Baker Botts has added Washington, DC-based partner Matthew Gurch, who joins from Stoel Rives.
March 4, 2024
Baker Botts L.L.P. has added Matthew Gurch to the Energy, Projects & Transactions Section of the Global Projects Department as a partner in the Washington, D.C. office.
Gurch’s practice focuses on advising sponsors and private lenders and multilateral development banks in domestic and international energy and infrastructure project development and financings. His broad-based experience includes tax equity structuring and back leverage debt financings for renewable and energy transition assets, and the development and financing of nuclear and other thermal power generation and oil and gas projects.
“Matt is a highly experienced project development and finance attorney and another key strategic lateral partner hire for the firm,” said Danny David, Managing Partner of Baker Botts. “His experience advising clients with respect to complex domestic and international energy and infrastructure projects will be a great complement to our outstanding offerings in those areas. We are excited to welcome him to the firm.”
He joins the firm from Stoel Rives, where he was a partner in the Corporate practice group and a member of the Energy and Natural Resources Industry Groups.
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The company anticipates bringing on additional equity partners to support the project’s construction costs.
Heliogen has signed an MOU with the City of Lancaster, California to develop and provide equity for a green hydrogen generation facility there, according to a press release.
“Heliogen expects to bring on additional equity partners to support the project’s construction costs,” the release states.
The City of Lancaster will assist with site identification, review by City Council and the community as required, support for permitting process, and evaluation of economic development potential.
This relationship is expected to accelerate the use of concentrating solar thermal energy for a commercial hydrogen generation facility and builds upon the existing relationship between the City of Lancaster and Heliogen, which sited its demonstration test facility in the city in 2019.
The facility is expected to leverage Heliogen’s patented technology to use AI and advanced computer vision software to concentrate sunlight and could generate up to 1500 metric tons per year of carbon-free hydrogen.
The Heliogen facility could help support other projects within the city and region, including sustainable aviation fuel for hydrogen-powered aircraft, fueling stations for hydrogen-powered vehicles, and sales and distribution of hydrogen fuel for industrial processes such as vertical agriculture, cement, and mining.
Caliche Development Partners has acquired two natural gas storage assets from Southern Company, which could serve as a bridge to storing helium, hydrogen, and CO2 in similar formations.
Caliche Development Partners II, Orion Infrastructure Capital (OIC), and GCM Grosvenor have reached a partnership targeting underground storage and sequestration assets in North America, according to a press release.
The capital commitments represent OIC’s second investment with the Caliche management team, and Caliche’s first with OIC’s frequent investment partner GCM Grosvenor, which invested client capital. Both firms bring extensive experience in infrastructure investing to Caliche’s next iteration, which will target underground assets supporting North America’s transition to lower-carbon forms of energy.
The partnership’s initial acquisition of Golden Triangle Storage, Inc. (GTS), together with the anticipated acquisition of Central Valley Gas Storage (CVGS), from Southern Company affiliates, targets two regions with increasing demand for storage to support variable power loads, natural gas liquefaction, and high penetrations of renewable resources.
Acquisition amounts funded and/or anticipated to be funded by OIC, GCM Grosvenor, and Caliche management collectively total $186m, which represents the aggregate purchase price of both GTS and CVGS, plus working capital and other adjustments. Caliche expects, with support from OIC and GCM Grosvenor, to explore and assess additional growth related to these assets and in these regions. The GTS transaction closed on November 18, 2022, and the CVGS purchase, which requires state regulatory approvals, is expected to close in 2023.
“Natural gas storage will continue to play an important role in our energy mix while providing the assets and knowledge to storing helium, hydrogen and CO2 in similar formations,” said Dave Marchese, CEO of Caliche II. “The support of our repeat and new capital partners combined with the location of these two acquisitions, and their exceptional operational teams, provide Caliche a platform to significantly impact the energy transition on the U.S. Gulf and West Coasts.”
