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Brookfield-owned renewables developer planning hydrogen co-location

An IPP and developer of wind, solar and storage projects is in early discussions with potential partners to co-locate electrolysis with its operating assets and projects in development.

Scout Clean Energy, the Boulder, Colorado-based IPP and renewables developer, is laying the groundwork to co-locate electrolysis for green hydrogen with its wind and solar assets, CEO Michael Rucker said in an interview.

The company’s Power2X team is charged with looking for alternative strategies, Rucker said.

“We are actively trying to match project opportunities with the future hydrogen economy,” he said, noting that the company’s operating wind portfolio provides a crucial piece of that. “Wind is an especially good fit for hydrogen production just in terms of pricing.”

Scout, which is owned by Brookfield Renewable, sees itself as producing green electrons and doesn’t want to get into marketing and distribution of hydrogen, Rucker said.

Brookfield acquired Scout in 2022 for $1bn, with the potential to invest an additional $350m to support development activities.

Scout has its first solar project in development in ERCOT, a market where shipping of hydrogen would make for a promising project, Rucker said. The company has also looked at the Midwest, where a robust SAF production ecosystem is forming, as well as the Pacific Northwest.

The company is already working with one hydrogen developer to match production to one of its wind farms, Rucker said. An exact location has not been selected.

Pricing diligence has been promising, Rucker said. But the offtake market in the US remains slow to develop despite regulatory encouragement.

“The IRA has given us maybe the most subsidized hydrogen production market in the world but it’s really being production-driven not demand-driven, so we really need to see more of the economy using hydrogen,” Rucker said. “I trust that will come, it’s just going to take longer than we think.”

Scout is not ready to take anything to market related to hydrogen, but ultimately there will be a need for financial advisory, Rucker said.

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Bloom Energy anticipates increase in waste-to-energy contracting

New developers are emerging in the waste-to-energy space, including many in agriculture and wastewater treatment that are looking for greater energy security.

Bloom Energy, the San Jose-based manufacturer of solid oxide fuel cells, anticipates a policy-driven increase in contracts from waste-to-energy developers this year and next year.

CEO KR Sridhar said during the company’s 3Q earnings call that between 200 MW and 300 MW of potential new waste-to-energy sales had come into the company’s pipeline, driven in part by passage of the Inflation Reduction Act.

While he declined to state a number, Sridhar said the company expects some of those to begin contracts this year and next.

New developers are emerging in the waste-to-energy space, he noted, including many in agriculture and wastewater treatment that are looking for greater energy security.

Bloom recorded record third quarter revenue of $292.3 million in 2022, an increase of 41.1% compared to $207.2 in the third quarter of 2021.

During the call Shridhar highlighted the company’s relationship with Taylor Farms and the effort to install a microgrid capable of taking one of their California food processing facilities completely off the traditional energy grid.

Additionally, the company is working with Westinghouse Electric Company to pursue clean hydrogen production in the commercial nuclear power market. Shridhar declined to give specifics but said the companies are actively pursuing several opportunities.

Bloom will double production capacity, with a focus on its Fremont facility, year-over year by the end of 4Q and plans to again double capacity next year, CFO Greg Cameron said on the call. Investment in the Fremont facility through 2023 will be about USD 200m and the company could consider new manufacturing facilities after that.

Bloom Energy also recently inaugurated a high volume commercial electrolyzer line at the company’s plant in Newark, Delaware.

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The clean energy project of the future looks something like … a refinery?

An optimized clean energy plant of the future might hinge on biofuels upgrading with green hydrogen, in a scenario that provides optionality to the facility operator, similar to a downstream oil refinery that manages its output based on market signals.

A new research note from Longspur Research examines the potential for hydrogen in a decarbonized economy, noting biofuels upgrading with green hydrogen as a promising path forward for clean fuels developers.

The note calls for realism with respect to where hydrogen does and does not make sense, but  acknowledges that long-term demand for justifiable use cases for hydrogen could amount to 447 million tons annually, with the main opportunities related to projects in ammonia, methanol, biomethane, grid balancing and refueling. 

One of the standout use cases? Upgrading biofuels using green hydrogen to enhance output or make derivatives like methanol.

“The clean energy project of the future may be an integrated project with a grid connected solar farm powering an electrolyzer with battery storage and with hydrogen produced sold to the market or upgrading the output from a biomethane or biomethanol plant,” reads the note, which was published yesterday. “This brings the operator lots of optionality with real time optimization into multiple energy markets including baseload power, peak load power, peak power, hydrogen and biofuel, with carbon credits on the side and perhaps pure oxygen as a by-product.”

The note continues, “It will be more like a downstream oil refinery managing its output mix in real time to meet the needs of varying markets.”

At the Varenne Carbon Recycling facility in Quebec, Canada, for instance, the county’s largest electrolyzer deployment so far is co-located with a biomass gasification plant to make green methanol. The project is backed by Proman, Enerkem, Shell, and Suncor.

