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FEED awarded for Alberta cement-plant CCUS project

Mitsubishi and Kiewit were jointly selected to conduct a feed study for a CCUS project at Heidelberg Materials' cement plant in Alberta.

Heidelberg Materials North America announced today the latest step in its two-stage competitive procurement process as it works to select the carbon capture technology and contractor for providing the CO₂ separation solution for its Edmonton, Alberta, Carbon Capture, Utilization, and Storage (CCUS) Project. This ground-breaking project is planned to be the first full-scale application of CCUS in the cement sector.

As the latest step in this process, MHI-LCSC, a part of Mitsubishi Heavy Industries, Ltd. (MHI) Group, providing services relating to CO2 capture and clean fuel business in Canada, and Kiewit have been awarded a front-end engineering design (FEED) contract for the carbon capture technology at the Edmonton CCUS project. The FEED study will leverage MHI’s proprietary Advanced KM CDR Process™ developed jointly with The Kansai Electric Power Co., Inc., which uses the KS-21™ solvent.

Heidelberg Materials North America will be commissioning the world’s first full-scale net-zero cement plant at its Edmonton location by adding CCUS technology to an already state-of-the-art facility. The plant could eventually capture and store an estimated 1 million metric tons of carbon dioxide each year, which is the equivalent of taking 220,000 cars off the road annually. Subject to finalization of federal and provincial funding agreements, the company anticipates the final investment decision to be taken in 2024.

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Atome seeking project finance for Paraguayan fertilizer project

The UK-based developer is seeking investors for a green fertilizer project in Paraguay to serve the South American and European markets.

Atome, the UK-based green hydrogen, ammonia, and fertilizer project development company, has issued a notice to seek project financing for a fertilizer project in Paraguay, according to information from the company.

The financing is for Phase 1 of the Villeta project, issued by Natixis Corporate & Investment Banking. The project will deliver green fertilizer to both South American and European markets.

The publicly traded company has large-scale projects in Latin America and Europe.

Carbon footprint analytics indicate a significant amount of carbon credit revenue generation, with some 500,000 credits potential each year, an alert sent out by the company states.

Management will present to all shareholders on 6 September at 11 a.m. BST. IDB Invest, the Washington DC based multilateral for the Americas, is already onboard with a signed mandate.

Initial carbon footprint analysis indicates a potential displacement of some 500,000 tons of carbon dioxide-equivalent each year from the production of green fertilizer at Villeta.

“As a result, the company estimates that it has the potential to generate approximately 500,000 valuable carbon credits each year,” company materials state.

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AES expects $500m of EBITDA from green hydrogen business

US utility AES expects to generate $500m of EBITDA from its ownership of green hydrogen projects by 2030, based on 1,200 metric tons per day of hydrogen production plus related renewables and tax attributes.

Anchored by one of the largest proposed projects so far in the US, Virginia-based AES is launching a green hydrogen platform where it expects to generate approximately $500m of EBITDA by 2030.

The earnings projection includes an assumption of 1,200 metric tons per day of green hydrogen along with the related renewables and tax attributes, executives said in an investor day presentation.

Reaching 1,200 MT/D of production will require $20bn of total capital needs including hydrogen plants and renewables, with equity contributions from AES expected to be 5%, or $1bn, of the capex after debt and partner equity. The presentation notes that 100 MT/D of green hydrogen requires roughly $2bn of capital for hydrogen plants and renewables.

In other words, AES plans to invest $1bn in a business that will generate $500m of EBITDA by 2030, which at, say, a 10x EV multiple, would represent a 5x return on equity. Meanwhile, AES investments in tech platforms like Fluence and Uplight have led to 8x returns on equity to date, according to the presentation.

AES and Air Products have announced a partnership to build a Texas green hydrogen project – so far the largest in the country – with $4bn of capital requirements supporting 1.4 GW of wind and solar capacity along with 200 MT/D of green hydrogen production.

The renewables supporting the Texas electrolyzer project are designed similarly to a portfolio developed for data centers, Chris Shelton, SVP and chief product officer, said during the presentation.

“We’re developing the capability to time-match and dispatch these together – there’s ongoing innovation here – to deliver that hourly matching,” Shelton said. “That results in a very high expectation that we will receive the full $3 / kg incentive for this project,” he said, referring to the emissions-tiered incentive program outlined in the Inflation Reduction Act.

