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Energy Vault starts construction of California hydrogen storage system

The Calistoga Resiliency Center will be the first-of-its-kind utility-scale green hydrogen energy storage project in the US.

Energy Vault Holdings has started construction of a utility-scale green hydrogen plus battery ultra-long duration energy storage system (BH-ESS) with 293 MWh of dispatchable carbon-free energy, according to a news release.

Construction of the BH-ESS, which is being developed for Pacific Gas and Electric Company (PG&E) on less than one acre of land in the Northern California City of Calistoga, is expected to be completed by the end of 2Q24.

Upon completion, the BH-ESS, dubbed the Calistoga Resiliency Center, will be the first-of-its-kind utility-scale green hydrogen energy storage project in the United States. The battery portion of the system will be used to support grid forming and black start capabilities.

The system will be prepared to power downtown Calistoga and the surrounding area for up to 48 hours during potential Public Safety Power Shutoffs, which occur when the powerlines serving the surrounding area must be turned off for safety due to high wildfire risk. PG&E’s proposal for the system was approved by the California Public Utilities Commission in April.

Energy Vault’s BH-ESS will replace the traditional mobile diesel generators currently used to energize PG&E’s Calistoga microgrid during PSPS events in the area. The project represents a major advance in community-scale microgrid development and a significant step toward realizing the CPUC’s vision of cleaner forms of microgrid generation.

The energy storage system will be owned, operated and maintained by Energy Vault while providing dispatchable power under a long-term tolling agreement with PG&E. Under the 10.5-year agreement, Energy Vault will provide “Distributed Generation-Enabled Microgrid Services” – a type of energy service that involves using grid-forming generation and storage resources, to provide energy, fault current contribution and to regulate voltage and frequency within the utility’s established parameters to enable the islanding of the Calistoga microgrid during PSPS outages. The solution is designed to operate during PSPS events, serving all the load within a safe-to-energize area in the City of Calistoga, including critical facilities such as fire and police stations, and shared services in the downtown and surrounding area.

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OCI Global supplying low-carbon ammonia for German fertilizer

OCI will supply COMPO EXPERT with ammonia that guarantees a 60% lower carbon footprint than the industry standard from its facilities in Texas.

OCI Global, a producer of nitrogen, methanol, and hydrogen products is supplying COMPO EXPERT, a producer of high-quality specialty fertilizers and biostimulants, with lower carbon ammonia for use in the production of COMPO EXPERT’s NPK fertilizers, with the first delivery having taken place this week, according to a news release.

COMPO EXPERT will initially replace 25% of the ammonia it uses at its facility in Krefeld, Germany, with OCI’s lower carbon product this year and has plans in place to further increase the ratio of OCI supplied lower carbon ammonia in its production over the next two years.

OCI will supply COMPO EXPERT with ammonia that guarantees a 60% lower carbon footprint 60% than the industry standard from its facilities in Texas, USA via OCI’s proprietary ammonia terminal and distribution hub at the Port Of Rotterdam.

OCI has supplied COMPO EXPERT with ammonia for fertilizer production for over a decade and the switch to lower carbon ammonia is testament to both companies’ commitment to sustainability and the decarbonization of their products.

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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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PE-backed biomass-to-energy operator on the block

A biomass-to-energy firm with four operational assets in the US and Canada has launched a sale process. The company is also developing 110 MW of co-located BESS projects, with additional revenue streams expected from organic waste diversion, gasification and carbon capture, and heavy-duty vehicle charging stations, according to a sale teaser.

Biomass-to-energy firm Greenleaf Power is for sale.

Denham Capital, the company’s private equity owner, has mandated BNP Paribas to run the process, which launched last week, according to two sources familiar with the process.

California-based Greenleaf is a biomass generation platform with 135.5 MW of fully-contracted renewable generation capacity and remaining weighted-average PPA term length of 9.5 years, according to a sale teaser.

The company’s four operational assets are the 45 MW Desert View Power, in Mecca, California; the 30 MW Honey Lake Power in Wendel, CA; the 23 MW St Felicien Cogeneration facility in Quebec; and the 37.5 MW Plainfield plant in Connecticut.

Greenleaf expects to generate $106m of biomass revenues in 2024, resulting in $24m in expected EBITDA.

According to the teaser, co-located battery energy storage projects amounting to 110 MW are also under development, with CODs expected for 2025 – 2026.

There is potential for additional revenue streams from existing infrastructure and land, including organic waste diversion, gasification and carbon capture, co-location of renewables, and heavy-duty electric vehicle charging stations, the teaser states.

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Exclusive: Hydrogen blank-check deal and capital raise on track

A de-SPAC deal and associated capital raise for a hydrogen technology and project development firm are still on track to close this year, despite this year’s busted SPAC deals and sagging hydrogen public market performance.

H2B2 Technologies is still on track to close a de-SPAC deal and related capital raise before the end of this year, CEO Pedro Pajares said in an interview.