In the case of methanol, the gasification of carbohydrate typically results in a syngas with equal parts hydrogen and carbon monoxide. Methanol, however, requires twice as much hydrogen as carbon monoxide, so adding hydrogen from an electrolyzer can increase methanol output from the same amount of feedstock.

Similarly, anaerobic digestion production can be combined with green hydrogen to double the amount of biomethane produced from the same amount of feedstock “and we see this growing as a source of demand for hydrogen production,” the note reads.

Anaerobic digestion produces biomethane and CO2, thus putting the excess CO2 through a methanation process with hydrogen produces more methane. 

“Note that in both cases” – methanol and anaerobic digestion – “the amount of resulting fuel is maximized for the biomass input and, unlike pure e-fuels, no carbon capture is required other than the initial biomass photosynthesis.”

In addition to the Varennes project, Norwegian Hydrogen AS is developing biogas projects co-located with wind and electrolysis, with a first project in Denmark. KBR has launched PureM, an advanced green methanol technology that combines green hydrogen with CO2 from biogenic sources or carbon capture.

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New Fortress Energy executives detail hydrogen project progress

New Fortress Energy executives detailed the amount of EBITDA they expect to generate — once fully operational — from three US green hydrogen projects under development.

Executives from New Fortress Energy believe the company will generate $150m of EBITDA from three green hydrogen projects when fully operational.

NFE’s ZeroPark I facility in Beaumont, Texas is the most advanced, having broken ground on construction after securing offtake for green hydrogen from OCI Global and contracting with Electric Hydrogen to install electrolyzers at the site.

The original design for the facility called for 100 MW of capacity or up to 50 tons per day of hydrogen production. The company is now increasing the scope of the facility to 200 MW or 100 tons per day, and expects to have the ability to turn on the facility next year with full operations entering 2025, NFE Managing Director Ken Nicholson said on an earnings call.

The company is pursuing two additional green hydrogen project developments, one in the Pacific Northwest and one in the Northeast that will start construction in the next six months.

“We have a fourth facility also on the Gulf Coast that we think is very interesting and we’re in advanced negotiations to secure that site,” Nicholson said.

The business segment, known as ZeroParks, will provide green hydrogen and hydrogen logistics terminals to customers in the energy, industrial and transportation sectors, he said. The terminals are focused on regional North American demand but are also on waterfront, allowing for expansion into exports to international markets.

“If all we do is build three parks in the Pacific Northwest, Northeast and down in Beaumont, this is a business that will generate $150m of EBITDA annually,” he said.

Meanwhile, the cost to build the facilities comes largely from debt financing with a borrowing rate under 5%, Nicholson said.

The company has said previously — and continues to stress in investor materials — that it will soon spin out ZeroParks into a pure-play green hydrogen business.

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Exclusive: Pattern Energy developing $9bn Texas green ammonia project

One of the largest operators of renewable energy in the Americas, San Francisco-based Pattern is advancing a 1-million-ton-per-year green ammonia project in Texas.

Pattern Energy knows a thing or two about large renewable energy projects.

It built Western Spirit Wind, a 1,050 MW project in New Mexico representing the largest wind power resource ever constructed in a single phase in the Americas. And it has broken ground on SunZia, a 3.5 GW wind project in the same state – the largest of its kind in the Western Hemisphere.

Now it is pursuing a 1-million-ton-per-year green ammonia project in Corpus Christi, Texas, at an expected cost of $9bn, according to Erika Taugher, a director at Pattern.

The facility is projected to come online in 2028, and is just one of four green hydrogen projects the company is developing. The Argentia Renewables project in Newfoundland and Labrador, Canada is marching toward the start of construction next year, and Pattern is also pursuing two earlier-stage projects in Texas, Taugher said in an interview.

The Corpus Christi project consists of a new renewables project, electrolyzers, storage, and a pipeline, because the electrolyzer site is away from the seaport. It also includes a marine fuels terminal and an ammonia synthesis plant.

Pattern has renewable assets in West and South Texas and is acquiring additional land to build new renewables that would allow for tax incentives that require additionality, Taugher said.

Financing for the project is still coming together, with JV partners and prospective offtakers likely to take project equity stakes along with potential outside equity investors. No bank has been mandated yet for the financing.

Argentia

At the Argentia project, Pattern is building 300 MW of wind power to produce 90 tons per day of green hydrogen, which will be used to make approximately 400 tons per day of green ammonia. The ammonia will be shipped to counterparties in Europe, offtake contracts for which are still under negotiation.

“The Canadian project is particularly exciting because we’re not waiting on policy to determine how it’s being built,” Taugher said. “The wind is directly powering our electrolyzers there, and any additional grid power that we need from the utility is coming from a clean grid, comprised of hydropower.“

“We don’t need to wait for rules on time-matching and additionality,” she added, but noted the renewables will likely benefit from Canada’s investment tax credits, which would mean the resulting ammonia may not qualify under Europe’s rules for renewable fuels of non-biological origin (RFNBO) as recently enacted.

