for asymmetric upside if development succeeds.

Dilution to FID: Existing shareholders should expect dilution through funding rounds before FID, though success would support a market cap materially higher than current £13 million, even accounting for significant dilution.

Risk-adjusted return potential: Potential for 5-10x+ returns if project succeeds and reaches operation. This risk/return profile is characteristic of development-stage infrastructure. However, the risk profile is ameliorated by the S35 order.

The bottom line

The Section 35 designation genuinely changes EnergyPathways’ investment profile.

This is no longer a speculative development company hoping for regulatory approval — it’s a company with government-validated nationally significant infrastructure and a clear regulatory pathway forward.

The partnership ecosystem with tier-one engineering firms provides external technical validation. The recent fundraise from existing long-term shareholders demonstrates informed insider confidence.

The integration of multiple revenue streams addresses critical UK energy challenges while creating economic synergies. And the strategic timing aligns with the UK’s most pressing energy transition needs.

However, EPP must still secure cornerstone financing, complete detailed engineering, obtain gas storage licensing, manage complex construction and commission sophisticated integrated systems.

Each of these stages presents risk.

The good news is that the people making this happen are of the finest calibre.

And for investors who understand and can tolerate development-stage infrastructure risk, who have appropriate portfolio diversification, and who can commit to long time horizons, EnergyPathways presents a wonderfully asymmetric opportunity.

The government has stated MESH matters to Britain’s energy future.

What happens over the next 12-24 months will be critical: Will cornerstone financing close successfully? Will FEED studies confirm technical and commercial viability? Will gas storage licensing be obtained? Will any technical challenges emerge that materially impact economics?

For now, EnergyPathways has cleared a major hurdle and stands at a genuine inflection point. The journey from here to operating infrastructure remains long. But the destination is government-validated as nationally important, and serious partners are committed to walking that path alongside the company.

As CEO Ben Clube states

‘The Secretary of State’s decision is a landmark moment for EnergyPathways and for the UK’s energy transition. By granting the MESH project nationally significant status, the Government has recognised its potential to become a cornerstone of the UK’s clean energy future.

MESH is designed to tackle some of the biggest challenges facing the UK energy system today - the high cost of wasted wind power, heavy reliance on aging high emission and expensive gas power plants and ensuring reliable and secure energy supply in an uncertain geo-political world. With its significant storage capacity, flexible clean power, low-cost hydrogen and supporting new low-carbon industries, MESH can become a catalyst for investment and growth in the UK’s economy delivering long-term value not only to EnergyPathways’ shareholders, but also to Britain’s consumers.

The MESH project’s “whole system” approach is critical to delivering synergies that support a clean energy future for Britain while helping reduce the burden of subsidy costs being passed on to UK consumers.

“Together with our world-class partners, we are now moving forward at pace towards development consent. We believe MESH has the potential to become one of the UK’s most important energy hubs, a flagship project of global significance with the potential to be replicated both within the UK and internationally.’

I couldn’t have put it better myself.