“We are thrilled to partner with the Caliche team again and with GCM Grosvenor to build off the success of Caliche I,” said Ethan Shoemaker, investment partner and head of infra credit at OIC. “GTS and CVGS are both premier storage assets and provide critical infrastructure for reliability in their respective markets. We look forward to supporting Caliche II’s continued growth as we expand the platform for other customers and into new products.”
“We believe the investment opportunity for underground storage is robust in light of market dynamics and ongoing energy transition initiatives across the globe,” said Matthew Rinklin, managing director at GCM Grosvenor. “The Caliche team has a proven track record of developing critical storage infrastructure for a range of customers across fuel types, and we look forward to growing their platform alongside our partners at OIC.”
Caliche welcomes GTS and CVGS employees to its culture of providing safe and environmentally conscious underground storage services. The Caliche team has a proven history of operating on the Spindletop salt dome, where GTS is located, and will leverage its expertise from its prior storage business—Coastal Caverns—for the success of both facilities.
Under the Caliche team’s stewardship, Coastal Caverns operated with a TIRR of zero (0), an industry leading environmental record. The team’s decision-making hierarchy of “Safety, Asset Integrity, Stakeholder Stewardship and On-Demand Deliverability” comes from a combined 65 years of collective underground storage experience, with products including NGLs, oil, helium and natural gas. Underground natural gas storage provides unparalleled flexibility for the entry of renewable generation resources into power grids, support for LNG exports to Europe and Asia, and ultimately provides the asset base and knowledge to move to carbon-neutral forms of generation.
The Caliche team previously developed North America’s first helium storage salt cavern and is committed to now applying the team’s decades of experience working together to the upcoming challenges of storing helium, hydrogen and sequestered CO2.
Lenders on the financing include Liberty Bank and Amalgamated Bank.
FuelCell Energy, Inc. has closed on a project debt financing transaction with Liberty Bank and Amalgamated Bank as senior lenders and the Connecticut Green Bank as subordinated lender for its Connecticut Municipal Electric Energy Cooperative (CMEEC) fuel cell microgrid-ready project at the Naval Submarine Base New London, located in Groton, Connecticut (Groton Project).
Liberty Bank and Amalgamated Bank’s senior commitment totals $12m with a seven-year term and Connecticut Green Bank’s commitment totals $8m with a 20-year term, according to a news release.
According to SEC filings, the portion of the loan provided by Liberty will accrue at 6.75%, while the piece from Amalgamated Lender will accrue interest at 6.07% during all times at which a “Carbon Offset Event” is not continuing and 7.32% at all times at which a “Carbon Offset Event” has occurred and is continuing.
Michael Bishop, EVP and CFO of FuelCell Energy, said, “We are thrilled to enter into this long-term financing solution with this banking group. With its recurring revenue and cash flow profile, this fuel cell project allows for the efficient and cost-effective financing of our Company. In addition, we believe this financing further highlights financial institutions’ confidence in the demonstrated long-term performance of our globally deployed power platforms. Lastly, the long-term nature of the loan commitments allows the Company to confidently redeploy that capital in support of our growth initiatives.”
“The Connecticut Green Bank is proud to be part of the Groton Project. This strategically important project and our continued partnership with FuelCell Energy, Amalgamated Bank, and Liberty Bank exemplify how the green bank model works to leverage public dollars to attract multiples of local- and national-level private investment into clean energy infrastructure,” said Bert Hunter, Executive Vice President and Chief Investment Officer of the Connecticut Green Bank. “This also highlights the environmental, economic, and strategic value of distributed base load fuel cells, capable of operating as a microgrid, as a key to grid resilience, reliability, and energy security, especially for our nation’s military defense.”
“Liberty Bank is proud to support FuelCell Energy, Inc., a leader in the green energy industry, with project financing for the Groton Project to provide grid resilience for the local community and our nation’s military. Liberty Bank is committed to clean energy solutions partnering with The Connecticut Green Bank, who is a testament to the power of collective action in addressing the urgent challenge of providing sustainable energy sources to Connecticut,” said Daniel Longo, First Vice President of Liberty Bank.
