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Exclusive: Advanced Ionics raising $12.5m, seeking pilot project partners

Advanced Ionics, an electrolyzer developer based in the Midwest, is approaching a close on the second tranche of its Series A and is seeking sponsors for pilot projects in Texas and elsewhere. The company’s Symbiotic electrolyzers use steam by tapping into excess heat from industrial settings, thereby lowering electricity needs for water splitting to 35 kWh per kg, with 30 kWh per kg possible. That compares to industry averages over 50 kWh per kg.

Advanced Ionics, the Milwaukee-based electrolyzer developer, is about six weeks out from closing a second tranche of its Series A and is seeking new partnerships for pilot projects in the US, Chief Commercial Officer Ignacio Bincaz told ReSource.

Bincaz, based in Houston, is working to close the second $12.5m tranche, which is roughly the same size as the first tranche. The company has technical teams in Wisconsin but could build out those as well as commercial capabilities in Houston.
The company’s Symbiotic electrolyzers use steam by tapping into excess heat from industrial settings, thereby lowering electricity needs for water splitting to 35 kWh per kg, with 30 kWh per kg possible. That compares to industry averages over 50 kWh per kg.

“We just put together our first stack, Generation One, which are 100 square centimeters,” Bincaz said. Generation Two stacks will come later this year, but to get to Generation Three — commercial size, producing between 7 and 16 tons per day — the company will have to conduct a Series B about one year from now.

“For that, we need to hit certain benchmarks on durability of a stack,” he said. “The money will go toward scaling up and getting the data expected by investors to get us to Series B.”

Aside from equity provisions, Advanced Ionics is looking for sponsors for pilots and related studies, Bincaz said. “There’s different ways that we’re looking for collaboration.”

Between 2027 and 2028 the company expects to have commercial-size Generation Three stacks in the market.

Pilot projects

Advanced Ionics has two pilot projects in development with Repsol Foundation and Arpa-E (US Department of Energy), respectively.

The Repsol project is a Generation One development producing 1 kilogram per day, Bincaz said. The government project will be the first Generation Two project.

Another pilot is in development with a large energy company that Bincaz declined to name. The company is also exploring pilot projects with bp, which is an investor in the company.

After four or so pilot projects of ascending scale, the company will look to do its first industrial-scale project using real process heat or steam, integrated into a hydrogen-use process like ammonia manufacturing or chemical refining.

“We’re talking to companies in Asia, companies in Europe, companies in the US,” he said, specifically naming Japan and Singapore. “I’m in early conversations.”

Advanced Ionics’ first tranche Series A was led by bp ventures, with participation from Clean Energy Ventures, Mitsubishi Heavy Industries, and GVP Climate.

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Canadian government unveils hydrogen tax credit proposal

In a bid to keep pace with the U.S. following passage of the IRA, Canada has unveiled a proposal for investment tax credits for clean hydrogen.

In a bid to keep pace with the United States following approval of the Inflation Reduction Act, policymakers in Canada have unveiled proposals to incentivize investments in clean energy including hydrogen.

In its 2022 Fall Economic Statement, the Canadian government is seeking establish an investment tax credit to support investments in clean hydrogen production.

The proposed investment tax credit will be refundable, according to the statement, and available for eligible investments made as of the day of Budget 2023. The credit will be phased out after 2030. The lowest carbon intensity tier that meets all eligibility requirements is proposed to receive an investment tax credit of at least 40%. If a company does not meet certain labour conditions, the maximum tax credit rate will be reduced by 10%, which will help incentivize companies to support and create good jobs for the workers our economy relies on.

In the coming weeks, the Department of Finance will launch a consultation on how best to implement an investment tax credit for clean hydrogen based on the lifecycle carbon intensity of hydrogen. The U.S. Inflation Reduction Act (IRA) introduced carbon intensity tiers to guide the level of support to clean hydrogen projects. As outlined in the IRA, support would begin to be provided when emissions from the production of clean hydrogen are 4.0kg of CO2e or less per kg of hydrogen, while the highest level of support would be provided where emissions are 0.45kg of CO2e or less per kg of hydrogen. The consultation will seek input on:

  • An appropriate carbon intensity-based system for the Canadian context; and,
  • The level of support needed for different production pathways in Canada.

Through this investment tax credit, the government will promote jobs and skills for a net-zero economy, such that the level of the credit will depend on whether certain labour protection requirements are met. The Department of Finance will consult with a broad group of stakeholders, but especially with unions, on how best to attach labour conditions to the investment tax credit for clean hydrogen to ensure that wages paid are at the prevailing level in the local labour market, and that apprenticeship training opportunities are being created.

