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ATCO and Kansai developing Canada-to-Japan fuels supply

The companies have completed a pre-feasibility study to produce clean hydrogen and its derivatives to be produced in Alberta and shipped from the west coast to Japan.

ATCO and The Kansai Electric Power Co are collaborating to develop an integrated clean fuels supply chain between Canada and Japan, according to a news release.

The companies have completed a pre-feasibility study to produce clean hydrogen and its derivatives in Canada, spanning the entire value chain, with end product arriving in Japan. ATCO is acting through its subsidiary Canadian Utilities Limited.

Clean hydrogen would be produced via Auto Thermal Reforming with carbon capture and sequestration in Alberta to develop hydrogen and its derivatives to be transported to Canada’s west coast before being shipped to Japan.

Feasibility evaluation of the entire value chain between Canada and Japan is ongoing and representatives from Kansai visited Canada in early March to investigate the production site area and the proposed locations for rail loading and port infrastructure.

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Florida liquefaction and storage firm raising $125m

A Florida-based hydrogen liquefaction and storage provider is in the middle of a Series A capital raise and has identified a financial advisor for a larger Series B.

GenH2, a manufacturer and installer of hydrogen liquefaction and liquid hydrogen storage systems, is undergoing a $25m Series A raise and has plans to conduct a Series B within 12 months, CEO Greg Gosnell said in an interview.

Young America Capital is advising GenH2 on the Series A, Gosnell said. Two term sheets from lead investors are expected this week for the Series A, he added.

B Riley will likely be conducting the Series B, which will seek to raise about $100m. The company has raised approximately $24m from four seed investors in the last two-and-a-half years.

Gosnell projects the company will generate $10.8m in revenues this year, with a “hockey stick” of revenue growth coming in the next two years. The company’s first one-ton-per-day liquefaction and controlled storage solution will roll out at the end of 2Q24. It will have a 5,600 sq ft. footprint.

The company has a partnership with Chart Industries to collaborate on global sales and marketing opportunities, equipment manufacturing and supply, and the deployment of GenH2’s one-ton-per-day liquefier.

Use of funds from the capital raises will predominantly go toward purchasing components and buildout and expansion of manufacturing facilities, Gosnell said. The company has a 35,000 sq. ft. manufacturing facility adjacent to its headquarters in Titusville, Florida, and is considering another location in Texas or Louisiana.

Currently the company, with 46 employees, has closed three contracts on one-ton-per-day liquefaction and storage systems, each between $10m and $12m, Gosnell said. Two additional sales have been made in Australia and Canada for 20-kilogram liquefaction solutions, each $2.2m with credit-worthy customers.

Facilities capacity in Titusville will probably be filled next year. There is space in Titusville to expand more than 100% and the company will option leases for manufacturing.

Going forward the company is interested in strategic partners, Gosnell said. A lot of VC-type investors want to deploy capital in the space but the difficulty is finding an investor confident enough to do the technology due diligence and take the lead.

Easier with liquid

GenH2 installs closed-loop helium-cooled systems of between one and five tons at ports, manufacturing and trucking facilities. The process is done with no liquid nitrogen (LN2), which eliminates the need for truckloads of LN2 or an adjacent LN2 plant.

“Everywhere you see a liquid hydrogen plant today, there’s an LN2 plant next door that’s about five times bigger,” Gosnell said.

GenH2’s liquid hydrogen storage capabilities were demonstrated with NASA, transferring the liquid from multiple tanks with zero loss, he said.

Liquid hydrogen is more energy-dense than compressed gas, bringing down the cost of transportation. In many cases, liquid hydrogen can be dispensed into compressed gas.

“It seems counterintuitive, but if you’re sitting there storing compressed gas at say 100 psi and you need to get to 900 [psi], that’s a lot of work,” Gosnell said. “That’s heavy-duty compression and probably a two-ton chiller.”

Conversely liquid hydrogen wants to become gas, requiring only that you let it vaporize into a smaller tank and it compresses, he said.

“You don’t need any of that work,” he said. “Believe it or not it’s easier to get to a seven or nine-hundred PSI gas with liquid hydrogen than it is from gaseous hydrogen.”

