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Electric Hydrogen awarded transferable tax credit from DOE

The Massachusetts electrolyzer start-up received the award under the Qualifying Advanced Energy Project 48C initiative, funded by the Inflation Reduction Act.

Electric Hydrogen has been awarded a $18.3m transferable tax credit from the Department of Energy, Department of Treasury, and the Internal Revenue Service under the Qualifying Advanced Energy Project 48C initiative, funded by the Inflation Reduction Act, for electrolyzer manufacturing at its gigafactory in Devens, MA.

The company was selected for this award for its advancements in manufacturing technology, ability to serve large-scale commercial projects in the near-term and commitment to building out U.S. manufacturing capacity.

Electric Hydrogen’s low-cost electrolyzer stacks sit at the center of the company’s fully integrated 100MW Electrolyzer Plant, a solution designed to deliver the lowest cost green hydrogen on earth, according to the company.

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Nel Hydrogen US industrializing PEM platform with GM

General Motors brings experience with fuel cells to advance Nel’s PEM line.

Nel Hydrogen US, a subsidiary of Norway’s Nel ASA, has entered into a joint development agreement with General Motors to industrialize Nel’s PEM electrolyzer platform, according to a press release.

The two companies are looking to enable more cost competitive sources of renewable hydrogen, the release states.

“Adding Nel as a strategic collaborator is an important step to help us commercialize fuel cell technology,” Charles Freese, GM executive director, Global HYDROTEC, said in the release. “Nel has some of the most promising electrolyser technology to help develop clean hydrogen infrastructure, and we believe our HYDROTEC fuel cell IP can help them get closer to scale.”

Detroit-based Nel Hydrogen US will be compensating GM for the development work and IP transfer on an ongoing basis and pay a license after successful commercialization dependent on how much of the end product is based on GM technology.

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Developer files for permit to construct green ammonia facility near Corpus Christi

A developer has filed for a permit to construct an 800,000-tons-per-year facility near Corpus Christi, on which it expects a final investment decision in 2Q24.

Avina Clean Hydrogen has applied for a permit to construct a green ammonia facility in Robstown, Texas, near Corpus Christi.

An Avina subsidiary, Nueces Green Ammonia, LLC, filed for the permit in late December with the Texas Commision on Environmental Quality.

Nueces Green Ammonia is a proposed world-scale anhydrous ammonia facility with a production capacity of 800,000 metric tons per year.

The total expected capital investment for the project is $2.2bn, and a final investment decision is expected for 2Q24, according to the project website.

ReSource previously reported that Avina was auditioning bankers to raise debt and equity capital in support of its projects.

Avina did not immediately respond to a request for comment.

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LSB CEO Mark Behrman: new ammonia markets could reshape – and revalue – the company

We spoke to CEO Mark Behrman about his vision of the company’s future.

Oklahoma City-based ammonia producer LSB Industries wants to be a player in new markets for ammonia as they develop, and is nearing a deal to provide blue ammonia to an existing customer in its ammonium nitrate and nitric acid segment, CEO Mark Behrman said in an interview.

Though Behrman expects LSB’s sales mix to shift – and the company’s valuation to rise – as ammonia markets evolve, it is pursuing deals to furnish blue ammonia at a premium to customers in its ammonium nitrate and nitric acid segment, currently its largest portion of net sales.

LSB is developing a blue ammonia facility on the Houston Ship Channel with INPEX and Air Liquide, offtake contracts for which could push its earnings mix away from more volatile fertilizer markets and help revalue the company. It also has a partnership with Lapis Energy for the installation of a carbon capture unit at its ammonia production facility in El Dorado, Arkansas.

“Unlike a lot of our competitors, who are really known as fertilizer companies, half our business is non-fertilizer,” he said. “So we’re really familiar with the non-fertilizer markets and the pricing and contractual nature of those markets.”

The company is in talks with its mining and nitric acid customers – Covestro, Dow, BASF – about helping them lower their carbon footprint via blue ammonia so these customers can meet 2030 decarbonization goals, said Behrman, who hopes to announce a sizeable contract within the next several months, “obviously at some premium to the price that they’re paying today.”

As for what the blue premium will be, for some markets the formulation might come down to the required capital investments and the developer’s desired return.

“I want long-term cost plus offtake contracts so I could de-risk the volatility in any cost,” he said. 

By way of example, Behrman said, “If we’re selling to JERA, and we have a long-term contract, and it’s a cost plus, so natural gas and power plus, it might be at a healthy premium to the overall ammonia market, or it might be a discount to the overall market,” he said, “but basically we’ve built an annuity because we’ve got a long-term contract at cost plus, and lock in our return as long as we operate the plant well.”

‘Meaningful player’

Behrman, a former investment banker, recognizes that it’s a brave new world for ammonia – particularly clean ammonia – with demand expected to come from myriad new places like shipping and power production. “We want to be a meaningful player as the new demand develops for ammonia,” he said. 

But he believes the market will evolve more slowly than expected, noting that initial estimates even for Japanese offtake and use of ammonia have already been pushed back.

“I think in the earlier years, so call it ‘28, ‘29, even ‘30, you’re probably only going to have two or three offtakers out of Japan until the other ones come online.” Korea, on the other hand, might be faster due to its national incentive scheme, he said.

Meanwhile, in the last few months, LSB has had a lot of conversations with potential European offtakers as Europe’s carbon tax scheme and the Carbon Border Adjustment Mechanism (CBAM) take hold.

“Europe, while still significantly focused on green, has come to the realization that it’s an energy transition and not an energy revolution,” he said. “So I think that we’re looking at trying to secure some European offtake as well.”