William Peterson, SVP Senior Lending Officer & Director of Climate Lending of Amalgamated Bank, commented, “Our team’s significant experience in sustainable lending uniquely positioned Amalgamated to partner with Liberty Bank and the Connecticut Green Bank to underwrite FuelCell Energy’s project at the Naval Submarine Base as it further develops its power supply through sustainable energy. Sustainable lending is a critical and growing source of financing as the United States strives to achieve net-zero emissions across federal operations by 2050. Amalgamated’s team of recognized thought leaders and sustainable lending experts are excited by the opportunity to help combat climate change as we work to underwrite sustainable solutions and emerging technologies much like FuelCell Energy’s project with the U.S. Navy.”
Bishop concluded, “We believe that the commitment from these respected financial institutions demonstrate the financeability of the solutions FuelCell Energy is offering to customers like CMEEC, that are helping them achieve their decarbonization, resiliency and clean energy goals.”
Proceeds of this financing have been (i) redeployed to FuelCell Energy (ii) used to retire a $3m corporate credit facility with Connecticut Green Bank (iii) used to fund project reserves and (iv) pay transaction fees.
A maker of anion exchange membrane electrolyzers is undergoing a Series B capital raise.
Versogen, an electrolyzer startup, is conducting a Series B capital raise, with the aim of closing the round in the coming weeks, CFO Tim Krebs said in an interview.
The Delaware-based maker of anion exchange membrane electrolyzers is seeking to raise multiples of its Series A capital raise, Krebs said, which was a $14.5m round completed in May, 2022.
Proceeds from the Series B would allow the company to complete development of its AEM electrolyzer, a 1 MW modular hydrogen generation system, Krebs said. The company is not using a financial advisor.
The Series A funding round was led by Doosan Corporation and its affiliate HyAxiom. Other investors include The Chemours Company, TechEnergy Ventures, Wenstone H2Tech, TOP Ventures America, a CVC arm of Thai Oil Public Company Limited, DSC Investment and CN Innovations Investments Limited.
Krebs, a former investment banker who has been the CFO of three energy technology companies, expects some existing investors will also participate in Versogen’s Series B round.
Versogen is led by co-founder and CEO Yushan Yan, an electrochemical engineer and inventor. The company touts a technology using low-cost construction materials like an alkaline electrolyzer but a more efficient production process akin to a membrane-based PEM electrolyzer.
Market dynamics
The capital raise is taking place amid a crowded field of electrolyzer startups looking to raise money in order to finalize designs and cement commercial opportunities.
Among others, Electric Hydrogen, a PEM electrolyzer startup, recently raised a $380m Series C; Verdagy raised a $73m Series B in August; and HyAxiom, a developer and manufacturer of fuel cell and electrolyzer solutions, completed a $150m private placement of convertible preferred stock in July.
At the same time, growth equity as well as Series A and Series B funding for climate tech dropped significantly through the first half of 2023.
Series A funding fell 36%, while Series B funding dropped 20% and growth equity investments fell by 64%, according to data from Climate Tech Venture Capital. Series C funding dropped by 72% in 1H23 compared to the same period last year, the same data shows.
Still, the market for electrolyzers is supported by undersupply as green hydrogen projects advance around the world.
James Bowe, a partner at King & Spalding who is advising on several large green hydrogen projects, said the three top manufacturers of electrolyzers are sold out for the next three to four years, potentially providing an opportunity for startups to fill the gap. Bowe made the comments yesterday during a panel at the Reuters North America Hydrogen conference in Houston.
Additionally, several catalysts for further electrolyzer demand are on the near-term horizon. The US Department of Energy is expected to announce the winners of up to $8bn in government funding for hydrogen hubs this week, while guidance from the IRS detailing rules to qualify for green hydrogen tax credits should be issued in the coming months.
Further clarity on government support for the hydrogen industry is expected to spur many projects toward final offtake arrangements and final investment decisions, experts say.
A US-based developer of salt cavern projects for hydrogen storage has retained a financial advisor to sell its first project and is informally seeking an equity investor.
