Innovation, Project finance, Project news, Raising capital
Exclusive: Natural gas decarbonization firm in capital raise
A Canadian methane pyrolysis firm is working with a pair of financial advisors and is in the market with an equity capital raise.
April 8, 2024
Ekona Power, the industrial hydrogen solutions firm based in British Columbia, is raising a Series B of between $50m and $80m, two sources familiar with the matter told ReSource.
RBC Capital Markets is conducting the raise, the sources said, while the Vancouver office of Fort Capital is also involved.
The capital raise would fund the second stage of decarbonization efforts at the Gold Creek Natural Gas plant in Alberta.
The company is targeting US investors, particularly large strategics, one of the sources said, and has had discussions with ExxonMobil Low Carbon Solutions.
Ekona is eyeing expansion in the US Pacific Northwest, Western and central Canada, Australia, Saudi Arabia and China, the source added.
A pair of renewables developers with a track record of completing large wind farms in North America are in late stage talks to join a massive Canadian wind-to-hydrogen project as co-developers.
“Discussions are at advanced stages with both companies,” the statement reads. “The Project would then benefit from their onshore wind development experience and local knowledge and relationships.”
In order to finance the project, financial advisor Green Giraffe plans to take a wide market approach using its project finance contacts as well as World Energy GH2’s relationship banks, which are mostly local Canadian banks, the document reads. The advisor plans to conduct the capital raise “in due time” and expects “strong interest” from lenders given the scarcity of green hydrogen projects in the market.
“Lenders will highly value the location (politically stable country with ambitious carbon-neutral targets), the experienced consortium, and the innovative aspect of the project that will be de-risked with adequate mitigations solutions,” according to the EIS.
The project involves 1 GW of wind power to produce hydrogen and ammonia on the Port au Port peninsula, Port of Stephenville, in Newfoundland and Labrador. Future expansions plan for up to 3 GW of energy from additional wind farms.
First production is planned for 2Q24 with full production reached by 3Q35.
In May SK ecoplant, the environment and energy arm of Korea’s SK Group, invested $50m in Project Nujio’qonik, acquiring a 20% stake in the first phase.
North Carolina-based Strata Clean Energy has made a series of hires for its P2X platform.
Strata Clean Energy has recently made a raft of hires for its P2X platform.
The North Carolina-based renewable energy firm recently hired Hannah Perl as development manager for P2X, according to LinkedIn. She was previously a senior analyst of energy origination and development at TC Energy.
Strata has also recently hired Nancy Estrada, previously a SunCoke Energy environmental manager, as permitting and local affairs manager; and Tamara Becejac, who was previously program manager of green hydrogen at AVANGRID, as senior technical product manager.
Matthew Moshier joined from TC Energy in October as senior director of engineering. And Minashree Singh, who came for Algonquin Power & Utilities, joined Strata’s P2X platform as a senior supply chain manager, also in October, according to LinkedIn.
Strata is developing a pipeline of green hydrogen projects that will produce large amounts of green ammonia and other hydrogen derivatives later this decade, Mike Grunow, executive vice president and general manager of Strata’s P2X platform, said in an interview last year.
The P2X team also includes KJ Plank, Strata’s Chief Innovation Officer.
The Pennsylvania-based company has modified the design of the project to include more sustainable aviation fuel thanks to incentives in the Inflation Reduction Act.
Air Products will commit an additional $500m to a sustainable aviation fuel (SAF) project in California thanks to the Inflation Reduction Act, bringing the company’s investment in the facility to $2.5bn.
Pennsylvania-based Air Products teamed with World Energy earlier this year to build an expansion project at World Energy’s SAF production and distribution hub in Paramount, California.
The change in the design of the SAF facility results from the passage of the Inflation Reduction Act in the US, Air Products executives said on its fiscal 4Q22 earnings call today. The IRA includes a new $1.25 per gallon SAF credit where the fuel reduces greenhouse gas emissions by at least 50% compared to petroleum-based jet fuel.
While the total capacity at the plant remains the same at 340 million gallons per year, the portion of the output dedicated to SAF will increase, adding additional costs, company CEO Seifi Ghasemi said.
The long-term, take-or-pay agreement with World Energy includes Air Products’ construction and ownership of a new hydrogen plant to be operated by Air Products and renewable fuels manufacturing facilities to be operated by World Energy, the company said in an April news release. The project is scheduled to be onstream in 2025.
Air Products is also building a $4.5bn blue hydrogen complex in Louisiana, where plans to capture 5 million tons per year of CO2 will result in an annual benefit of roughly $425m after tax from incentives in the IRA, Ghasemi said on the call. The legislation provides a tax credit of $85 per metric ton of captured CO2.
“The numbers are very clear with regard to CO2sequestration,” Ghasemi said.
The company is conducting further evaluations of the expected impact of the IRA’s tax benefits for the Louisiana facility that could result in an expansion of the project’s scope, he added.