Many of the potential offtakers are similarly considering taking equity stakes in the Argentia project, Taugher added.

Domestic offtake

Pattern is also pursuing two early-stage projects in Texas that would seek to provide green hydrogen to the domestic offtake market.

In the Texas Panhandle, Pattern is looking to repower existing wind assets and add more wind and solar capacity that would power green hydrogen production.

In the Permian Basin, the company has optioned land and is conducting environmental and water feasibility studies to prove out the case for green hydrogen. Pattern is considering local offtake and is also in discussions to tie into a pipeline that would transport the hydrogen to the Gulf Coast.

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US clean fuels producer prepping equity and debt raises

A Texas-based clean fuels producer is close to mandating an advisor for a platform equity raise. It has already tapped Goldman Sachs to help arrange a cap stack in the billions for a project in Oregon.

NXTClean Fuels, a Houston-based developer of clean fuels projects, is preparing a $50m to $100m platform equity raise in the near term and has large debt and equity needs for a pair of projects in Oregon, CEO Chris Efird said in an interview.

The company is close to engaging a new financial advisor for the raise, which will launch late this year or early next, Efird said.

Port Westward

Meanwhile, Goldman Sachs’ post-carbon group is retained for the capital stack on NXTClean’s flagship project at Port Westward, at the Port of Columbia County, Efird said. The $3bn CapEx (including EPC) project is fully permitted by the State of Oregon and is awaiting one federal Clean Water Act permit. An Environmental Impact Statement is expected this fall.

The project is dedicated to producing a split of renewable diesel and SAF, amounting to roughly 50,000 barrels per day total permitted capacity when fully operational.

FID is expected for roughly August 2024, he said. About 30 months from FID the plant will reach COD.

“What we’re most focused on right now is the true senior debt,” Efird said. On the equity side the company is engaged with strategic partners that have indicated interest in post-FID equity.

NXTClean has conversations ongoing with the Department of Energy’s Loan Programs Office, along with commercial project finance lenders.

Red Rock

In April NXTClean acquired what was the Red Rock Biofuel facility in Lakeview, Oregon. That woody biomass-to-SAF facility foreclosed after $425m in investment, following technical and financial issues brought on by the COVID 19 pandemic. NXTClean purchased the facility for $75m in preferred stock at auction on the courthouse steps.

GLC advisors was retained by lead bondholder Foundation Credit to advise on that process, Efird said.

Red Rock is being repurposed to produce carbon-negative RNG for the adjacent Tallgrass Ruby Pipeline, Efird said. The fully-permitted project has a significant amount of equipment already installed or on skids.

A first phase will require a spend of $100m to $150m. Some $50m of equity will augment a balance of debt, raised in part through USDA programming, Efird said. Cash flow from the first phase will help with the second phase, which will bring the capital needs of the facility up to as much as $400m.

Looking forward

Geographically, NXTClean will expand in the Pacific Northwest and British Columbia, Efird said.

Each of NXTClean’s two projects are held by a separate subsidiary. The company has a third subsidiary called GoLo Biomass that focuses on feedstock aggregation, Efird said. It engages with fish processors in Vietnam and used cooking oil suppliers in South Korea to augment supply from large companies.

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Exclusive: Seattle biomass-to-chemical firm planning equity round

A firm with plans for a biorefinery in Washington state will raise its first large equity round early next year.

Planted Materials, a Seattle-based biomass-to-chemicals company, is in early design stages for its first biorefinery in eastern Washington state and planning to raise an equity round in early 2025, co-founders Noah Belkhous and Greg Jenson said in an interview.

The company will seek to raise between $10m and $20m ahead of FID on the biorefinery, Belkhous said. The four-year-old company has raised $500k from angel investors to date and is currently raising another $1m from high net worth individuals in the Seattle region.

Planted Materials does not have a relationship with a financial advisor but is open to one, Belkhous said.

The company’s recycling model takes municipal landfill waste and converts it to chemical materials for pharmaceutical, paper, plastic and other manufacturing industries.

The proprietary recycling process is something the company would like to license to municipalities in the US and abroad, in addition to building biorefineries in the Pacific Northwest, Belkhous said. The company’s lab is currently based in the Ballard neighborhood of Seattle.

Early design work on the first biorefinery is underway. The duo expects CapEx to cap at $50m, reaching FID in 2026 and beginning construction that year.

While the majority of the company’s feedstock will likely come from the major metropolitan regions in the western PNW, refining capacity is more attractive in the east for reasons of space and existing waste management infrastructure. Jenson noted the presence of the relevant research campus of Washington State University in Pullman, as well as the Pacific Northwest National Laboratory in Richland.

Recently, the team accompanied Washington Governor Jay Inslee and members of the Washington State Department of Commerce on a trip to Sydney and Melbourne in Australia. The company has applied to a pair of $350k grants from the state.
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