Behrman believes that, over time, 400 million metric tons of new demand for ammonia could materialize – the current global market is around 175 million metric tons – but “it would take a lot of switching from hydrocarbons to ammonia, or to partial ammonia as a feedstock, and it’s going to take the marine industry to really ramp up.”

The principal gating factors, he said, are the infrastructure required to support the transition and parties coming together on price.

Mix shift

The Houston Ship Channel project could be a centerpiece in LSB’s efforts to expand into new markets and potentially transform the way the business is valued.

“As we think about where we’re going and our vision of really being a leader in the production of low-carbon products, I think you’ll start to see more of our production trend away from fertilizer and to existing markets that we’re in by broadening some of those markets, plus really focusing on taking advantage of some of these new markets,” he said.

One reason is for the stability of the contracts compared to fertilizer markets, he added, which feeds into the second reason: predictability of earnings could lead to higher multiples on LSB’s equity, akin to valuation multiples for Air Liquide, Linde, and Air Products. For reference, LSB’s equity trades in the mid to high single digits on an enterprise value to LTM EBITDA basis, while equities for the aforementioned companies trade in the mid to high teens.

On LSB’s most recent earnings call, Behrman detailed some of the expected economics from the Houston Ship Channel project as well as the in-development blue ammonia facility in El Dorado, Arkansas. He expects to add roughly $150m of EBITDA each year from the Houston Ship Channel project and $15m – $20m of EBITDA annually from the carbon capture installation in Arkansas.

Behrman clarified in the interview that the $150m figure assumes 100% ownership of the facility, and that LSB’s ultimate ownership would come in the 45% – 49% range.

LSB is expecting to finish the pre-FEED study for the project in July or August of this year, at which point they would elect to proceed with a FEED study that would finish around September, 2025.

The company will use a project finance model to fund the project, and recently ran a process to select a banker, the terms of which are still being negotiated. Behrman declined to name the advisor.

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Air Products CEO discusses mega-scale green hydrogen project with AES

Air Products CEO Seifi Ghasemi further discussed its JV with AES Corporation to develop a $4bn green hydrogen project in Texas, noting that roughly half the price tag would come from developing 1.4 GW of renewables to feed the electrolyzers.

Air Products and AES Corporation will form a JV to develop a $4bn integrated green hydrogen facility in Texas, with roughly half of the cost coming from development of 900 MW of wind and 500 MW of solar generation, and the other half for the hydrogen build-out, Air Products CEO Seifi Ghasemi said on an investor call today.

Similar to his company’s JV in Saudi Arabia, the 50/50 JV will develop, build, own and operate a facility in Wilbarger County, at the site of a decommissioned coal-fired plant, Ghasemi said on the call.

Air Products has an exclusive global agreement with thyssenkrupp for electrolyzers, and could include battery storage at the Texas site to help power the electrolyzers, he added.

A separate entity owned 100% by Air Products will be the sole offtaker from the facility, Ghasemi said, which will produce more than 100 mtpd for use in transportation and industrial markets.

The relationship between AES and Air Products is not exclusive, he said.

Air Products expects a minimum internal rate of return of 10%, Ghasemi said. The company is hoping the tax benefits of the project will result in a lower hydrogen price from the JV.

The amount of capital invested by Air Products will be determined by downstream uses, Ghasemi said. The company has yet to decide if it will build a liquefaction plant, transport gaseous hydrogen by pipeline, or convert the hydrogen to ammonia and ship it by rail.

When it was noted that there is not an existing pipeline connecting Wilbarger County to Air Product’s Gulf Coast pipeline, Ghasemi said he was being pressured to get more deeply in the topic than he wanted, but that the company was confident emerging industry in the area would provide the necessary offtake.

“We don’t have to send it all the way down 250 miles to our existing pipeline,” Ghasemi said. “There’s a lot of different options.”

Air Products will not issue new stock to dilute shareholders or jeopardize its A-rating, Ghasemi said.

The labor cost is “very low on these projects,” Ghasemi said. And customers are attracted to getting 30-year contracts not associated with the price of oil, natural gas or geopolitics.

Air Products is investing approximately $500m for a 35 metric ton per day facility to produce green liquid hydrogen at a greenfield site in Massena, New York, as well as liquid hydrogen distribution and dispensing operations.

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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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Exclusive: E-fuels developer raising $500m

A developer of green hydrogen for e-fuel products is looking for a more diverse set of backers for a recently launched Series C capital raise.

Ineratec, the German power-to-liquid fuels developer and technology provider, has launched a $500m Series C and could take on a US-based financial advisor to help, CEO Tim Boeltken said in an interview.

German boutique Pava Partners helped Ineratec on its $129m Series B, which was led by Piva Capital. The Series B raise, which was announced in January, also included participation from HG Ventures, TDK Ventures, Copec WIND Ventures, RockCreek, Emerald, Samsung Ventures as well as the increased support from current investors, including global corporates like ENGIE New Ventures, Safran Corporate Ventures and Honda.

The Series C can include equity, debt and project finance, Boeltken said.

The company, which takes a modular approach to fuels production, serves customers in Switzerland, Spain and Finland. Its e-fuels process involves two main steps: first, turning CO2 and hydrogen into synthesis gas, then using a second reactor to turn the synthesis gas into liquid and solid hydrocarbons, according to its website.

Growth in the US would include eventual rollout of its 100 MW commercial unit, none of which have been built to date. Now the company is focused on its 10 MW commercial units, following completion of a 1 MW industrial plant operating now.

In the next month Ineratec will be scouting locations in the US, Boeltken said, adding the the company is “hoping for many, many US installations” with eyes on additional applications in South America and Japan. The company also intends to establish a US headquarters.

Sites in New York and California are of first interest but there are also growth intentions in Texas, Washington state and Appalachia.

Ineratec is currently raising project finance for a “triple-digit” million capex project in the Europe, he said.

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