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CPP Investments to invest in green molecule developer

Toronto-based CPP Investments will invest an initial EUR 130m into Power2X, focused on the development of green hydrogen, methanol, and ammonia.

Canada Pension Plan Investment Board (CPP Investments) and hydrogen project developer Power2X today announced a long-term investment partnership aimed at advancing Amsterdam-based Power2X’s leading role in the global clean energy transition, according to a news release.

The partnership plans to invest an initial €130m to accelerate the growth of Power2X as a development platform and fund green molecule projects. The investment supports Power2X’s mission to become a long-term developer, owner, and operator of next-generation energy assets with a focus on green hydrogen and other clean molecules such as green methanol and ammonia.

Bruce Hogg, managing director, head of sustainable energies, CPP Investments, said: “Investing in Power2X is fully aligned with our ambition to play a leading role in the energy transition. The need for industrial decarbonization is increasing rapidly, and green molecules have a vital role to play in meeting these demands, whether to create alternative fuels, hydrogen, or renewable feedstocks such as green ammonia. With Power2X’s development capabilities and CPP Investments’ flexible capital and sustainable energies expertise, this partnership enables us to invest in next-generation energy assets at an industrial scale with long-term business partners.”

Power2X develops large-scale new energy assets and infrastructure focusing on decarbonizing industrial value chains and heavy transport in collaboration with industrial companies around the world. The company is focused on clean hydrogen, ammonia, and methanol, with a diverse portfolio of projects that are initially prioritising European demand. Under the terms of the deal, CPP Investments will acquire a majority interest in Power2X.

Occo Roelofsen, CEO, Power2X, said: “In 2020, we founded Power2X to have a lasting impact on world’s energy transition, by focusing on green and clean molecules. Working with CPP Investments will enable us to accelerate our ambition to become a leader in green molecules, and, in doing so, continue on our journey as a long-term and serious player in this critical arena of global sustainability. Announcing this partnership with CPP Investments today shows how far our team have come in a very short time. We are actively participating in hydrogen projects, such as ErasmoPower2X, a €1bn solar and hydrogen plant, and MadoquaPower2X, a €1bn industrial-scale hydrogen and green ammonia project.”

The term “green molecules” refers to the application of green hydrogen and its derivatives, including green ammonia and green methanol, to decarbonize non-power, hard-to-abate industrial activities. Notably, these green molecules can act as direct replacements for process feedstocks or transportation and heating fuels.

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European Union gives 213m to Faurecia for clean mobility

Faurecia will develop lightweight carbon fiber gaseous hydrogen tanks as well as a tank to store hydrogen in cryogenic form.

Faurecia, a subsidiary of the French FORVIA Group, will receive EUR 213m from to develop lightweight carbon fiber gaseous hydrogen tanks as well as a tank to store hydrogen in cryogenic form, according to a news release.

The money is dedicated to Faurecia’s Historhy Next project. Faurecia’s plant in Allenjoie will produce over 100.000 tanks per year, start of production will be in 2024.

In addition, fuel cell supplier Symbio, a joint venture between Faurecia and Michelin, is also among the 10 projects supported by the French government in IPCEI (Important Project of Common European Interest), which has dedicated EUR 2.1bn to support the hydrogen industry in France.

A large-scale transformation project, Hymotive will accelerate the mass production of its latest-generation fuel cell systems in Saint-Fons.

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Strategic RNG ventures ramping up

A pair of joint ventures to develop RNG projects in the US – between Clean Energy Fuels Corp. and bp and TotalEnergies, respectively — are expected to make first profits in the second half of this year, as projects come online and begin to generate environmental credits.

Over the next 12 to 24 months, investments made by Clean Energy Fuels and its global JV partners TotalEnergies and bp will start realizing earnings for the company, president and CEO Andrew Littlefair said in an earnings call today.

When these projects come online they have a period of nine to 12 months where the project is producing gas but not monetizing state and federal credits.

“This ramp-up period will have a negative drag on our financials in 2024, until we can monetize the RNG produced with environmental credits,” Littlefair said, adding that the company plans to store RNG until the credits can be claimed.

To date Clean Energy Fuels has invested $238m in the joint ventures established three years ago, Littlefair said. Another $35m is to be deployed into additional dairy RNG projects.

Clean Energy Fuels put $68m into its dairy RNG venture with bp late last year, Robert Vreeland, Clean Energy’s CFO, said in the call; $198m of cash infused into that JV is now all earmarked for dairy RNG development.

M&A can play a factor in Clean Energy Fuels’ RNG growth, Vreeland said. The company is open to acquiring projects to accelerate production volumes.

The RNG ventures will start producing revenues in the second half of this year, Vreeland said; 100% of net losses will occur in the first half of the year.

“You see the effects of the dairy-RNG joint ventures being in ramp-up mode,” Vreeland said. “We’ll start to see the effects of monetizing the RNG projects in the second half of the year.

