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EQT-backed Voltera reaches fueling infrastructure agreement with Nikola

Nikola and Voltera plan to develop up to 50 HYLA stations throughout North America over the next five years.

Nikola Corporation, a provider of zero-emissions transportation and energy supply and infrastructure solutions, via the HYLA brand, and Voltera, a provider of critical infrastructure necessary to support the full decarbonization of transportation, have reached a definitive agreement to develop the hydrogen fueling infrastructure required to support Nikola’s deployment of its innovative zero-emissions vehicles.

Through this strategic partnership agreement, Nikola and Voltera plan to develop up to 50 HYLA stations throughout North America over the next five years, according to a news release. This partnership underpins Nikola’s prior announced plans to develop 60 stations by 2026.

Voltera launched last year with backing from EQT Infrastructure.

Through this partnership, Nikola and Voltera will create the largest North American open-network of commercial hydrogen refueling stations, providing fuel to vehicles from various manufacturers to accelerate the adoption of zero-emission vehicles. Voltera will site, build, own, and operate the strategically located, fit-for-purpose hydrogen refueling stations, and Nikola will supply the hydrogen fuel and provide technical expertise. This partnership will accelerate the deployment of the several billion dollars Voltera plans to invest into EV charging and hydrogen fueling facilities. Together, Nikola and Voltera will develop a reliable and optimal refueling experience.

“Our partnership with Voltera will bring substantial capital and expertise to support Nikola’s plans to build refueling infrastructure to support its customers,” said Carey Mendes, president, Nikola Energy. “Voltera’s expertise in building out zero-emission energy infrastructure will be a key enabler for Nikola’s first-to-market hydrogen fuel cell electric trucks and fueling infrastructure. Nikola and Voltera have a shared commitment to the rapid deployment of infrastructure which is key to enabling the transition to a zero-emission economy.”

“Voltera’s mission is to accelerate the adoption of zero-emission vehicles, by taking on the complex and costly nature of developing the necessary infrastructure,” said Matt Horton, CEO of Voltera. “By partnering with Nikola, we are expanding our focus beyond battery-electric vehicle charging in order to dramatically increase hydrogen fueling infrastructure, reduce barriers for operators buying vehicles at scale to enable mass adoption of hydrogen trucks.”

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Tenaska unveils Alabama CCS hub

Construction on the project is slated to begin as soon as late 2025, pending permitting approvals.

Tenaska has unveiled the Longleaf CCS Hub, a carbon capture and storage (CCS) project planned for Mobile County. The facility will provide an innovative business solution to assist manufacturers, power plants, industrial processors and other industries in South Alabama in meeting emissions regulations and climate mandates.

Longleaf CCS Hub is participating in an award through the U.S. Department of Energy’s (DOE) Office of Fossil Energy and Carbon Management (FECM), allowing for $17.9 million in funding to support geologic characterization and permitting efforts, according to a news release.

This DOE funding brings together a diverse project team, which includes Southern States Energy Board (award recipient), Tenaska, Advanced Resources International, Crescent Resource Innovation, ENTECH Strategies, the Geological Survey of Alabama, the University of South Alabama and Williams. Baker Hughes Oil Field Services and Environmental Resources Management will also participate as vendors, with Southern Company Services taking on the role of the Project Industry Network lead.

Tenaska’s initial development of the Longleaf CCS Hub started in 2022. The project’s Class VI application is under review by the U.S. Environmental Protection Agency, and Tenaska has solicited interest from a number of emitter customers in the region. Pending all necessary permitting approvals, construction is slated to begin as soon as late 2025, with commercial injection expected a year later. Actual start of construction will be scheduled to synchronize the start of injection with the customers’ readiness to capture CO2.

The project aims to add to the stability and growth of the region, offering a viable path for existing businesses to comply with evolving environmental standards and attracting new ventures that will contribute to the region’s economic vitality and employment opportunities.

“Through the Longleaf CCS Hub, we’re not just addressing the growing demand for efficient CO2 management solutions; we’re fostering an ecosystem of economic resilience and sustainability,” said Joel Link, president of Tenaska’s Development Group. “This project reflects our commitment to innovative solutions while propelling Alabama to the forefront of economic growth.”

