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Exclusive: Green hydrogen developer planning capital raises for distributed portfolio

A developer of US green hydrogen projects will need to access the project equity, debt and tax equity markets in the near term for a pipeline of distributed assets nationwide.

NovoHydrogen, the Colorado-based renewable hydrogen developer, will be in the market for project financing for a portfolio of distributed green hydrogen projects in 2024, CEO Matt McMonagle said.

The company, which recently agreed to a $20m capital raise with Modern Energy, is aiming to attract additional private equity and infrastructure investors for the projects it is developing, the executive said.

“The opportunity is really there for attractive risk-adjusted returns at the project level based on how we’re structuring these projects with long-term contracted revenue,” he said.

The company plans to bring its first projects online in late 2024 or 2025.

“We don’t have the project financing set at the point that we can announce, but that’s something myself and my team have done in our careers,” McMonagle said, adding that he’s focused on bankability since founding the company. “We wanted to be as easy for the lenders to underwrite as possible.”

No financial advisors have been attached to the project financings, McMonagle said. A recently announced Series A, first reported by ReSource in February, gave the company exposure to investors that want to participate in project financings, he said.

“We’ll really be ramping that process up, likely after the new year,” McMonagle added, declining to say how much the company would need to raise in 2024.

NovoHydrogen doesn’t have a timeline on a Series B, he said.

Distributed pipeline

The company looks to do onsite projects adjacent to consumption, McMonagle said. The first projects that will go online will be 10 MW and smaller.

“Typically the permitting is straightforward in that we’re adding equipment to an already impacted industrial site,” McMonagle said. He declined to elaborate on where these projects are located or what customers they will serve.

The company also has off-site, or near-site projects, where production is decoupled from consumption. But the company still calls those distributed because they are being developed with a targeted customer in mind.

“We want to be as close as possible to that customer,” he said. Those off-site projects typically are larger and will begin coming online in 2026 and 2027.  

In Texas NovoHydrogen has two large-scale green hydrogen developments in production, co-located with greenfield renewables projects, McMonagle said. Partners, including EPC, are in place for those efforts. The company also has projects in West Virginia, Pennsylvania, New Jersey and along the west coast.

“Where can we add the most value and have the biggest competitive advantage?” McMonagle said of the company’s geographic strategy. “We have very specific go-to-markets in each of those regions which we feel play to our strengths.”

NovoHydrogen is a member of the Pacific Northwest Hydrogen Hub and is involved with the Appalachian Regional Clean Hydrogen Hub (ARCH2), though not in line to receive DOE funding through that hub.

Post-IRA, green hydrogen projects will look much like renewables deals from the equity, tax equity and debt perspectives, he said.

“We’re structuring and setting up our projects to take advantage of that existing infrastructure and knowledge base of how to finance deals,” he said. New options on transferability will enable additional financing options as well.

No flipping

NovoHydrogen does not plan to flip projects before COD, McMonagle said.

“We are planning to deploy hundreds of millions if not billions of dollars in capex for these projects, and we’ll certainly need to partner with folks to deploy that capital,” McMonagle said. “But we will remain in deals with our customers because that relationship is really the fundamental value that we bring in our business.”

Hydrogen projects are different from renewables in that the customers need greater assurances of resiliency, security of supply and performance, than in a space like solar, he said.

Flipping projects before COD would be inconsistent with the trust required to attract offtakers.

“We don’t believe doing a flip reflects that level of importance and support and, frankly, incentive, behavioral incentive, that we have to show to our customers,” he said.

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Group to bring zero-emissions passenger flights to Denmark

DAT, Everfuel, and Universal Hydrogen Co. will collaborate on regional aviation by enabling zero-emissions flight using clean hydrogen by the end of 2025.

DAT, Everfuel, and Universal Hydrogen Co. will collaborate on regional aviation in Denmark by enabling zero-emissions flight using clean hydrogen by the end of 2025.

The three companies will combine their expertise in flight operations, hydrogen fuel production, and hydrogen logistics and aircraft propulsion to bring into service hydrogen-powered ATR 72-600 regional aircraft on DAT routes in Denmark, with the goal of converting all of DAT’s domestic flights to true zero-emission flights by 2030, according to a press release.

DAT plans to use ATR 72s converted using Universal Hydrogen technology. These aircraft will accommodate 56 passengers following conversion to hydrogen. Universal Hydrogen will also provide fuel services to supply green hydrogen using modular capsules, without the need for changes to existing airport infrastructure.

The green hydrogen will be produced at Everfuel’s first Power-to-X (PtX) plant in Fredericia, the release states.