Phoenix Hydrogen, a salt cavern storage developer based in Berkeley, California, has hired a financial advisor to run a sale of its primary project in Arizona, according to two sources familiar with the matter.
Scotiabank is leading the process, which will launch next week, the sources said. The sale is for 100% of the company’s first project near Kingman, Arizona. The project is expected to reach FID in the next 18 months.
Phoenix CEO Shawn Drost said in an interview that the company is informally seeking a platform equity investment as well but is only willing to take on a minority partner. An equity sale would need to raise an amount in the “low-tens” of millions, he said. It’s a difficult proposition, as equity providers in the space tend to demand majority positions.
The company wants to bankroll projects from beginning to end as an owner operator, he said, but requires capital to do so.
Phoenix, a six-person team, has a relationship with GHD Group for EPC, he said. The company is seeking relationships with production-side developers to sign site and storage leases.
Scotiabank did not respond to requests for comment.
Ammonia-to-power start-up Amogy will launch a final equity raise once it establishes revenue milestones in 2023 and 2024
Amogy, an ammonia-to-power technology start-up, will likely launch a $400m to $500m Series C late next year, CEO Seonghoon Woo said in an interview.
The company should achieve its first revenues this year and grow those revenues in 2024 to reach a target valuation, Woo said. The company to date has not used a financial advisor.
Amogy is planning to use proceeds from a recent Series B-1 capital raise to expand into a Houston manufacturing facility as it seeks to bring its product to the market.
After demonstrating its technology on a drone, a tractor, and a semi truck, the company is currently working to install its ammonia-cracking technology on a tugboat, and plans to advance a commercialization strategy starting in 2024, Woo said.
The proceeds of the $139m capital raise announced last week will allow Amogy to expand into an already-built facility in Houston, Woo said. The company also plans to roughly double its workforce from 110 employees currently as it boosts capacity in R&D, manufacturing, and commercialization.
CEO Seonghoon Woo
Amogy was founded in 2020 by four MIT PhD alumni, including Woo, and is based in Brooklyn, New York.
Ammonia vs hydrogen
Woo believes using ammonia as a fuel and cracking it into hydrogen solves the transportation issues facing hydrogen, as ammonia is already a widely traded global commodity.
Similarly, at room temperature, ammonia can be stored as a liquid with only mild pressure (~8 bar), compared to the cryogenic requirements for liquid hydrogen.
And, according to a white paper commissioned by Amogy, the volumetric energy density of liquid ammonia is 12.7 megajoules per liter, which is higher than for liquid hydrogen at 8.5 MJ/L and compressed hydrogen at 4.7 MJ/L (at a pressure of 69 MPa in ambient temperature conditions), but lower than for diesel or gasoline.
“Over an equivalent distance, fueling a vehicle solely using ammonia would require approximately three times the internal tank volume needed for conventional diesel fuel but three times less than the volume required for compressed hydrogen,” the paper reads.
While Amogy’s technology is compatible with any color ammonia, Woo said regulations in Scandinavia and Europe give confidence that the global market for clean ammonia will become competitive with fossil-based fuels.
Scaling up
The recent capital raise gives Amogy roughly two years of runway before additional fundraising might be needed, at which point the company will have more visibility into revenue growth, Woo added.
The latest funding round was led by SK Innovation, joined by other global investors including Temasek, Korea Zinc, Aramco Ventures, AP Ventures, MOL PLUS, Yanmar Ventures, Zeon Ventures and DCVC.
The company previously raised roughly $70m in three separate funding rounds, with proceeds allowing it to demonstrate the drone, heavy-duty tractor, and semi truck. Woo said the tractor project drew interest from John Deere, which sent representatives to observe and offer some assistance on the retrofit.
In previous capital raises, Woo said Amogy has encountered investor reluctance to enter what is considered an early market with regulatory and economic risk, with some investors wanting to wait as much as another two years before gaining exposure to the market. The strongest interest has come from upstream producers.
Amogy plans to continue scaling up its technology in the maritime industry to cargo and container ships as well as offshore supply vessels, Woo said.
