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DOE opens $47m funding round for hydrogen

The funding opportunity focuses on RD&D of key hydrogen delivery and storage technologies as well as affordable and durable fuel cell technologies.

The Biden-Harris Administration, through the U.S. Department of Energy (DOE), today announced up to $47m in funding to accelerate the research, development, and demonstration (RD&D) of affordable clean hydrogen technologies.

Projects funded under this opportunity will reduce costs, enhance hydrogen infrastructure, and improve the performance of hydrogen fuel cells—advancing the Department’s Hydrogen Shot goal of reducing the cost of clean hydrogen to $1 per kilogram within a decade, according to a release.

This funding opportunity, which is administered by DOE’s Hydrogen and Fuel Cell Technologies Office (HFTO), focuses on RD&D of key hydrogen delivery and storage technologies as well as affordable and durable fuel cell technologies. Fuel cell RD&D projects will focus particularly on applications for heavy-duty trucks, to reduce carbon dioxide emissions and eliminate tailpipe emissions that are harmful to local air quality. These efforts will work in concert with hydrogen-related activities funded by President Biden’s Bipartisan Infrastructure Law, including the Regional Clean Hydrogen Hubs and an upcoming funding opportunity for RD&D to advance electrolysis technologies and improve the manufacturing and recycling of critical components and materials.

For all topic areas, DOE envisions awarding financial assistance awards in the form of cooperative agreements. The estimated period of performance for each award will be approximately two to four years. DOE encourages applicant teams that include stakeholders within academia, industry, and national laboratories across multiple technical disciplines. Teams are also encouraged to include representation from diverse entities such as minority-serving institutions, labor unions, community colleges, and other entities connected through Opportunity Zones.

The application process will include two phases: a Concept Paper phase and a Full Application phase. Concept papers are due on February 24, 2023, and full applications are due on April 28, 2023.

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Rolls-Royce and easyJet test hydrogen jet engine

The UK ground test was conducted on an early concept demonstrator using green hydrogen created by wind and tidal power.

Rolls-Royce and easyJet today have successfully tested an aero engine on hydrogen, according to a press release.

The ground test was conducted on an early concept demonstrator using green hydrogen created by wind and tidal power.

The companies have ambition to carry out flight tests, the release states.

The test took place at an outdoor test facility at MoD Boscombe Down, UK, using a converted Rolls-Royce AE 2100-A regional aircraft engine. Green hydrogen for the tests was supplied by the European Marine Energy Centre, generated using renewable energy at their hydrogen production and tidal test facility on Eday in the Orkney Islands.

Following analysis of the ground test the partnership plans a series of rig tests leading up to a full-scale ground test of a Rolls-Royce Pearl 15 jet engine.

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NextEra leads Series B for hydrogen firm

Modern Hydrogen, previously known as Modern Electron, has completed an oversubscribed $32.8m Series B-2 funding round led by NextEra Energy.

Modern Hydrogen has completed an oversubscribed $32.8m Series B-2 funding round led by NextEra Energy, with strategic investors & partners Miura and National Grid Partners also participating, according to a news release.

Existing investors Gates Frontier, IRONGREY, Starlight Ventures, Valo Ventures and Metaplanet continued their participation and expanded their investments as part of the funding round.

Modern Hydrogen will leverage the investment to scale-up the capacity of its hydrogen production units. This will further accelerate decarbonization of gas networks and support distributed production of hydrogen, all without a reliance on new hydrogen pipelines or massive infrastructure upgrades. The capital will also be utilized to expand the company’s clean carbon material offerings and boost its global market presence via the partnership with Miura in Japan.

The company also announced the move away from its previous name, Modern Electron, to shape the new brand of Modern Hydrogen. This new identity reflects its commitment to innovation in the clean hydrogen economy. As Modern Hydrogen, the company will continue to provide the exceptional technology and products its customers have come to expect and will continue expanding offerings of clean energy and materials under the “Modern” umbrella.