The collaborative effort between the three companies follows the Government of Denmark’s request for tender to develop zero-emission commercial flights in Denmark.

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First Citizens finances acquisition of ammonia carrier

The financing supports Purus Clean Energy’s acquisition of the MV Green Power, a 40,000 cbm ammonia carrier.

The Maritime Finance group of First Citizens Bank has provided financing to Purus Clean Energy to support the acquisition of the MV Green Power, a 40,000 cbm ammonia carrier, according to a news release.

Purus Marine, the parent of Purus Clean Energy, provide slow-carbon maritime energy transportation and infrastructure systems. The company has a fleet of more than 50 low-carbon vessels in the offshore wind, LNG, ammonia, logistics and ferry sectors.

Maritime Finance, part of First Citizens’ CIT division, offers customized solutions for secured loans to a global client base of vessel owners and operators.

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Par Pacific to invest $90m in Hawaii renewable fuels facility

The renewable fuel facility is expected to produce approximately 61 million gallons per year of renewable diesel, sustainable aviation fuel, renewable naphtha and liquified petroleum gases.

Par Pacific Holdings, Inc. plans to invest approximately $90m to develop the state’s largest liquid renewable fuels manufacturing facility at its Kapolei refinery.

The project relies on the Kapolei refinery’s highly experienced operating team, existing tank storage and related logistics, as well as available hydrogen from current refining operations, a key requirement for low-carbon renewable fuels production. As a result, this project is expected to be completed for less than $1.50 per gallon of annual operating capacity and is expected to be commissioned in 2025. The unit can produce up to 60% sustainable aviation fuel in a first step toward decarbonizing Hawaii’s significant air travel market.

“This project represents a key milestone in our renewable fuels strategy, which supplements our conventional fuels production in Hawaii. The expansion ensures that Par Hawaii, with its high-paying local manufacturing jobs, will be the leading supplier of liquid fuels to the Hawaii economy now and into the future,” said William Pate, Par Pacific’s CEO.

In total, the renewable fuel facility is expected to produce approximately 61 million gallons per year of renewable diesel, sustainable aviation fuel (SAF), renewable naphtha and liquified petroleum gases (LPGs). If market conditions are supportive, yield can be shifted to over 90% renewable diesel. These renewable fuels lower greenhouse gas emissions while providing reliable electricity and transportation fuels to Hawaii consumers.

“Given this project’s feedstock requirements, the state is well positioned to drive an additional major economic benefit by creating a market for locally grown oil seed crops. The creative redevelopment of a portion of our refining system is an excellent example of our team’s technical strength to deliver renewable fuel solutions that supplement our existing operations. I am very proud of the team’s contributions and look forward to continuing our efforts to diversify and decarbonize energy sources for our community,” said Eric Wright, president of Par Hawaii, Par Pacific’s local subsidiary.

The announcement coincides with Par Pacific’s authorization from the U.S. Foreign-Trade Zone Board to use foreign-sourced vegetable oil to supplement locally-sourced renewable feedstocks. Par Hawaii is working with Hawaii-based Pono Pacific in the planting of camelina crops to test the suitability of that oil seed for state production. Par Pacific is committed to supporting the state agricultural sector in the development of oil seed crops to support decarbonization of the local economy.

In 2022, Par Pacific and Hawaiian Airlines, the largest air carrier in the state, announced a joint feasibility study to explore ways to make sustainable aviation fuel commercially viable. Today’s announcement marks a significant milestone in our shared efforts to produce renewable fuels in Hawaii. The companies look forward to engaging with stakeholders across the community to advance policies which enable the use of renewable fuels in Hawaii.

Par Pacific also is assessing development opportunities at the former Chevron refinery location in Kapolei, near its current operations, including projects that would further support the state’s efforts to decarbonize its electrical grid.

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Exclusive: TransGas CEO talks mega ammonia project

The owners of a proposed colossal ammonia production facility in Appalachian coal country are in the beginning stages of seeking liquidity, EPC contracting, and advisory services for a project they say will ultimately be financed akin to an LNG export terminal.

It’s an appeal often made in modern US politics – doing right by those left behind.

Perhaps no place is more emblematic of that appeal than West Virginia, and perhaps no region in that state more so than the southern coal fields. It’s there a fossil developer is proposing the architecture of the ruling coal industry be used to build a $10bn decarbonized ammonia facility and is gathering the resources to do so.

“It’s world class, and it makes southern West Virginia, Mingo County, the catalyst for the 21st century’s energy revival,” said Adam Victor, the CEO of TransGas Development Systems, the developer of the project. “The people [here] are the heirs and descendants of the people that mined the coal that built the steel that built the Panama Canal.”

