SGH2 Energy, a Washington D.C.-based hydrogen developer, is in the early stages of a process to raise project equity for its three California projects.
Morgan Stanley has been retained to run the process, which could result in taking on two investors, CEO Robert Do said in an interview. The company hopes to have the process wrapped up within three months, he added.
Do declined to disclose the amount he is seeking to raise, but said the company prefers a strategic investor that can co-develop projects outside of California.
Meanwhile, SGH2 has filled out 70% of the senior debt commitments it will need for its Lancaster, California plant, Do said. At the Lancaster plant, SGH2 plans to produce up to 12,000 kilograms (1,380 MMBtu) of clean hydrogen per day, and 4.5 million kilograms per year (517,000 MMBtu) from the conversion of 42,000 tons per year of rejected recycled mixed-paper waste.
An additional set of three projects in Germany, Belgium and Holland will need an equity provider as well, Do said. That process could launch at the end of this year and the company could hire additional financial advisors.
A less expensive proposition
In addition to the Lancaster plant, SGH2 is advancing a Bay Area agricultural waste-to-hydrogen project in Stockton and a Sierra Valley forest residue-to-hydrogen plant.
Lancaster has offtake agreements for 10 years, and the company is in talks with the same offtaker for the other projects.
SGH2’s process requires about five acres of land for a project, as opposed to about 300 acres for solar-powered electrolysis, Do said. The process also requires less water.
“It gives us a cost-competitiveness where we can be two-to-three times cheaper,” Do said.
SGH2 is exporting that process to Europe, Do said. The EU is still going through iterations of new legislation, particularly the Renewable Energy Directive III, that could clarify SGH2’s place in that market.
“Until the legislation is clear it’s hard to really launch the project and know what kind of support you’re getting,” Do said. SGH2 has sites, feedstock and development partners in place for Europe.
SGH2 was spun off from a technology development company that raised about $50m from various VC firms and energy companies, Do said. He is the controlling owner of SGH2.
Do plans to expand across the globe and will be raising money to fund projects in Korea, South Africa and elsewhere.
“There will be indeed opportunities for us to work with additional bankers and funders,” he said.