GenH2 is competing against liquid hydrogen delivered in a truck, Gosnell said. He doesn’t know of anyone else doing standalone refrigerated storage with zero transfer loss.

Efficiency is a core focus in design, Gosnell said. Levelized cost with capex and opex all in is between $3 and $3.50 per kilogram for liquifying and storing. With electrolysis or other H2 sourcing on the front end, the company is at $7 or $8 a kilogram, which will improve as renewables are applied.

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Nel needs more orders to build Michigan electrolyzer plant

Nel Hydrogen executives said today that they will need to win more large-scale orders in order to take a positive final investment decision on a proposed Michigan electrolyzer factory.

Norway-based Nel Hydrogen will need to win more large-scale orders in order to build its proposed electrolyzer gigafactory in Michigan, executives said today.

The company announced last month that it has selected Plymouth Charter Township near Detroit as the location for the plant, with an anticipated annual capacity of 4 GW between PEM and alkaline technology.

Nel has so far secured more than $50 million in financial support for the site. Pending approval of additional state and federal applications, this amount could increase to around $150m.

The company has still not made a final investment decision on the facility, and does not provide a timeline for when it expects to do so.

“For us to do something in Michigan we first need to utilize the capacity that we are building now,” CEO Håkon Volldal said. “It doesn’t make sense to build another factory in Michigan and run our current facilities with utilization rates at sixty to seventy percent.”

To execute on the new plant, it would take large-scale orders that they would ideally like to produce and deliver in the US. 

“We will not invest a lot of capital up front and wait for the order,” he said. “We would like to see the orders materialize before we invest, and that’s why we don’t give an exact schedule for when we start the construction.”

Nel’s order intake for 3Q23 came in at 352 NOK ($31m), the lowest of the previous four quarters. Volldal noted that Nel’s win rate for electrolyzer contracts remains around one or two per quarter; however, the 3Q contract wins were smaller compared to previous quarters.

Its total backlog for electrolyzers stands at 2,442bn NOK ($218.5m).

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New JV to provide H2-blending solutions to gas utilities

Progressus Clean Technologies and Alkaline Fuel Cell Power have entered into a JV for a H2-blending pilot project for natural gas utilities.

Progressus Clean Technologies and Alkaline Fuel Cell Power have entered into a JV for a H2-blending pilot project for natural gas utilities, according to a news release.

The JV is intended to combine Progressus technologies with AFCP fuel cells to serve residential and small building customers across North America. PowerTap Hydrogen owns 49% of Progress.

Gas distribution companies and municipalities are setting-up projects to inject hydrogen into the local gas distribution grid.; generally up to 20% hydrogen.

The project is designed to use the Progressus hydrogen separation technology to efficiently extract hydrogen at high purities from the existing natural gas grid, and then convert the purified hydrogen using either AFCP’s 4 kW Micro-CHP or 4 kW generator to produce electricity, and potentially heat. This project could be put to immediate use in a residential home or commercial building, providing truly zero-emission power. AFCP has already identified interest from natural gas and electric utilities and municipalities to pilot the concept.

The exact location of the JV pilot project remains under consideration but, initially, North America will be the focus with secondary priority given to potential future pilots in Europe.

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Cutting the electricity out of electrolysis

Milwaukee-based start-up Advanced Ionics is seeking to commercialize an electrolyzer that cuts electricity needs for hydrogen production to as low as 30 kWh per kilogram.

Advanced Ionics is seeking to ramp manufacturing capacity and raise capital as it begins to commercialize an electrolyzer promising to reduce electricity needs, CEO Chad Mason said in an interview.

The Milwaukee-based company is working to demonstrate its low-cost electrolyzer technology through a partnership with the Repsol Foundation.

The technology will be tested locally, but could grow to include additional tests and, eventually, a commercial relationship with the Spain-based energy and petrochemical company.

Advanced Ionics is looking to move into a larger facility in Milwaukee to advance early-stage production of the electrolyzer, which uses steam from process and waste heat to reduce the amount of electricity required in electrolysis.

The company last year raised $4.2m in a seed round led by Clean Energy Ventures, with participation from SWAN Impact Network. It has also received financial support from Repsol and $500,000 from the DOE.

As it scales, Mason said, the company will also need to raise additional capital, but he declined further comment.