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Carbon capture firm attracts investment from Chevron, raises $45m

CIBC Capital Markets led a capital raise of $45m for ION Clean Energy.

ION Clean Energy has raised $45m from Chevron New Energies (CNE), a division of Chevron U.S.A. Inc., who is leading the round, and Carbon Direct Capital.

ION is a Boulder-based technology company that provides post-combustion point-source capture technology through its third-generation ICE-31 liquid amine system. The capital raised will continue to fund ION’s organizational growth and commercial deployment of its ICE-31 liquid amine carbon capture technology for hard-to-abate emissions, according to a news release.

CIBC Capital Markets served as the exclusive financial advisor to ION for the raise.

In conjunction with this investment, ION also announced Timothy Vail will join the company as Chief Executive Officer. Vail was previously CEO of Arbor Renewable Gas, LLC. He was also Founder and CEO of G2X Energy, Inc., and serves as an Operating Partner for OGCI Climate Investments, LLP. “With these investments, we are well positioned to grow ION into a worldwide provider of high-performance point source capture solutions,” said Vail. “This capital allows us to accelerate the commercial deployment of our carbon capture technology.”

“We have truly special solvent technology. It is capable of very high capture efficiency with low energy use while simultaneously being exceptionally resistant to degradation with virtually undetectable emissions. That’s a pretty powerful combination that sets us apart from the competition. The investments from Chevron and Carbon Direct Capital are a huge testament to the hard work of our team and the potential of our technology,” said ION founder and Executive Chairman Buz Brown.

“We continue to make progress on our goal to deliver the full value chain of carbon capture, utilization, and storage (CCUS) as a business, and we believe ION is a part of this solution. ION has consistent proof points in technology performance, recognition from the Department of Energy, partnerships with global brands, and a strong book of business that it brings to the relationship,” said Chris Powers, Vice President of CCUS & Emerging with CNE. “ION’s solvent technology, combined with Chevron’s assets and capabilities, has the potential to reach numerous emitters and support our ambitions of a lower carbon future. We believe collaborations like this are essential to our efforts to grow carbon capture on a global scale.”

“We believe ION’s novel liquid amine solution is a game-changer for point source carbon capture,” commented Jonathan Goldberg, CEO of Carbon Direct Capital. “Especially for asset owners with hard-to-abate waste streams, ION has demonstrated exceptional performance coupled with standout environmental scores. ION has already received validation from the U.S. Department of Energy, EPC partners, and project customers. This round of growth capital is a further endorsement of ION’s technology by both financial and strategic investors,” said Goldberg.

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CIB providing $277m for Varennes biorefinery JV

CIB will provide a loan of $277m to a joint-venture partnership between Shell, Suncor, Proman and the government of Québec.

Canada Infrastructure Bank will provide a loan of $277 million to a joint-venture partnership between Shell, Suncor, Proman and the government of Québec that will enable construction of Canada’s largest biorefinery, the Varennes Carbon Recycling facility, according to a news release.

The $1.2bn facility will include an electrolyzer which will supply clean hydrogen and oxygen to convert more than 200,000 tonnes of non-recyclable waste and residual biomass into biofuels with a capacity of up to 130 million litres annually.

The project will be using Enerkem’s proprietary thermochemical process.

This is CIB’s first project from its low-carbon fuels, carbon capture utilization storage and hydrogen initiative.

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Renewables developer exploring move into green hydrogen

North Carolina-based Strata Clean Energy is engaged with engineers and consultants in preparations for a potential move into the production of green hydrogen.

Strata Clean Energy, the North Carolina-based utility-scale renewables developer, is researching locations in the U.S. where it could potentially build a green hydrogen production plant, executives said in an interview.

“We’ve been doing some hydrogen work for the past few years,” said Tiago Sabino Dias, former CEO of Crossover Energy, which was acquired by Strata in a deal announced this week. That forward momentum on green hydrogen and other areas of the energy transition was part of the reason the deal with Strata was made, he said.

Sabino Dias is now the senior vice president of origination at Strata following the takeover.

“We’ve done a lot of work thinking about where the high-value locations are,” Strata’s Chief Development Officer Josh Rogol said in a separate interview.

Hydrogen is adjacent to Strata’s core competencies in energy storage, Rogol said. The company is confident it could supply the green kilowatt hours for hydrogen production and is researching offtake scenarios in transportation and industrial uses.

