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ECP-backed Braya Renewables project gets federal investment

The CAD 86m investment will enable Braya to commercialize its production of renewable diesel and sustainable aviation fuel in N.F.L, Canada.

The federal government of Canada will support Braya Renewables’ Come By Chance refinery conversion in Newfoundland and Labrador with a CAD 86m investment.

The federal support will enable Braya Renewable Fuels to commercialize its production of renewable diesel and sustainable aviation fuel. When completed later this year, the project is expected to sustain 200 full-time jobs while creating 800 local jobs during its construction.

Energy Capital Partners recently made a $300m preferred equity investment in the project.

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Viking testing first hydrogen-powered cruise ship

Viking is using the small H2 system to test how hydrogen fuel could be used at a larger scale.

The Viking cruise line has received its first ship testing the use of hydrogen power, according to a press release.

The ship, the Viking Neptune, is equipped with a small hydrogen fuel system for on board operations. Viking is using the small system as a test to determine how hydrogen fuel could be used at a larger scale in future newbuilds.

Delivery took place when the ship was presented at Fincantieri’s shipyard in Ancona, Italy.

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JERA Americas appoints chief commercial officer

JERA Americas has appointed James Tinsley as CCO. He joins from Calpine.

ERA Americas, the Houston-based subsidiary of global energy leader JERA, has appointed James Tinsley as its new Chief Commercial Officer (CCO), according to a news release.

Tinsley joins JERA Americas from his position as vice president, Natural Gas Supply and Trading for Calpine Energy Services.

In his new role, Tinsley will be responsible for all commercial functions for the Company including overseeing commercial development opportunities for existing assets and for future asset portfolios the company may acquire.

“We are glad to have James join us at a critical point in JERA Americas’ growth trajectory. Over the past two years we have scaled up the organization to where we now have a solidly performing core asset portfolio and supporting corporate infrastructure,” said Steven Winn, JERA Americas chief executive officer. “James will spearhead the next phase of growth—expanding our commercial organization’s capabilities in order to optimize our current portfolio and the new assets we intend to build or acquire.”

During his seven years with Calpine, Tinsley led a natural gas supply and trading team of more than 20 people, responsible for natural gas trading, scheduling, and supply for the largest fleet of natural gas power facilities in the United States. He also grew the company’s natural gas commercial activities through the acquisition of new transportation and storage assets in addition to negotiating LNG imports.

Tinsley’s tenure at Calpine built on his leadership roles in the Natural Gas Trading and Supply businesses of Hess Energy Marketing (later acquired by Direct Energy) and helped build the largest commercial/industrial natural gas marketer in the country. He also oversaw development and construction activities of two power projects. Tinsley started his career in natural gas and electricity with Pace Global Energy where he helped large industrial companies manage commodity risk, negotiate contracts and lower energy costs.

“JERA Americas is catalyzing the clean energy transition—bringing clean energy projects such as wind and solar in Texas, hydrogen blending to reduce CO2 emissions at natural gas plants and looking to repurpose existing infrastructure into clean energy centers that will maintain a reliable supply of energy as well as facilitating the integration of new offshore wind farms and battery storage in the northeast,” said Tinsley. “I am looking forward to joining the Company and helping to accelerate the rollout of these technologies.”

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Exclusive: Green hydrogen developer raising capital for flagship project

A Québécois green hydrogen developer has retained a financial advisor and is raising equity capital for a pipeline of smaller scale projects in Canada and the United States.

Charbone, a publicly traded green hydrogen developer based near Montreal, has retained a financial advisor and is seeking equity capital for a pipeline of smaller scale projects in Canada and the US.

The company is working with advisory firm US Capital Global to raise $5m in equity capital to support the first phase of its flagship green hydrogen project, the Sorel-Tracy plant, located about 45 minutes from Montreal, CFO Benoit Veilleux said in an interview.

The Sorel-Tracy project, which could expand to up to 10 tonnes per day of production, requires about $2m of capital in order to advance through phase 1, which would amount to a capacity of approximately 200 kg per day. The balance of the raise would support development of additional projects, including one in Michigan that will seek to provide green hydrogen for the automobile industry, Veilleux said.

Veilleux expects that the projects will eventually be back-levered through a debt raise, and that Canada’s export agencies, including Investissement Québec, will be involved in providing financing.

In total, Charbone plans to scale and deliver 16 green hydrogen production facilities in the US and Canada by 2030, each set up as a separate legal entity with its own strategic and financial backers. The company is also working with New York-based Maxim Group on additional project financing and equity raise aspects of its project pipeline.