The Adams Fork Energy project in Mingo County, jointly developed by TransGas and the Flandreau Santee Sioux Tribe, is slated to reach commercial operations in 2027. Six identical 6,000 mtpd ammonia manufacturing plants are being planned on the site of a previously permitted (but not constructed) coal-to-gasoline facility.

ReSource exclusively reported this week that the state has issued a permit to construct the facility. TransGas owns 100% of the project now, though if the Tribe comes through with federal funding then it will become the majority owner.

TransGas itself could take on a liquidity partner to raise up to $20m in development capital for the project, Victor said. The company is not using a financial advisor now but will hire one in the future.

White & Case is TransGas’ legal advisor. The company is in discussions with Ansaldo Energia, of Italy, about construction.

“The project is not averse to talking to private equity or investment bankers, because nothing has been decided right now,” Victor said, noting that the company is just beginning talks with infra funds and is eager to do so. “The project will be looking for an EPC.”

The first of the six plants will cost about $2bn, but each one will get successively less expensive, Victor said. Total capex is about $10bn, though there is discussion of acquiring adjacent land to double the size of the project – or 12 plants in all producing 6,000 mtpd each.

TransGas has the support of West Virginia politicians like Sen. Joe Manchin and Gov. Jim Justice, Victor said. Financing the project will be a function of the offtake.

Electricity for data centers, or ammonia for export?

The company is conducting a market analysis to determine avenues for offtake, Victor said. They could do partial electricity generation onsite to power a data center, with the remainder of the hydrogen being used to make ammonia for shipment overseas.

Depending on the needs of offtakers, the facility could also do one or the other entirely, he said.

The project, if configured at current size, could support about 6,000 MW of non-interruptible power generation, 2,000 MW of that for cooling.

“This could basically become a 6,000 MW campus to become the center of data centers in the United States,” Victor said, noting that the region is much less prone to natural disasters than some others and is high enough in elevation to escape any flooding. “I think we could rival Loudoun County [Virginia] as where data centers should be located.”

Adams Fork sits on the largest mine pool reservoir in the eastern US, Victor noted. Data centers need constant cooling, particularly new chip technology that requires liquid cooling.

TransGas will know in a matter of weeks if it’s going to go the electrical route, Victor said. There are only five companies in the world with data centers large enough to efficiently offtake from it: Amazon, Microsoft, Google, Meta and Apple.

If not, the facility will continue down the path of selling the decarbonized ammonia, likely to an oil company or international ammonia buyer like JERA in Japan.

Partnering with a tech company will make it easier to finance the project because of high credit ratings, Victor said. International pressure on oil companies could affect those credit ratings.

“We think the investor world could be split,” he said, noting tech and fuels investors could both be interested in the project. “You’re doubling the universe of investors and offtakers.”

He added: “Once we have the offtake, we think we could have a groundbreaking this year.”

Two ways of shipping

For ammonia production the facility could use the same shipping channels the coal industry uses – either to the Big Sandy River to be sent by barge on the Ohio to New Orleans, or rail to ports in Baltimore; Norfolk, Virginia; and Savanna, Georgia.

By rail, two 40-car trains per day would take ammonia to port. Norfolk Southern and CSX both operate in the region.

Another option is to have a fleet of 50 EV or hydrogen-powered trucks to transport ammonia to the Big Sandy where electric-powered barges can take it to the Gulf, Victor said. That latter option could mean a lower CI score because it will eliminate rail’s diesel power.

Mercedes-Benz and Volvo both make the kind of trucks used for this work in Europe and Asia, he said. Coal mines in the region use diesel trucks in fleets as numerous as 500, and the original TransGas coal plant was permitted for 250 trucks per day.

“This is something that our offtake partner is going to determine,” he said. Japan would likely want the ammonia in the Gulf of Mexico, whereas European shipping companies would want it on an Atlantic port.

The LNG financial model

The offtakers themselves could fund the facility, Victor said.

“The financial model for this is the financial model for funding LNG terminals,” he said. “The same teams that put those large facilities together, financial teams, would be the same teams that we’re talking to now.”

The offtakers may also dictate who they want to be the financial advisor, he said.

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Exclusive: Midwest renewables developer launches capital raise

A Midwest renewables developer has launched a $340m capital raise for a wind-to-hydrogen operation in the US heartland.