A large project in Idaho with 37,000 cows will be complete in late 2024 or early 2025, Vreeland said. That project alone will be responsible for more than half of the earnings drag in 2024.

Six greenfield projects have completed construction and are in final commissioning, Littlefair said. Two projects are in or near construction and the company continues to evaluate new projects.

Clean Energy has the largest number of RNG fueling stations in the US, serving customers like Amazon. Some of the stations are customer owned and operated by Clean Energy, namely in Texas, Ohio and California.

Cummins new X15N engine will allow new fleets to adopt RNG, providing a catalyst for Clean Energy’s growth in commercial trucking and OEMs, he said.

Littlefare called the recent passage of a clean fuels standard in New Mexico a major win for RNG adoption, and noted positive signs that midwestern and northeastern states could pass their own standards soon.

Stonepeak committed $400m to Clean Energy Fuels in DecemberThe company recently made a $10m commitment to climate solutions start-up Rimere.

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JERA Americas completes modifications for hydrogen firing at NJ power plant

Hydrogen co-firing of up to 40% (by volume) will be possible at Linden Unit 6.

JERA Co. has completed modification of the gas turbine at Linden Gas Thermal Power Station Unit 6 in the United States to enable the use of hydrogen, making possible the co-firing of natural gas with hydrogen-containing off-gas generated at the adjacent oil refinery, according to a news release.

Because it will require the procurement of hydrogen at an economically rational price and the development of carrier technology, it is expected to take some time before hydrogen can be used for power generation in Japan. By working to resolve such issues and advancing the use of hydrogen at power plants in areas where hydrogen is already available, JERA seeks to accumulate technical capabilities and experience that can be applied to future power generation projects both at home and abroad.

JERA had previously decided to move forward, through JERA Americas Inc., with modification of the gas turbine at Linden Unit 6 to enable co-firing with hydrogen-containing off-gas supplied by Bayway Oil Refinery, which is owned by the major US oil refiner Phillips 66.

With the completion of this work, hydrogen co-firing of up to 40% (by volume) will be possible at Linden Unit 6. The effective use of hydrogen-containing off-gas sourced from the adjacent oil refinery is expected to reduce CO2 emissions at both Unit 6 and the oil refinery.

Under its “JERA Zero CO2 Emissions 2050” objective, JERA has been working to eliminate CO2 emissions from its domestic and overseas businesses by 2050. By leveraging its strengths across the entire value chain from upstream fuel development through power generation, working actively to develop decarbonization technologies, and seeking to ensure economic rationality, JERA will continue its efforts to achieve zero emissions going forward.

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DG Fuels charting path to be SAF powerhouse

The company has retained advisors and is mapping out a plan to build as many as 50 production facilities in North America for a “gigantic” sustainable aviation fuel market.

DG Fuels is charting a plan to build a proprietary network of 30 to 50 sustainable aviation fuel (SAF) production facilities in North America, CEO Michael Darcy said in an interview.

The Washington, D.C.-based company will pursue a combination of debt and equity on a case-by-case basis to fund the projects, Darcy explained, with financings underway now for the firm’s initial project in Louisiana and a second facility in Maine. The Louisiana facility recently inked a USD 4bn offtake agreement with an undisclosed investment grade industrial buyer.

The company is working with Guggenheim and Stephens as financial advisors, Darcy said. About 60 people hold equity in the company; Darcy and the founding team hold a majority stake.

In the coming months DG Fuels will likely make announcements about more SAF plants in the US and British Columbia, Darcy said. Site negotiations are underway and each project is its own subsidiary of the parent company.

“There’s clearly a good return of what we refer to as the ‘project level,’ and then we have the parent company,” Darcy said. “We have strategic investment at the parent and now we’re looking at strategic investment at the project level.”

Huge demand, low supply

DG Fuels produces SAF from cellulosic biomass feedstock, a technology that does not need sequestration of CO2 because natural gas is not used.

“We like to say it’s the corn cob, not the corn,” Darcy said. The company can also use timber waste, waxes, and renewable power as an important source of energy.

The company gets about 4.5 barrels of SAF for every ton of biomass feedstock, which is roughly three to four times the industry average, Darcy said.

“Practical scale” for a facility is 12,000 to 15,000 barrels a day, Darcy said. That’s big enough to be commercialized without stressing the electrical grid with power demand.

Despite the company’s advantages, there is “plenty of room” for other producers to come into the SAF space, Darcy said.

“Right now, the market for SAF is gigantic and the supply is minimal,” Darcy said. “Companies like us are able to pick and choose high-quality offtakers.”

DG Fuels includes Delta Airlines, Air France and General Electric as committed offtakers.

Multi-tasking

DG Fuels is “always engaged in some level of capital raise for construction of facilities and detailed engineering,” Darcy said. “There’s always more engineering to be done.”

Some of the financing has already been completed, but Darcy declined to go into additional detail. After Louisiana, the company will quickly follow up with Maine.

HydrogenPro AS recently announced that it would join Black & Veatch and Energy Vault in financing the remaining capital requirements of DG Fuels’ project in Louisiana, which is expected to be completed in mid-2022.