Going to market

The Repsol arrangement is part of the company’s early access program allowing potential end users to take a first look at the technology.

“Repsol is just the tip of the iceberg here,” Mason said. “We’re talking to some really amazing partners at some of the largest energy companies in the world. People who use hydrogen today and want to make it green immediately understand what we’re doing.”

Given the concentration of hydrogen use in petrochemicals and ammonia, Advanced Ionics is targeting these sectors for deployment of its electrolyzers to produce clean hydrogen, Mason added.

Mason noted that, as the traditional petrochemical industry dies off over time, it will be replaced by green materials and green fuels like sustainable aviation fuel and biofuels that require hydrogenation to be useable.

“You’ll see a bit of a replacement happening on the petrochemical side, towards a green chemical,” he said, adding that a third potential key market is green steel production using hydrogen.

Thermodynamically favored

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’ water vapor electrolyzer

“We set out to build an electrolyzer specifically that would operate at intermediate temperatures,” he said. “And that allows you to have the synergy with those processes, and the downstream effect is the most cost-effective hydrogen you can get.”

The resulting hydrogen could be available for less than $1 per kg – but, Mason notes, the underlying power price math assumes an abundance of cheap, clean power. The models are usually pricing in two cents per kWh, the availability of which, Mason added, is “extremely geographically dependent.”

“If you’re in Texas, you have a system with wind, solar, and some amount of clean energy grid back-up, it’s pretty attractive,” he said. “Or if you hook up to a hydroelectric facility in the Northwest or in the Quebec area.”

Mason added, “Electrolysis rides on the coattails of cheap, clean electricity. What we have under our control is to make sure we’re using as little electricity as possible.”

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Analysis: States with hydrogen use and production incentives

Some states are mulling hydrogen-specific incentives and tax credits as they wait for final federal regulations for clean hydrogen production, Bianca Giacobone reports.

[Editor’s note: Paragraphs six through nine have been modified to clarify that Colorado legislation does in fact include ‘three pillars’ language.]

Final guidelines for the federal hydrogen production tax credits are still a work in progress, but in the meantime, legislatures across the country have been mulling their own incentives to spur production. 

So far, 14 U.S. states have or are considering legislation that includes tax credits or other incentives for the use or production of hydrogen, five of which specify the hydrogen has to be “green,” “clean” or “zero-carbon.” 

The industry is waiting for the final regulations relating to the 45V tax credit for production of clean hydrogen, a draft of which was released last December, and states are similarly waiting to make their own moves. 

“States have interest in developing hydrogen programs, but they will lag the federal initiatives,” said Frank Wolak, CEO of the Fuel Cell and Hydrogen Energy Association. “The new suite of things that the states will do is largely dependent upon the reaction from the federal government, which is brand new.” 

The ones that aren’t waiting opt for vagueness. 

Val Stori, senior program manager at the Great Plains Institute, a non-profit focused on the energy transition, notes that Washington state has a bill supporting renewable electrolytic hydrogen, but it doesn’t specify whether electricity has to be sourced directly from renewables or if it can come from the grid. It doesn’t touch upon the more granular “three pillars” requirements for clean hydrogen which could be included in federal regulations: new supply, temporal matching, and deliverability.

“The lack of specificity is the trend,” she said.

Meanwhile, Colorado’s Advance the Use of Clean Hydrogen Act is the exception to that rule with what’s considered the country’s first clean hydrogen standards, including “matching electrolyzer energy consumption with electricity production on an hourly basis” and requiring that “the electricity used to produce clean hydrogen comes from renewable energy that would otherwise have been curtailed or not delivered to load or from new zero carbon generation.”

The standard will be enforced starting in 2028 or when the deployment of hydrogen electrolyzers in the state exceeds 200 MW.

(Colorado also has a Clean Air Program and a recently launched Colorado Industrial Tax Credit Offering that can offer financial support for industrial emissions reduction projects, including hydrogen projects, but they don’t mention hydrogen use or production specifically.)

“You might see the beginnings of laws that are starting to appear now,  but it might take two or three years before states build the momentum to figure out what they should be doing,” said Wolak. 

Nine out of the 14 states that have hydrogen-specific legislation don’t target clean hydrogen, but hydrogen in general. Kentucky, for example, has a 2018 tax incentive for companies that engage in alternative fuel production and hydrogen transmission pipelines. 