Zero6, the Minneapolis-based renewables developer, owner and operator, recently launched a process to raise $340m in project capital for its portion of the Lake Preston Biofuels Project in South Dakota, senior managing director Howard Stern said in an interview.The company, previously known as Juhl Energy, is partnered with Colorado-based Gevo, which plans to produce SAF on 240 acres at Lake Preston in a project dubbed Net-Zero 1.Zero6 will develop 20 MW of green hydrogen production adjacent to Net-Zero 1 powered by a 99 MW wind farm located 10 miles from the SAF site, Stern said.Plans call for FID late this year, he said.Zero6 met with several financial advisors for the raise, but decided to try and conduct it in-house, Stern said. The company has not ruled out help from an advisor for this raise and could need those services in the future.The goal is to have an anchor investor in place by May, Stern said. The company is open to strategic or financial investors.Zero6’s strategy is akin to a traditional private equity play, holding a project for five to ten years of operation, Stern said. That could change depending on new investors’ outlook.According to the ReSource database, Gevo has additional projects in Illinois, Iowa and Nebraska.Stern said Zero6 sees opportunities to replicate the Lake Preston strategy in other parts of the country.The Lake Preston project has been tied to the development of carbon capture pipelines through South Dakota, namely the Summit Carbon Solutions CO2 pipeline. Gevo officials have made public comments noting that if the Summit pipeline does not get built, it would disadvantage the Lake Preston project on the basis of its carbon intensity score, and the company may seek options elsewhere.
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Exclusive: Hydrocarbon recycling firm raising pre-IPO equity

An early-stage company capturing and recycling CO2 from hydrocarbon engines in the northeastern US and Germany has hired an investment bank to help them with a public listing and is raising pre-IPO platform equity.

ESG Clean Energy, a Massachusetts-based carbon capture and recycling firm formed in 2016, plans to go public in 2025 but will first raise pre-IPO platform equity, CEO Nick Scuderi said in an interview.

ESG Clean Energy will change its name in a re-brand and has hired an investment bank to help with the IPO, which does not yet have a targeted quarter, Scuderi said. He declined to name the advisor.

After the name change but prior to the public listing, ESG is seeking to raise between $20m and $40m in platform equity, he said. The company is interested in a traditional IPO, not a SPAC or private debut opportunity.

Angel investors have backed the company to date, with some $40m total raised, Scuderi said. He owns a controlling stake in the company.

Power, water and CO2

ESG Clean Energy, billed as a thermal dynamics and fluid mechanics engineering company, has patented technology for use in fossil combustion engines – both piston-driven engines and bottoming cycles (secondary thermal dynamic waste-to-energy systems). Exhaust is treated to produce CO2 and water.

The technology is commercialized, producing power at a facility in Holyoke, Massachusetts under a 5 MW/20-year PPA with Holyoke Gas & Electric. The 5,000 square-foot plant in the city proper has two Caterpillar G3520 natural gas engines each producing 2 MW of power running on natural gas during peak hours.

The waste-heat from Holyoke One is used to create commodities, including distilled water.

“What we have is a design, a system, where we utilize our technology to separate the water from the exhaust,” Scuderi said. “We can utilize this technology in any power plant in the US that’s running on natural gas.”

In arid regions, the distilled water aspect has obvious potential. The Holyoke One facility makes up to 14,000 gallons of distilled water per day, Scuderi said.

The system is also applicable in ICE engines, Suderi said. The company has been in discussions with auto manufacturers to license ESG’s IP; he declined to name which auto companies.

The CO2 is sold to offtakers who do not re-emit it into the atmosphere, such as cannabis growers and CO2 beverage makers. ESG is also able to sell carbon credits.

Bankable opportunities in the US and Germany

Holyoke One, at a cost of $20m, can be replicated throughout the US and, post-IPO, ESG has eyes on power projects in New England, California and Florida, Scuderi said.

Power plants that produce from 100 MWh to 200 MWh will cost between $400m and $450m, and each of those projects will be set up as a separate LLC, Scuderi said. The demand is particularly large in powering data storage.

“We have different [investment] funds that are very large that are willing to put up the money” to fund the projects, Scuderi said. “It’s bankable because the power sales agreement is tied to a data storage company that’s triple-A rated.”

Data-heavy geographies like Virginia are targets for this kind of development, and ESG plans to sharpen its focus on these projects, as well as project finance efforts, following the IPO.

Now, the company has six large scale projects in development in Germany, including one advanced project serving a cloud computing offtaker in the Berlin area, needing 150 MW to 200 MW of power per hour, Scuderi said.

“In Germany, we’re very far along with getting power sales agreements,” he said. “Once we deploy this technology in one location, the world’s going to want it.”

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