The participation of NextEra Energy, Miura, and National Grid Partners in this funding round highlights their confidence in Modern Hydrogen’s vision and potential to clean up one of the largest sources of energy in human civilization today: Natural gas. These strategic investors bring a wealth of expertise in the energy, technology, and industrial equipment market, which will be invaluable as the company continues to scale and innovate.

“As a leading manufacturer of industrial boilers, our mission is to make it ‘actionable’ for our customers to decarbonize the heat. Among the various hydrogen production and transportation pathways, the clean hydrogen production at point of use from natural gas is unique, and bundled with our hydrogen-fired boiler, it will be a great solution to the customers who have limited access to clean hydrogen in the other pathways. Participating in the COP27 last year, I strongly felt the need for immediate climate action. Together with Modern Hydrogen, we will work toward hydrogen deployment as early as possible,” said Daisuke Miyauchi, president & CEO MIURA Co., Ltd.

“National Grid is mobilizing to help our customers reach net zero, and hydrogen plus renewable natural gas are key pillars of our strategy,” said Lisa Lambert, chief technology & innovation officer of National Grid and founder & president of National Grid Partners. “Modern’s technology could help our gas customers adopt clean hydrogen sooner by making low-CO2 hydrogen affordable onsite. Moreover, by pairing Modern’s pyrolysis technology with renewable natural gas in National Grid’s network, we have the potential to achieve negative emissions without the high cost of CO2 capture.”

“NextEra Energy Resources sees Modern Hydrogen’s potential to support the emerging hydrogen economy using technology that can provide clean hydrogen on-site, without liquefaction, transport or storage,” said Elena Bueno-Gonzalez, vice president, Clean Energy Solutions, NextEra Energy Resources. “In addition to our industry-leading wind, solar and battery energy storage portfolio, NextEra Energy Resources offers comprehensive decarbonization solutions, such as renewable natural gas and green mobility. NextEra Energy Resources believes that Modern Hydrogen will enable yet another exciting clean, cost-effective option for commercial and industrial customers.”

“There are 3 million miles of natural gas pipelines in the USA alone. And the delivered price of natural gas is much cheaper than that of delivered electricity, typically by a factor of 3 to 5 times,” explained Tony Pan, co-founder and CEO of Modern Hydrogen. “By stripping out the offending carbon atom from gas at the end of the pipe, before it has a chance to become CO2, Modern’s technology can deliver decarbonized gas – aka clean hydrogen – on location. Thus, Modern can deliver this hydrogen to the end consumer, without the decades and billions of dollars it would take to build out hydrogen infrastructure. Sidestepping the need for new pipes and transmission permits will be invaluable in achieving speed & scale in realizing the clean hydrogen economy.”

“Negative emissions technologies are required to meet humanity’s climate goals,” notes Modern Hydrogen Co-founder and CTO Max Mankin. “We can generate net negative emissions by applying our pyrolysis technology on carbon-neutral gases such as biogas. The solid carbon we pull out from the gas is directly weighed, so every ton of solid carbon we put into products and building materials are verifiable emissions captured, avoided, and utilized.”

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DG Fuels selects Johnson Matthey-bp Fischer Tropsch technology

DG Fuels has selected the technology for its first SAF plant in Louisiana, and is planning 10 more facilities across the United States modeled after the Louisiana project.

DG Fuels has chosen Johnson Matthey and bp’s co-developed Fischer Tropsch (FT) CANS™ technology for its first sustainable aviation fuel (SAF) plant, according to a news release.

Located in Louisiana, USA, it would be the largest announced FT SAF production facility in the world, with a planned capacity of 13,000 barrels per day – capable, after blending to 50%, of producing enough SAF for more than 30,000 transatlantic flights annually.

The project previously planned to produce 120 million gallons at the facility, but today’s press release notes that the proposed $4 billion plant is planned to produce 600,000 metric tons (MT) of SAF per year when fully operational — or 159 million gallons — and would be the largest announced SAF production plant using a non-HEFA route.