Potential Charbone sites. Source: Charbone corporate presentation

Charbone believes the smaller scale of their projects give it a near-term advantage in getting projects off the ground, according to Veilleux, as they are finding offtakers interested in the product now, versus waiting several more years for larger projects to come online.

“We’re focusing on this niche and we have a window, we think of 10 to 15 years where there’s big players or big projects that will start to come into play,” he said. “But at the end of the day, it’s a massive market that is increasing every day.”

Charbone is working with renewable energy construction firm EBC Inc. to lead project delivery, and has signed offtake contracts with Superior Plus, a North American gas marketer and distributor.

While Charbone has chosen its sites to be close to industrial demand, it chose to sign offtake agreements with a distributor to take advantage of Superior’s existing infrastructure and transportation capabilities.

The company plans to use PEM electrolyzers that can ramp up and down more quickly with intermittent power from renewables, and is in talks with several of the major PEM manufacturers.

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Renewable hydrogen developer in exclusivity with strategic investor

A renewable hydrogen developer based in the western US is reaching the final stages of a capital raise with an investor in exclusivity.

NovoHydrogen, the Colorado-based renewable hydrogen developer, is in exclusivity with clean energy investment platform Modern Energy, according to two sources familiar with the matter.

ReSource reported in February that GreenFront Energy Partners was advising the company on a Series A.

NovoHydrogen CEO Matt McMonagle said previously that the company has about 30 projects in development in the US, ranging from a few megawatts to hundreds of megawatts. Its most active markets are the West coast, Northeast, Appalachia, Texas and the Rocky Mountains, though the company is not geographically constrained.

The company aims to begin construction on its first projects by the end of this year, the executive had said.

NovoHydrogen declined to comment. GreenFront and Modern Energy did not respond to requests for comment.

Modern Energy, a certified B-Corporation, recently put $90m into net metered solar developer Industrial Sun along with partner EIG. In 2020 EIG committed USD 100m to Modern Energy through a debt facility to fund the development of clean energy assets.

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How hydrogen from nuclear power shows pitfalls of ‘additionality’

An interview with the Nuclear Energy Institute’s Director of Markets and Policy Benton Arnett.

Tax credits for low-carbon hydrogen production in the Inflation Reduction Act represent one of the climate law’s most ambitious timelines for implementation, with the provision taking effect late last year. That means low-carbon hydrogen producers can, in theory, already begin applying for tax credits of up to $3 per kilogram, depending on the emissions intensity of production.

However, IRS guidelines for clean hydrogen production have yet to be issued, and industry groups, environmentalists, and scientists are taking sides in a debate over whether the tax credits should require hydrogen made via electrolysis to be powered exclusively with new sources of zero-carbon electricity, a concept known as “additionality.”

In a February letter, a coalition of environmental groups and aspiring hydrogen producers expressed concern to the IRS that guidelines for 45V clean hydrogen production tax credit implementation would not be sufficiently rigorous, especially when it comes to grid-connected electrolyzers. Citing research from Princeton University, the group argued that grid-powered electrolyzers siphon off renewable generation capacity, requiring the grid to be backfilled by fossil power and thus producing twice the carbon emissions that natural gas-derived hydrogen emits currently.

(The group, which includes the National Resources Defense Council, Intersect Power, and EDF Renewables, among others, also argues in favor of hourly tracking, which they say would better guarantee energy used for electrolysis comes from clean sources, and deliverability, requiring renewable power to be sourced from within a reasonable geographic distance. In February, the European Commission issued a directive phasing in, over a number of years, rules for additionality, hourly tracking, and deliverability.)

Benton Arnett, director of markets and policy for the Washington, DC-based Nuclear Energy Institute, a nuclear industry trade association, does not believe the concept of additionality was part of Congress’s intent when the body crafted the Inflation Reduction Act. For one, he notes, the text of the 45V provision for clean hydrogen production includes specific prescriptions for the carbon intensity of hydrogen production as well as for the analysis of life-cycle emissions, but says nothing about additionality.

“When you get legislative text, you don’t usually have prescriptions on carbon intensities for the different levels of subsidies,” he said. “You don’t usually have specifications on what life-cycle analysis model to use – and yet all of that is included in the 45V text. Clearly [additionality] is not something that was intended by Congress.”

Reading further into the law, section 45V contains precise language allowing renewable electricity used for the production of hydrogen to also claim renewable energy tax credits, or “stacking” of tax credits. Further, the statute includes a subsection spelling out that producers of nuclear power used to make clean hydrogen can also avail themselves of the 45U tax credit for zero-emission nuclear energy production.

“It’s really hard for me to think of a scenario where the drafters of the IRA would have included a provision allowing existing nuclear assets to claim 45V production tax credits and also be thinking that additionality is something that would be applied,” Arnett said.