Also during the quarter, Air Products announced a long-term supply agreement for Imperial Oil’s proposed Strathcona renewable diesel complex, with Air Products supplying about half the low-carbon hydrogen output from its net-zero hydrogen energy complex in Edmonton, Alberta, Canada.
In addition, the company said it would invest approximately $500m to build, own and operate 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 for industrial decarbonization and mobility.
A developer of planned microgrid communities will look for an electrolysis partner to provide green hydrogen for use in agricultural applications and is planning to go to market for platform equity and project debt.
Embark Fund and NOVA Constructors, a group of real estate development interests focused on developing three planned residential communities, will look for an electrolysis partner for its community microgrid development efforts, managing partner Craig McBurney said in an interview.
McBurney, who is also solar development manager for the South Carolina-based renewables developer Alder Energy, said the partners are in the process of acquiring land – between 1,500 and 2,000 acres per parcel – in Virginia, Maryland and Illinois. The latter project is the most advanced.
Each is for a planned residential community including microgrid development, he said. The communities will include renewables, which could be used to power electrolysis during times of low demand. He gave the example of a 30 MW solar ground array.
“We are preparing to announce a [$60m to $80m] equity raise,” McBurney said, adding that between $240m and $300m of debt will also be required. The money will be used for site acquisition, development and EPC. “The whole capital stack is an opportunity.”
The group has not formally engaged with an investment bank or financial advisor, he said. They will be targeting private equity, sovereign wealth funds, and family offices.
McBurney pointed to communities like Whisper Valley in Texas and Babcock Ranch in Florida as examples of his group’s efforts to develop sustainable off-grid communities.
A firm with plans for a biorefinery in Washington state will raise its first large equity round early next year.
Planted Materials, a Seattle-based biomass-to-chemicals company, is in early design stages for its first biorefinery in eastern Washington state and planning to raise an equity round in early 2025, co-founders Noah Belkhous and Greg Jenson said in an interview.
The company will seek to raise between $10m and $20m ahead of FID on the biorefinery, Belkhous said. The four-year-old company has raised $500k from angel investors to date and is currently raising another $1m from high net worth individuals in the Seattle region.
Planted Materials does not have a relationship with a financial advisor but is open to one, Belkhous said.
The company’s recycling model takes municipal landfill waste and converts it to chemical materials for pharmaceutical, paper, plastic and other manufacturing industries.
The proprietary recycling process is something the company would like to license to municipalities in the US and abroad, in addition to building biorefineries in the Pacific Northwest, Belkhous said. The company’s lab is currently based in the Ballard neighborhood of Seattle.
Early design work on the first biorefinery is underway. The duo expects CapEx to cap at $50m, reaching FID in 2026 and beginning construction that year.
While the majority of the company’s feedstock will likely come from the major metropolitan regions in the western PNW, refining capacity is more attractive in the east for reasons of space and existing waste management infrastructure. Jenson noted the presence of the relevant research campus of Washington State University in Pullman, as well as the Pacific Northwest National Laboratory in Richland.
Recently, the team accompanied Washington Governor Jay Inslee and members of the Washington State Department of Commerce on a trip to Sydney and Melbourne in Australia. The company has applied to a pair of $350k grants from the state.
An early-stage provider of distributed methanol-to-hydrogen solutions is planning a capital raise as it scales up.
Kaizen Clean Energy, a Houston-based methanol-to-hydrogen fuel company, is planning to raise additional capital in support of upcoming projects.
The company, which uses methanol and water to produce hydrogen with modular units, recently completed a funding round led by Balcor Companies, in which Balcor took a minority interest in Kaizen.
Additional funding in the capital raise was provided by friends and family, Kaizen co-founder and chief commercial officer Eric Smith said in an interview.
But with its sights on larger project opportunities this year, the company is already targeting an additional capital raise to support continued growth, Smith said. He declined to comment further on the capital raise and potential advisors, but noted that the company’s CFO, Craig Klaasmeyer, is a former Credit Suisse banker.
Kaizen’s methanol model utilizes a generator license from Element 1 and adds in systems to produce power or hydrogen, targeting the diesel generator market, EV charging and microgrids as well as hydrogen fueling and industrial uses.
Compared to trucking in hydrogen, the model using methanol, an abundant chemical, cuts costs by around 50%, Smith said, noting that Kaizen’s containers are at cost parity with diesel.
In addition, the Kaizen container is cleaner than alternatives, producing no nitric or sulfur oxide, according to Smith. Its carbon intensity score is 45, compared to 90 for the California electric grid and 100 for diesel generators.
Smith also touts a streamlined permitting process for Kaizen’s containerized product. The company recently received a letter of exemption for the container from a California air district due to low or no emissions. The product similarly does not require a California state permit and similarly, when off grid, no city permits are required, he added.