Most of the engineering work in Louisiana is transferable to the company’s project in Maine. Darcy likened the facilities’ build-out to a class of ships: once the first is completed, the second and third can be built almost concurrently.

“There will be a point where we won’t be building one at a time,” Darcy said.

The opportunity for funders to participate is broad in the SAF space, Darcy said. There is a crossover of good economics and ESG, so strategics, industrials, private equity and other pure financial players can all be involved.

The broad base of capital eager to participate in companies that are innovative — but not too innovative as to scare investors — is indicative of the industry’s ability to secure offtakers and feedstock.

Storing power

It’s one thing to acknowledge the need for reduction of carbon, but hard work is required ahead, Darcy said.

“The low-hanging fruit has been done,” he said of the renewables industry. “Now it’s not really about the power, it’s about the storage of power.”

DG Fuels is an offtaker of non-peak renewable power to displace fossil fuel energy. But baseload renewable power is becoming available almost anywhere.

The Maine project will use stranded hydroelectric power, Louisiana will use solar, and projects in the Midwest will use wind, Darcy said. Additionally, geothermal power is “starting to become a very real opportunity,” he added.

Deploying broadly with renewable power gets past the issues of variability of renewable power at a reasonable cost, he said.

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Avangrid touting green hydrogen opportunity in onshore renewables sale

Advisors selling up to 50% of the company’s US onshore renewables platform are pitching the value-enhancing potential of green hydrogen development in the process.

Avangrid is touting the opportunity to develop a major pipeline of green hydrogen projects as it prepares to collect initial bids for a stake in its US onshore renewables platform, according to two sources familiar with the matter.

The Portland, Oregon-based clean energy firm, which is owned by Spain-based Iberdrola, is running a process to sell up to a 50% stake in roughly 9.6 GW of operational projects and an 18 GW development pipeline, the sources said. The process launched in March with Lazard and Rothschild on the sellside.

As part of the platform’s opportunities for value enhancement, the company is promoting the potential for green hydrogen, with a sale teaser noting that parent Iberdrola is a global leader in green hydrogen development with two operational projects and 60 in development.

“[Avangrid] Onshore Renewables intends to leverage this experience to become an early leader in hydrogen project development in the US,” the teaser reads, stating a goal of building out some 900 MW of green hydrogen projects by 2035.

The company is also involved in seven “hydrogen hub” regions in the US: regions participating in the Department of Energy’s grant process for funding under the Bipartisan Infrastructure Act.

Avangrid last year signed an MoU with Sempra Infrastructure to develop large-scale green hydrogen and ammonia projects powered by renewable sources. The teaser notes that the company is advancing a flagship joint development project and initiating conversations with offtakers.

The operating renewables portfolio for sale includes 8.7 GW of wind power and some 300 MW of solar in Pennsylvania, Colorado, California, New York, Iowa, and North Carolina, along with the 536 MW Klamath cogeneration plant in Oregon. The development pipeline has roughly 14.2 GW of solar and solar-plus-storage capacity and 3.8 GW of wind.

Avangrid declined to comment. Rothschild and Lazard did not respond to requests for comment.

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AIMCo-backed midstream infrastructure firm in refi

The company, whose asset footprint includes Gulf Coast hydrogen production, today priced a debt refinancing transaction with an 8.875% coupon.

Howard Energy Partners today priced $550m of senior unsecured notes to refinance amounts outstanding on its revolving credit facility.

The company, which is majority owned by the Alberta Investment Management Corporation (AIMCo), will pay 8.875% on the notes, inside of price talk of between 8.75% – 9%, according to sources familiar with the matter.

RBC Capital Markets and TD Securities are joint active bookrunners on the deal, the sources said.

Howard in 2021 closed on the acquisition of the Javelina Facility in Corpus Christi, Texas — a treating and fractionation plant that extracts olefins, hydrogen, and natural gas liquids from the gas streams produced by local refineries.

Starting in Jan of 2023, a strategic technology partner began producing a low-carbon diesel substitute using Javelina’s hydrogen and CO2 as feedstocks, making it one of the first merchant “clean” hydrogen facilities on the US Gulf Coast, according to the company. HEP is also pursuing carbon capture and sequestration opportunities with its Javelina assets through a joint venture with TALOS Energy and the Port of Corpus Christi.

AIMCo acquired an initial 28% stake in HEP in 2017, and brought its ownership stake to 87% last year following the purchase of Astatine Investment Partners’ stake in the company.

Howard operates in two key segments in the US and Mexico: natural gas and liquids. The natural gas segment includes 1,175 miles of pipelines and approximately 4.3 Bcf/d of throughput capacity and 600 MMCf/d of cryogenic processing capacity.

The liquids segment includes terminalling and logistics services for refined products as well as refinery-focused off-gas handling, treating, processing, fractionation and hydrogen supply services.

Spokespersons for the company, RBC, and TD did not respond to emails seeking comment.

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