Spain-based H2B2 announced the deal to be acquired by RMG Acquisition Corp. III and go public in a $750m SPAC deal in May. In tandem, Natixis Partners and BCW Securities are acting as co-private placement agents to H2B2 for a capital raise that the company must close as part of the acquisition.

The company said recently in filings that the deal as well as the capital raise would close before the end of 2023, a fact that Pajares reiterated in the interview. He declined to comment further.

Many publicly traded hydrogen companies have dropped significantly in value in recent months, and dropped further on Friday following news from Plug Power that it would need to raise additional capital in the next 12 months to avoid a liquidity crisis.

Meanwhile, there have been 55 busted SPAC deals this year, according to Bloomberg, with Ares Management’s deal for nuclear tech firm X-Energy the latest to not close.

Expansion

H2BE recently inaugurated SoHyCal, its first facility in Fresno, California, and wants to get the message out to offtakers in California’s Central Valley that it has hydrogen available to sell.

“What we want to show is that H2B2 is the solution for those who are seeking green hydrogen in the Central Valley,” Pajares said.

Phase 1 (one ton per day) of the plant was funded by a grant from the California Clean Energy Commission. Phase 2 (three tons per day) will involve transitioning to solar PV power, and the company could consider a project finance model to finance the expansion, though Pajares believes the market is not yet ready to finance hydrogen projects.

In addition to project development, the company is also an electrolyzer manufacturer. It is focusing its efforts in the California market on future projects that are larger than SoHyCal, as well as those related to individual offtakers, Pajares said. End users will be in mobility and fertilizer, with offtake occurring via long-term contracts as well as through spot market transactions.

The company is pursuing developments in other regions of the US as well, he added, declining to name specific areas.

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Exclusive: Advanced Ionics raising $12.5m, seeking pilot project partners

Advanced Ionics, an electrolyzer developer based in the Midwest, is approaching a close on the second tranche of its Series A and is seeking sponsors for pilot projects in Texas and elsewhere.

The company’s Symbiotic electrolyzers use steam by tapping into excess heat from industrial settings, thereby lowering electricity needs for water splitting to 35 kWh per kg, with 30 kWh per kg possible. That compares to industry averages over 50 kWh per kg.

Advanced Ionics, the Milwaukee-based electrolyzer developer, is about six weeks out from closing a second tranche of its Series A and is seeking new partnerships for pilot projects in the US, Chief Commercial Officer Ignacio Bincaz told ReSource.

Bincaz, based in Houston, is working to close the second $12.5m tranche, which is roughly the same size as the first tranche. The company has technical teams in Wisconsin but could build out those as well as commercial capabilities in Houston.
The company’s Symbiotic electrolyzers use steam by tapping into excess heat from industrial settings, thereby lowering electricity needs for water splitting to 35 kWh per kg, with 30 kWh per kg possible. That compares to industry averages over 50 kWh per kg.

“We just put together our first stack, Generation One, which are 100 square centimeters,” Bincaz said. Generation Two stacks will come later this year, but to get to Generation Three — commercial size, producing between 7 and 16 tons per day — the company will have to conduct a Series B about one year from now.

“For that, we need to hit certain benchmarks on durability of a stack,” he said. “The money will go toward scaling up and getting the data expected by investors to get us to Series B.”

Aside from equity provisions, Advanced Ionics is looking for sponsors for pilots and related studies, Bincaz said. “There’s different ways that we’re looking for collaboration.”

Between 2027 and 2028 the company expects to have commercial-size Generation Three stacks in the market.

Pilot projects

Advanced Ionics has two pilot projects in development with Repsol Foundation and Arpa-E (US Department of Energy), respectively.

The Repsol project is a Generation One development producing 1 kilogram per day, Bincaz said. The government project will be the first Generation Two project.

Another pilot is in development with a large energy company that Bincaz declined to name. The company is also exploring pilot projects with bp, which is an investor in the company.

After four or so pilot projects of ascending scale, the company will look to do its first industrial-scale project using real process heat or steam, integrated into a hydrogen-use process like ammonia manufacturing or chemical refining.

“We’re talking to companies in Asia, companies in Europe, companies in the US,” he said, specifically naming Japan and Singapore. “I’m in early conversations.”

Advanced Ionics’ first tranche Series A was led by bp ventures, with participation from Clean Energy Ventures, Mitsubishi Heavy Industries, and GVP Climate.

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exclusive

Government money still top of mind for early movers in US hydrogen

Gaining access to funding from government and other agency sources is top of mind for many developers seeking to de-risk their projects and reach FID. But only hydrogen, ammonia, and other clean fuels projects exhibiting “the best in the business” are garnering support from government financing agencies and commercial lenders, experts say.

The US Department of Energy came out this week with the news that it was not yet ready to release the long-awaited winners of its $8bn hydrogen hubs funding opportunity, as Secretary of Energy Jennifer Granholm noted Monday at the Hydrogen Americas Summit in Washington, DC.

The delay disappointed many in the industry, who are also waiting for crucial guidance from the IRS on rules for clean hydrogen tax credits.