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Yara Clean Ammonia hires CEO from OCI

Yara Clean Ammonia has hired a CEO out of OCI’s fertilizers business in Europe.

Hans Olav Raen has been appointed CEO of Yara Clean Ammonia, effective May 1, 2024.

Raen has until now been Business Director and heading OCI’s fertilizers business in Europe. He has more than 25 years of experience in the fertilizer industry, including twelve years with Norsk Hydro and Yara International (between 1997 and 2009), where Raen held commercial and managerial roles in Europe and Africa.

“We are pleased to announce that Hans Olav will be heading Yara Clean Ammonia. Together with the strong YCA-team, I am confident that Hans Olav will support and lead the company to the next level, spearheading the rapidly growing clean ammonia business,” said Magnus Krogh Ankarstrand, EVP Corporate Development in Yara International.

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Calumet subsidiary Montana Renewables inks supply and offtake agreement with Macquarie

Montana Renewables is developing a renewable hydrogen facility that will supply hydrogen to a plant producing renewable fuels.

Calumet Specialty Products Partners has closed two transactions that together fund the working capital needs of Montana Renewables LLC (MRL), including a supply and offtake agreement with Macquarie Commodities and Global Markets, according to a news release.

The Macquarie supply and offtake agreement provides inventory monetization for renewable feedstocks and products, as well as intermediation services connected with the purchase of renewable feedstocks.

Simultaneously, a $90m asset backed loan revolving credit facility was executed with Wells Fargo Bank, NA, secured by accounts receivables and open blenders tax credit refunds.

“Now that Montana Renewables has commenced operations, these transactions ensure that our working capital needs are met going forward,” said Bruce Fleming, EVP Montana Renewables. “Third party inventory financing has been in the MRL plan since day one, and we are pleased to execute on the plan as we launch operations.”

Once fully operational, Montana Renewables, based in Great Falls, Montana, will use waste feedstocks to produce low-emission alternatives that directly replace fossil fuel products including Renewable Hydrogen, Renewable Diesel (RD) and Sustainable Aviation Fuel (SAF).

Montana Renewables is developing a renewable hydrogen facility that will supply hydrogen to the plant’s hydrocracker.

In August, 2022, Warburg Pincus agreed to invest $250m in MRL in the form of a participating preferred equity security, which values MRL at a pre-commissioning enterprise value of $2.25bn. Stonebriar Commercial Finance has invested an additional $350m through a pair of sale and leaseback contracts on top of its existing $50m commitment to MRL. The sale and leaseback transactions carry an approximate 12.3% cost of capital and offer certain strategic early termination options. Concurrent with these transactions, the $300m convertible investment from Oaktree Capital Management L.P. in MRL has been retired.

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Advisor Profile: Cameron Lynch of Energy & Industrial Advisory Partners

The veteran engineer and financial advisor sees widespread opportunity for capital deployment into early-stage renewable fuel companies.

Cameron Lynch, co-founder and managing partner at Energy & Industrial Advisory Partners, sees prodigious opportunity to pick up mandates in the hydrogen sector as young companies and early movers attract well-capitalized investors looking for auspicious valuations.

The firm, a three-year-old boutique investment banking outfit with offices in New York and Houston, is broadly committed to the energy transition, but is recruiting for new personnel with hydrogen expertise, Lynch said, adding that he is preparing for a new level of dealmaking in the new year.

“I think we can all expect 2023 will be even more of a record year, just given the appetite for hydrogen,” Lynch said. “Hydrogen is one of our core focuses for next year.”

Cameron Lynch

Lynch started his career as a civil & structural engineer and moved into capital equipment manufacturing and leasing for oil & gas, and also industrial gasses –things like cryoge

nic handling equipment for liquid nitrogen. He started the London office of an Aberdeen, U.K.-based M&A firm, before repeating that effort in New York.

Founding EIAP, Lynch and his business partner Sean Shafer have turned toward the energy transition and away from conventional energy. The firm works on the whole of decarbonization but has found the most success in the hydrogen space.

Earlier lifecycle, better valuations

Hydrogen intersects with oil& gas, nuclear, chemicals, midstream companies, and major manufacturing.

Large private equity funds that want to get into the space are realizing that if they don’t want to pay “ridiculous valuations for hydrogen companies” they must take on earlier-stage risk, Lynch said.