Strata has a 13 GW project pipeline of standalone and combined solar and storage, according to its website, with 4 GW under management.

The company’s IPP has about 1 GW with ambitions to grow, Rogol said. It’s go-forward pipeline comprises more than 100 projects across 26 states.

Strata is now engaged with several consultants and engineers to explore green hydrogen opportunities, Rogol said. The company is open to new advisory relationships across verticals.

“We think we are really well positioned to be both the energy supplier, as well as the molecule producer,” Rogol said. The capabilities and intellectual property acquired through Crossover put the firm six to 18 months ahead of other nascent developers.

Early-stage development in green hydrogen can be funded with Strata’s balance sheet, similar to Strata’s bilateral takeover of Crossover, Rogol said. Later stage development and EPC will require “an ecosystem of partners” potentially both financial and strategic, he added.

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exclusive

TC Energy executive talks hydrogen strategy

Canadian midstream giant TC Energy recently unveiled it was pursuing 10 hydrogen projects across North America. To learn more we caught up with Omar Khayum, a vice president at the company in charge of hydrogen project development.

TC Energy is evaluating 10 blue and green hydrogen hubs across North America, viewing incumbency as a significant competitive advantage.

The company is looking to use hydrogen as a means of providing a larger basket of low-carbon solutions to customers, according to Omar Khayum, a TC Energy vice president who is in charge of hydrogen project development. That basket includes mature power generation assets like wind, solar and pumped hydro, Khayum said in an interview, as well as additional firming resources, renewable natural gas, and carbon capture.

“We have a continental platform of customers that are in oil & gas and heavy industry that are looking to decarbonize their existing feedstock,” he said.

TC Energy is partnering with end-use customers, adding capabilities into the partnerships, and sharing in both the risk and benefit of the projects, he said.

“Our incumbency really allows us to partner with end users, and identify customer solutions,” Khayum said. “That’s our business model around de-risking what is a newer form of energy solution.”

Khayum declined to specify where the 10 hydrogen projects are located, other than to say they are proximate to industrial load – existing steelmaking, power plants, chemical facilities and refineries – and are not on the Gulf Coast. TC Energy has announced one project in Alberta which involves an evaluation of its Crossfield gas storage facility and would entail generating 60 tonnes of hydrogen per day with capacity potentially increasing to up to 150 tonnes per day.

In some cases, TC Energy is partnering with the end-use customer to jointly develop the hydrogen projects, Khayum said. “We are the lead developer in most cases but we’re not managing all of the risk ourselves – we’re putting together coalitions with organizations that have upstream and downstream capabilities to make sure we de-risk effectively.”

While conducting project management, TC will use external EPC firms and OEMs to deliver projects, depending on the location and technology in use, Khayum said.

Project funding

As for funding the projects, Khayum said the business model for hydrogen looks similar to the model for liquefied natural gas projects. “We have a wide degree of flexibility in how we can finance projects,” he said, noting the availability of project financing as well as the option to fund projects from TC Energy’s balance sheet.

“We have a number of financial advisors engaged to ensure that as we develop the projects from the offtake agreements to the supply chain agreements – and everywhere in between – those contracts are bankable to provide us the optionality to use project financing,” he said.

Khayum believes that the project finance market is still about 12 months away from being ready to finance hydrogen projects. “That’s because we are one of the early movers in hydrogen development and, as such, we’ll be bringing forward to the marketplace some of the first bankable offtake and supply chain contracts along with risk management tools and activities.”

He noted there was still work to be done among underwriters to validate those contracts for bankability. “We are working over the next year to not only get our projects to FID but working in tandem with our financial advisors to enable the banking system to accommodate those transactions.”

Much of the underwriting requirements have already been well-established in LNG, he noted. “If we can manage risk in a similar fashion,” he added, “we think it will be much more expeditious to achieving a positive FID.”

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Exclusive: TransGas CEO talks mega ammonia project

The owners of a proposed colossal ammonia production facility in Appalachian coal country are in the beginning stages of seeking liquidity, EPC contracting, and advisory services for a project they say will ultimately be financed akin to an LNG export terminal.

It’s an appeal often made in modern US politics – doing right by those left behind.

Perhaps no place is more emblematic of that appeal than West Virginia, and perhaps no region in that state more so than the southern coal fields. It’s there a fossil developer is proposing the architecture of the ruling coal industry be used to build a $10bn decarbonized ammonia facility and is gathering the resources to do so.