Gaining access to funding from government and other agency sources is top of mind for many developers seeking to de-risk their projects and reach FID. But only hydrogen, ammonia, and other clean fuels projects exhibiting “the best in the business” are garnering support from government financing agencies and commercial lenders.

Speakers on a financing panel at the summit yesterday pointed to the successful FID of the Air Products-backed NEOM green hydrogen project in Saudi Arabia as an effective project finance model, where major sponsors working together helped to de-risk the proposal and attract support from export credit agencies and global banks.

In the US, large players like ExxonMobil (Hydrogen Liftoff Hub), NextEra (Southeast Hydrogen Network), and Chevron (ACES Delta) have applied for DOE hydrogen hubs funding, according to the results of a FOIA request, joining major utilities and other oil and gas companies like bp and Linde in the running for funds.

In addition to inadequate regulatory guidance, some developers have already started grumbling that the proposed government assistance will not be enough to meet the scale of decarbonization needs. And the nascent clean fuels project finance market still needs to sift through techno-economic challenges in order to reach its potential, according to comments made yesterday on a panel called Financing Clean Hydrogen.

Leopoldo Gomez, a vice president of global infrastructure finance at Citi, sees a big role for the project finance framework for hydrogen facilities undertaken by independent project developers as well as strategics looking to strike the appropriate risk allocation for new projects.

And Michael Mudd, a director on BofA’s global sustainable finance team, said hydrogen projects are similar in many ways to established facilities like power and LNG, but with additional complexities, like understanding the impact of intermittent power and how to appropriately scale technologies.

Credibility

This year, Pennsylvania-based Air Products along with ACWA Power and NEOM Company finalized and signed an $8.5bn financing agreement for NEOM the project, which will build 4 GW of renewables powering production of up to 600 tons per day of hydrogen. The National Development Fund and the Saudi Industrial Development Fund kicked in a total of $2.75bn for the project, with the balance covered by a consortium of 23 global lenders.

“It is very important from the financing side to make sure the parties that are at the table are the best in the business, and that’s what we’re seeing with the projects that are able to receive either commitments from the DOE Loan Programs office or from commercial lenders and export credit agencies,” Gomez said.

Highly credible engineering firms are also critical to advance projects, and the EPCs themselves might still need to get comfortable integrating new technologies that add more complexity to projects when compared to power generation or LNG projects.

“The bottom line is that having someone that’s very credible to execute a complex project that involves electrolyzers or carbon capture or new renewable power generation within the parameters of the transaction” is critical for providing risk mitigation for the benefit of investors, Gomez added.

Funding sources

Additional funding sources are intended to be made available for clean fuels projects as part of the Inflation Reduction Act, the panelists said.

Most notably, tax credit transferability and the credits in section 45Q for carbon capture and sequestration and 45V for clean hydrogen are available on a long-term basis and as a direct-pay option, which would open up cash flows for developers.

“If you can use [tax credit transfers] as a contract, you can essentially monetize the tax credits in the form of debt and equity,” Mudd said. And if a highly rated corporate entity is the counterparty on the tax transfer, he added, the corporate rating of the buyer can be used to leverage the project for developers that don’t have the tax capacity.

Still, section 45V is potentially the most complex tax credit the market has ever seen, requiring a multi-layer analysis, according to Gomez, who advised patience among developers as prospective lenders evaluate the potential revenue streams from the tax credit market.

“First and foremost we’ll be looking at cash flows driven by the offtake contract, but it will be highly likely that lenders can take a view on […] underwriting 10 years of 45V at a given amount,” Gomez added.

Crucial guidance on how to conduct a lifecycle emissions analysis is still outstanding, however, making it difficult to bring all project parties to the table, according to Shannon Angielski, a principal at law and government relations firm Van Ness Feldman.

“It’s going to hinge on how the lifecycle analyses are conducted and how you have some transparency across states and borders” regarding the potential for a green premium on clean hydrogen, she added.

Agency support

In Canada, the Varennes Carbon Recycling plant in Quebec has received CAD 770m of provincial and federal support, primarily from the Canada Infrastructure Bank and the province of Quebec, noted Amendeep Garcha of Natural Resources Canada.

Around CAD 500m of funding from the Canada Infrastructure bank is also going to support hydrogen refueling infrastructure, Garcha said, with the aim of establishing a hydrogen highway that will form the basis of the hydrogen ecosystem in Quebec.

Pierre Audinet, lead energy specialist from World Bank Group, noted how the international development agency was stepping in to provide support for projects that might otherwise not get off the ground.

“In the world where I work, we face a lot of scarcity of capital,” he noted, adding that the World Bank has backed the implementation of clean fuels policies in India with a $1.5bn loan.

Additionally, the World Bank has supported a $150m project in Chile, providing insurance and capital for a financing facility that will reduce the costs of electrolyzers. Chile, while it benefits from sun and wind resources, said Audinet, is less competitive when it comes to transportation given its geographic location.

The agency is also working to help the local government in the Northeastern Brazil port of Pecem. Shared infrastructure at the port will help reduce risks for investors who have taken a stake in the port facilities, Audinet said.

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