Interest from big private equity is therefore comparatively high for early-stage capital raising in the hydrogen sector, Lynch said, particularly where funds have the option to deploy more capital in the future, Lynch said.

“They’re willing to take that step down to what would normally be below their investment threshold.”

Lynch, who expects to launch several transactions in the coming months with EIAP, has a strong background in oil & gas, and views hydrogen valuations as a compelling opportunity now.

“It’s very refreshing to be working on stuff that’s attracting these superb valuations,” Lynch said.

There’s a lot of non-dilutive money in the market and the Inflation Reduction Act has been a major boon to investors, Lynch said. For small companies, getting a slice of the pie is potentially life changing.

Sean Shafer

The hydrogen space is not immune to the macroeconomic challenges that renewables have faced in recent months and years, Lynch said. But as those same challenges have accelerated the move toward energy security, hydrogen stands to benefit.

Supply chain issues post-COVID pose a potential long-term concern in the industry, and equity and debt providers question the availability of compressors and lead times.

“I would say that’s one of the key issues out there,” Lynch said. There’s also the question of available infrastructure and the extent to which new infrastructure will be built out for hydrogen.

EIAP sees the most convincing uses for hydrogen near term in light-weight mobility and aerospace, Lynch said. The molecule also has a strong use case in back-up generation.

Hydrogen additionally presents companies in traditional fossil fuel verticals the opportunity to modernize, Lynch said, citing a secondary trade EIAP completed earlier this year

California’s Suburban Propane Partners acquired a roughly 25% equity stake in Ashburn, Virginia-based Independence Hydrogen, Inc. The deal involved the creation of a new subsidiary, Suburban Renewable Energy, as part of its long-term strategic goal of building out a renewable energy platform.

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Exclusive: Verde Clean Fuels seeking project finance for gas refineries

Publicly listed Verde Clean Fuels plans to seek equity and debt investors for low-carbon gasoline refineries it expects to deploy across the US. We spoke to CEO Ernest Miller about the strategy.

Verde Clean Fuels, a publicly listed developer of clean fuels technology and projects, is planning to seek project debt and equity investors to finance a series of low-carbon gasoline refineries it expects to deploy across the US.

Houston-based Verde, which employs syngas-to-gasoline refining technology, recently announced an agreement with Diamondback Energy to construct a facility in the Permian Basin that will utilize stranded natural gas to produce 3,000 barrels per day of gasoline.

The company is also pursuing a carbon-negative gasoline project on the premises of California Resources’ Net Zero Industrial Park in Bakersfield, California. The California project will produce approximately 500 barrels of RBOB renewable gasoline per day from agricultural waste, while capturing and sequestering around 125,000 tons of CO2 per year.

Verde is capitalized following a private investment in public equity (PIPE) injection of $54m as part of a reverse merger last year, allowing the company to take the Bakersfield and West Texas projects through the FEED phase, CEO Ernest Miller said in an interview.

Underpinning Verde’s business model is the view that gasoline will persist as a transportation fuel for many years to come, and that very few parties are working to decarbonize the gasoline supply chain.

“Between renewable diesel, renewable natural gas, and sustainable aviation fuel, there is very little awareness that renewable gasoline is even a thing,” Miller said. “The addressable market is enormous, and the impact that can be made by taking even a sliver of that market is enormous.”

Miller says that many market participants believe that electric vehicles will solve the emissions problem from road transport.

“The fact is that gasoline has a very, very long runway ahead of it,” he said. “Regardless of the assumptions you want to make about EV penetration, the volume of gasoline that we continue to use for the foreseeable future is huge.”

Verde Clean Fuels demo plant.

Verde’s projects are sized in the 500 – 3,000 barrels per day range, making them a unique player at the smaller end of the production range. The only other companies with similar methanol-to-gas technology are ExxonMobil and Danish-based Topsoe, which operate at a much larger scale, according to Miller.

Miller recognizes that low-carbon, or negative-carbon, gasoline operates within a complex ecosystem, with the California project potentially playing in that state’s LCFS and D3 RIN markets, in addition to the market for gasoline.

“What I would like to see us do is have an offtaker that plays in all three of those products – so if I can go to Shell Trading, or bp, or Vitol, and get one of them to say, ‘here’s a price,’ and they take all of that exposure and optionality,” Miller said, “that allows me to finance the project without having to manage a whole bunch of different commodity exposures and risk.”