Text of the IRA

The NEI emphasized these provisions in a letter to Treasury and IRS officials last month, noting that, “given the ability to stack tax credits for existing sources with section 45V, the timing of when the section 45V credit was made available” – December 31, 2022 – “and congressional support for leveraging existing nuclear plants to produce hydrogen, it is clear Congress intended for existing facilities to be eligible to supply electricity for clean hydrogen production.”

Arnett adds that the debate around additionally ignores the fact that not all power generation assets are created equal. Nuclear facilities, in particular, given the regulatory and capital demands, do not fit within a model of additionality geared toward new renewable energy capacity. (Hydrogen developers have also proposed to use existing hydropower sources for projects in the Pacific Northwest and Northeast.)

This year, the NEI conducted a survey of its 19 member companies representing 80 nuclear facilities in the US. The survey found that 57% of the facilities are considering generation of carbon-free hydrogen. Meanwhile, the US Department of Energy’s hydrogen hubs grant program requires that one hub produce hydrogen from nuclear sources; and the DOE has teamed up with several utilities to demonstrate hydrogen production at nuclear power plants, including Constellation’s Nine Mile Point Power Station, Energy Harbor’s Davis-Besse Nuclear Power Station, Xcel Energy’s Prairie Island Nuclear Generating Plant, and Arizona Public Service’s Palo Verde Generating Station.

“We’re worried that if [additionality] goes into effect it’s going to remove a valuable asset for producing hydrogen from the system, and it’s really going to slow down penetration of hydrogen into the market,” Arnett said.

As for the research underlying arguments in favor of additionality, Arnett says that it appears to take the 45V provision in a vacuum, without considering some of the larger changes that are taking shape in US electricity markets. For one, the research, which argues that electrolyzers would absorb renewable capacity and require fossil-based generation to backfill to meet demand, assumes that natural gas generation will continue to be the marginal producer on the electrical grid.

“One of the shortcomings of that is that the IRA has hundreds of billions of dollars of incentives aimed at changing that very dynamic. The whole goal of the IRA is that marginal additions of power are carbon-free,” he said, noting incentives for clean electricity production tax credits, investment tax credits, supply chain buildouts, and loan program office support for all of these projects.

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Green hydrogen developer in exclusivity with new investor

New York-based green hydrogen developer Ambient Fuels is in exclusivity with a new investor, with proceeds from the capital raise slated to fund project development and acquisitions.

Ambient Fuels, the New York-based green hydrogen developer, is in exclusivity with a new investor for a bilateral capital raise, CEO Jacob Susman said in an interview.

Susman declined to name the private equity provider but said the backing will allow Ambient to develop several projects, as well as acquire projects from other developers. The deal is proceeding without the help of a financial advisor.

Once the company reaches its run rate, Ambient plans to complete three to four projects per year costing $50m and up, Susman said, with the first expected to reach operation in 2025.

The company’s initial geographic focus is on the Gulf Coast, centered on the Port of Corpus Christi, Susman said. New York, California, the Pacific Northwest and traditional wind energy states in the Midwest and West are areas of additional work.

Hydrogen hubs

Ambient is closely following the DOE hydrogen hub applications process, Susman said. Which regions are awarded funding could make a difference for where the company locates new projects.

According to ReSource‘s project tracker, Ambient is involved in at least two of the hubs that were encouraged by the DOE to submit a final application: California’s Alliance for Renewable Clean Hydrogen Energy Systems (ARCHES), and the Port of Corpus Christi Green Hydrogen Hub.

In 2021 Ambient completed a funding round led by SJF Ventures. Several other VC funds and angel investors also participated.

Open for offtake business  

Ambient is looking for offtakers in industries that use the molecules for feedstock and energy but need to meet decarbonization targets.

The company is working to provide hydrogen as an industrial feedstock and energy source to sectors including transportation, oil and gas, mining, glass and steel production and automobile manufacturing. Supplying hydrogen for ammonia fertilizer is another target market.

Advisors with clients in those industries should reach out to Ambient, Susman said.

M&A strategy

Ambient strives to be a fully integrated devco with the resources, capital and expertise to take a project to fruition, Susman said. Projects developed by smaller companies can look to Ambient as a buyer for their projects.

“We want to be a home for those great projects that are being developed independently,” Susman said. “Absolutely we will be acquiring projects.”

Smaller developers with good projects could also be targets for takeover with the backing from the new investor, Susman said. The firm could also make a technology buy in software for project development, operations, or possibly the equipment side, though Susman said there’s a low probability of that.

Financial advisors that have leads on good projects Ambient can acquire are welcome to pitch, Susman said.

Susman said he is not in a hurry to exit Ambient and can see the company being independently financed for years to come.

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