More recently, Oklahoma introduced a bill that proposes a one-time $50m infrastructure assist to a company that invests a minimum of $800m in a hydrogen production facility. According to local news reports, the bill is aimed at Woodside Energy’s electrolytic hydrogen plant in Ardmore. 

“We are an oil and gas state and we will be a primarily oil and gas state for a long time,” Oklahoma Senator Jerry Alvord, the bill’s sponsor, said in an interview. “But we could be at the forefront in our area of hydrogen and the uses that hydrogen puts before us.” 

Depending on the state, general hydrogen incentives could potentially add to federal tax incentives for clean hydrogen projects. 

Meanwhile, other states have been implementing Low Carbon Fuel Standards to encourage the development and use of clean fuels, including hydrogen, in transportation.

Last month, for example, New Mexico enacted its Low Carbon Fuel Standard, a technology-neutral program based where producers and vendors of low-carbon fuels, including clean hydrogen, generate credits to sell in the clean fuels marketplace, where they can be bought by producers of high carbon fuels. 

Similar programs exist in Oregon, Washington, and California, which was early to the game and began implementing its program in 2011. 

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CCS developer initiating discussions for corporate capital raise

Following its sale of a stake in a mega-scale carbon capture project in the Gulf Coast, Carbonvert is planning to initiate conversations to raise additional corporate capital, with plans to deploy as much as $500m into new projects.

Carbonvert, a Houston-based carbon capture and sequestration developer, is planning to start conversations soon with an eye to raise corporate capital that will allow it to advance mega-scale CCS projects, CEO Alex Tiller said in an interview.

Owned by a group of outside investors and the management team, Carbonvert is advancing a business model that takes advantage of the group’s expertise in early-stage project development, Tiller said.

The company recently completed the sale of its 25% interest in the Bayou Bend CCS project to Norway’s Equinor, which will now own the development alongside Chevron (50%) and Talos Energy (25%).

Bayou Bend CCS is the type of mega-scale project that Carbonvert will be pursuing in coming years, and for which the company will need to raise as much as $500m in corporate capital due to the capital-intensive nature of the projects, Tiller said.

Chevron last year bought its 50% operating stake in Bayou Bend for $50m, implying a $100m valuation for the project, which is positioned to become one of the largest CCS developments in the US for industrial emitters, with nearly 140,000 gross acres of pore space – 100,000 onshore and 40,000 offshore.

Carbonvert’s stake sale, announced yesterday, was “a positive result” for the company, Tiller said, though he declined to comment further on the valuation.

“It delivers capital to our balance sheet and allows us to grow our pipeline of projects and fund additional projects,” he said. Carbonvert used Jefferies as sell-side financial advisor in the sale to Equinor, he added.

Tiller, a veteran of the renewable energy industry, is a founding member of Carbonvert alongside Chief Development Officer Jan Sherman, who previously had a 30-year career with Shell and helped build the oil major’s Quest CCS project in Alberta, Canada.

For the upcoming capital raise, Carbonvert has not decided on whether to use a financial advisor; the structure of the capital raise will likely determine if an advisor is needed, Tiller said.

“We’ll definitely be out raising more corporate capital – these projects are tremendously expensive,” he said. “We’ll be starting conversations soon.”

The company has a line of sight to deploy as much as $500m of capital into its own projects over the next several years, he said, an indication of how much capital it will need to raise.

“These are large infrastructure projects that are going to take many years to bring to fruition, followed by decades of operations,” he said. “We live at the front end of the projects,” he added, “and when the appropriate parties are at the table, it’s really an act of humility to say ‘hey, maybe we’ve taken this as far as we can or should,’” a reference to finding the right time to sell the company’s stakes in the projects it is developing.

In addition to the Bayou Bend CCS project, Carbonvert is part of a consortium that’s developing a carbon hub in Wyoming. The company is also collaborating on an exploratory study for the direct air capture and storage of CO2 emissions from a nuclear power plant in Alabama.

“You can expect to see project announcements that look like Bayou Bend in the future,” Tiller said. “We like that type of mega-scale project, we like offshore, and we’re also pursuing some opportunities onshore that are less mature.”

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