DG Fuels has already secured offtake agreements with Delta Air Lines and Air France-KLM, and has a strategic partnership with Airbus to scale up the use of SAF globally.

DG Fuels is planning 10 more SAF production plants across the United States. These would be modelled on the Louisiana plant with JM and bp as the partners of choice for these facilities.

The fuel at the Louisiana plant is expected to be produced from waste biomass. DG Fuels is projected to purchase around $120 million of sugar cane waste annually, a third of which is planned to be purchased from St. James Parish farmers. JM and bp’s FT CANS technology converts the synthesis gas derived from this biomass to synthetic crude, which is then further processed to produce the synthetic kerosene that is then blended with conventional jet fuel to produce SAF.

In July 2023, DG Fuels announced the closing of investment transactions with aviner & co., inc, Chishima Real Estate Co, and an undisclosed investor. DG Fuels expects the $30m capital raise to fund the project until FID, which is expected in early 2024.

In September 2023, DG Fuels announced a partnership with Airbus in support of DG Fuels’ goal of launching the equity process and reaching FID.  Airbus and DG Fuels have agreed for a portion of the production of the first plant to benefit Airbus’ customers.

In November 2023, DG Fuels announced Air France-KLM has made an investment in the facility. Air France-KLM acquired an option to purchase up to 25 million gallons / 75 000 tons of SAF annually over a multi-year period beginning in 2029, in addition to the long-term offtake contract announced by Air France-KLM and DG Fuels in 2022.

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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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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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New clean fuels firm takes first external financing

A clean fuels startup aiming to provide turnkey decarbonization solutions will be in the market for additional capital shortly.

Elemental Clean Fuels has closed on its first round of external financing from investors Piney Point Capital and Fusion Fuel Green plc, according to a company spokesperson.

The money will be used to build out the company’s pipeline and add new projects, which it plans to develop, own and operate. Clean fuels would be produced from renewables via electrolysis, followed by storage and transportation solutions, according to the company’s website.

Capital investment provided by Piney Point will be utilized by ECF to further develop its existing decarbonization portfolio in North America, as well as to expand its internal capabilities and add additional project assets (including the projects contributed by Fusion Fuel), according to a news release.

ECF is a business venture of CEO Zach Steele and CFO Jason Baran, former executives of Fusion Fuel who have executed and managed over $3bn in development projects in North America. They are joined by CDO Jeff Crone, a former vice president of engineering and construction services at Buckeye Partners.

In parallel, Fusion Fuel has also entered into a strategic technology partnership with Elemental, granting Fusion Fuel the right to bid on all PEM-based green hydrogen projects in Elemental’s North American pipeline for a period of three years, according to a release from Fusion Fuel.

Elemental has approximately 40 MW in pre-feasibility projects within its pipeline and is currently collaborating with Fusion Fuel on a feasibility study for a 2 MW green hydrogen project for a state utility to be delivered in 2024. This partnership will provide Fusion Fuel with exposure to the emerging North American green hydrogen market, whilst enabling the company to focus its near-term commercial efforts on the Iberian Peninsula and Northern Europe.

“We are extremely excited to have Piney Point as a partner as we progress our mission to drive growth in the emerging clean fuels market,” said Steele. “With investments in a broad range of companies across the energy transition, they are uniquely positioned to provide strategic partnerships and additional access across the value chain to drive scale.  Piney Point’s investment and expertise will accelerate the growth of our Company in the mobility and heavy industry sectors throughout North America.  We are also excited and optimistic about continued collaboration with Fusion Fuel going forward.”

“As investors, Piney Point Capital recognizes the immense potential of ECF in revolutionizing the clean fuel landscape. We believe in the vision and capabilities of the ECF team, and we are committed to supporting their mission to accelerate decarbonization through innovative projects and strategic partnerships across North America,” said Mike Keough, managing partner Piney Point Capital, a subsidiary of Racon Capital.

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