Bakersfield 

The Bakersfield project, estimated to cost $235m to build, will utilize 450 tons per day of agricultural waste to produce gasoline, and sequester CO2 via California Resources’ carbon management company, Carbon TerraVault, a joint venture with Brookfield Renewable.

Because of the carbon sequestration, the project will qualify for incentives under 45Q, but since it is producing, in Miller’s words, “deeply carbon-negative gasoline,” most of the value for the project will come from California’s LCFS program.

In order to qualify for LCFS credits, the Bakersfield facility goes through the full GREET modeling process – including transport of feedstock, processing and refining, and transport away from the facility – returning a negative 125 grams equivalent per MJ carbon intensity score for the project, according to Miller.

As for investors, Verde “would like to see both California Resources and Brookfield Renewable in the project, either individually or through the Carbon TerraVault JV,” Miller said.

Verde is also in discussions with a handful of financial players, including infrastructure and pension funds that are looking for bond-like cash flow that a project finance model can provide. The company has also explored the municipal bond market in California, which would bring to bear a favorable capital structure for the project, Miller said.

Verde is not currently working with a project finance advisor, Miller said, noting that they have in-house project finance experience. In Texas, Verde is working with Vinson & Elkins as its law firm; and in California Verde is working with Orrick as counsel.

Gasoline runway

For the Diamondback facility in West Texas, which requires roughly $325m of capex, both Verde and Diamondback will take equity stakes in the project, and Verde will seek to bring in debt financing to fund the rest of the project costs in a non-recourse project finance deal, Miller said.

The Permian project seeks to provide a pathway to monetize stranded gas in the basin by taking advantage of and alleviating its lack of takeaway capacity, which causes gas prices at the Waha Hub in West Texas to trade at a significant discount to the Henry Hub price.

“Diamondback would take the position that any gas that’s getting consumed in the Permian Basin is gas that’s not getting flared in the Permian Basin,” Miller said, thus making the project a emissions-mitigating option. “There will never be enough natural gas takeaway capacity out of the Permian Basin,” he added, noting that driller profiles are only going to get gassier as time goes on.

Diamondback, for example, produces more in the Permian than it can take out via pipeline, therefore “finding a use, a different exposure, for that gas by turning it into gasoline, is of value for them,” Miller said.

“It’s the same dynamic in the Marcellus and Bakken and Uinta – all the pipeline-constrained basins,” he added, alluding to possible future expansion to those basins.

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US hydrogen developer to raise $1bn in 2023

Avina Clean Hydrogen will need $600m or more of debt and between $200m and $300m of equity. Capital raising talks are focused on the operating company and project level.

Avina Clean Hydrogen, a U.S.-based developer of hydrogen production plants, will seek to raise approximately $1bn, or possibly more, in 2023, CEO Vishal Shah said in an interview.

The company will need $600m or more of debt and between $200m and $300m of equity, Shah said. Capital raising talks are focused on the operating company and project level.

Avina is also in discussions with potential investment bankers, but has not hired anyone yet, Shah said.

“The capital needs for us are going to continue to grow,” Shah said. “We are certainly open to bringing on additional partners.”

Four development projects have offtake agreements in place, Shah said. The first operational plant will open in Southern California next year or early 2024, followed by Avina’s 700,000 mtpa green ammonia project in the Texas Gulf Coast. Additional projects are underway in the Midwest.

Three of those projects, each with offtakers in place, will reach FID in 2023 and need project debt, Shah said.

Avina is engaged with half-a-dozen potential customers and will seek to develop additional projects within that existing footprint.

Renewable energy procurement is also an important concern for Avina; the Texas project alone will require 900 MW of renewable energy to power, Shah said. The company is in offtake discussions with regional IPPs, mostly in solar and battery storage, but could use help with those agreements. Shah declined to name the firm’s legal advisor.

Avina was founded more than three years ago and is principally backed by Hydrogen Technology Ventures, a firm headed by Shah.

An equity raise was completed in early Q4, Shah said, declining to provide details. The company has a “large industrial firm” as a strategic investor that it hopes to announce soon. Looking forward, the company will look for a second strategic investor, as well as project finance.

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