“It’s world class, and it makes southern West Virginia, Mingo County, the catalyst for the 21st century’s energy revival,” said Adam Victor, the CEO of TransGas Development Systems, the developer of the project. “The people [here] are the heirs and descendants of the people that mined the coal that built the steel that built the Panama Canal.”

The Adams Fork Energy project in Mingo County, jointly developed by TransGas and the Flandreau Santee Sioux Tribe, is slated to reach commercial operations in 2027. Six identical 6,000 mtpd ammonia manufacturing plants are being planned on the site of a previously permitted (but not constructed) coal-to-gasoline facility.

ReSource exclusively reported this week that the state has issued a permit to construct the facility. TransGas owns 100% of the project now, though if the Tribe comes through with federal funding then it will become the majority owner.

TransGas itself could take on a liquidity partner to raise up to $20m in development capital for the project, Victor said. The company is not using a financial advisor now but will hire one in the future.

White & Case is TransGas’ legal advisor. The company is in discussions with Ansaldo Energia, of Italy, about construction.

“The project is not averse to talking to private equity or investment bankers, because nothing has been decided right now,” Victor said, noting that the company is just beginning talks with infra funds and is eager to do so. “The project will be looking for an EPC.”

The first of the six plants will cost about $2bn, but each one will get successively less expensive, Victor said. Total capex is about $10bn, though there is discussion of acquiring adjacent land to double the size of the project – or 12 plants in all producing 6,000 mtpd each.

TransGas has the support of West Virginia politicians like Sen. Joe Manchin and Gov. Jim Justice, Victor said. Financing the project will be a function of the offtake.

Electricity for data centers, or ammonia for export?

The company is conducting a market analysis to determine avenues for offtake, Victor said. They could do partial electricity generation onsite to power a data center, with the remainder of the hydrogen being used to make ammonia for shipment overseas.

Depending on the needs of offtakers, the facility could also do one or the other entirely, he said.

The project, if configured at current size, could support about 6,000 MW of non-interruptible power generation, 2,000 MW of that for cooling.

“This could basically become a 6,000 MW campus to become the center of data centers in the United States,” Victor said, noting that the region is much less prone to natural disasters than some others and is high enough in elevation to escape any flooding. “I think we could rival Loudoun County [Virginia] as where data centers should be located.”

Adams Fork sits on the largest mine pool reservoir in the eastern US, Victor noted. Data centers need constant cooling, particularly new chip technology that requires liquid cooling.

TransGas will know in a matter of weeks if it’s going to go the electrical route, Victor said. There are only five companies in the world with data centers large enough to efficiently offtake from it: Amazon, Microsoft, Google, Meta and Apple.

If not, the facility will continue down the path of selling the decarbonized ammonia, likely to an oil company or international ammonia buyer like JERA in Japan.

Partnering with a tech company will make it easier to finance the project because of high credit ratings, Victor said. International pressure on oil companies could affect those credit ratings.

“We think the investor world could be split,” he said, noting tech and fuels investors could both be interested in the project. “You’re doubling the universe of investors and offtakers.”

He added: “Once we have the offtake, we think we could have a groundbreaking this year.”

Two ways of shipping

For ammonia production the facility could use the same shipping channels the coal industry uses – either to the Big Sandy River to be sent by barge on the Ohio to New Orleans, or rail to ports in Baltimore; Norfolk, Virginia; and Savanna, Georgia.

By rail, two 40-car trains per day would take ammonia to port. Norfolk Southern and CSX both operate in the region.

Another option is to have a fleet of 50 EV or hydrogen-powered trucks to transport ammonia to the Big Sandy where electric-powered barges can take it to the Gulf, Victor said. That latter option could mean a lower CI score because it will eliminate rail’s diesel power.

Mercedes-Benz and Volvo both make the kind of trucks used for this work in Europe and Asia, he said. Coal mines in the region use diesel trucks in fleets as numerous as 500, and the original TransGas coal plant was permitted for 250 trucks per day.

“This is something that our offtake partner is going to determine,” he said. Japan would likely want the ammonia in the Gulf of Mexico, whereas European shipping companies would want it on an Atlantic port.

The LNG financial model

The offtakers themselves could fund the facility, Victor said.

“The financial model for this is the financial model for funding LNG terminals,” he said. “The same teams that put those large facilities together, financial teams, would be the same teams that we’re talking to now.”

The offtakers may also dictate who they want to be the financial advisor, he said.

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