AES is targeting hydrogen growth in the US, Chile, and Brazil, and has 800 MT/D of green hydrogen projects in active development, within an identified opportunity set of 3,200 MT/D.

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Apollo invests in hydrogen and CNG storage and transportation solutions provider

Apollo funds have acquired a majority interest in a manufacturer of cylinders that facilitate the use of natural gas and hydrogen.

Apollo-managed funds have acquired a majority interest in Composite Advanced Technologies, Inc, a provider of compressed natural gas (CNG), renewable natural gas (RNG) and hydrogen transportation and storage solutions in the United States, according to a news release.

CATEC’s products and services help its customers transition away from carbon-intensive fossil fuels towards cleaner alternatives. Founded in 2014 and based in Houston, CATEC manufactures large format Type IV cylinders that facilitate the use of natural gas and hydrogen across a wide variety of industry applications when mounted on mobile trailers or used in stationary applications.

TerraNova Capital served as financial advisor and Baker Botts L.L.P. acted as legal counsel to CATEC. Vinson & Elkins LLP acted as legal counsel to the Apollo Funds. Financial terms were not disclosed.

CATEC’s high capacity, lightweight trailers and storage solutions help end-customers decarbonize, while making lower carbon energy sources more accessible and affordable. Gaseous fuels are one important solution for reducing carbon emissions in certain ‘hard-to-abate’ sectors. As penetration of natural gas continues and the hydrogen economy grows, logistics are expected be a constraint and CATEC is an early mover in providing safe and efficient solutions for a wide range of end uses.

Apollo Funds intend to invest further capital behind the company, seeking to establish a leading gaseous equipment manufacturing and services platform with enhanced capabilities and customer offerings to support expansion in the high-growth hydrogen transport and storage market, the release states.

Apollo Partner Scott Browning said, “CATEC’s proprietary manufacturing capabilities are critical to supporting the growing market demand to reduce carbon emissions in ‘hard-to-decarbonize’ industries. The CATEC team has built an impressive business, which we believe can scale to become a one-stop-shop platform for serving the equipment needs of the compressed gas value chain through various expansion initiatives. We look forward to helping accelerate the Company’s growth trajectory in support of the broader energy transition.”

Alberto Chiesara, Co-Founder and President of CATEC, added, “We are pleased to join forces with Apollo Funds to help expand our capabilities and better support the growing adoption of low-carbon fuel solutions such as hydrogen, RNG and CNG. Apollo’s track record in energy transition investing, industry experience and significant resources make them an ideal partner for CATEC as we scale and embark on our next phase of growth.”

Co-Founder of CATEC Ryan Comerford said, “It has been a privilege to help lead the team, and I’m confident new management, with the backing of Apollo Funds, will position the Company for further growth and success.”

The transaction underscores Apollo’s commitment to driving a more sustainable future and long track record of investing in or lending to companies supporting the energy transition. Last year, Apollo launched its Sustainable Investing Platform, which targets to deploy $50 in clean energy and climate capital by 2027 and sees the opportunity to deploy more than $100bn by 2030. Over the last five years, Apollo Funds have deployed over $23bn into energy transition and sustainability-related investments, supporting companies and projects across clean energy and infrastructure, including offshore and onshore wind, solar, storage, renewable fuels, electric vehicles as well as a wide range of technologies to facilitate decarbonization.

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Exclusive: OCI Global exploring ammonia and methanol asset sales

Global ammonia and methanol producer OCI Global is working with an investment bank to explore a sale of ammonia and methanol assets as part of the re-opening of its strategic business review.

OCI Global is evaluating a sale of several ammonia and methanol assets as part of the re-opening of its strategic business review.

The global producer and distributor of methanol and ammonia is working with Morgan Stanley to explore a sale of its ammonia production facility in Beaumont, Texas, as well as the co-located blue ammonia project under development, according to sources familiar with the matter.

The evaluation also includes OCI’s methanol business, one of the sources said.

Representatives of OCI and Morgan Stanley did not respond to requests for comment.

As part of the earlier strategic review announced last year, OCI in December announced the divestiture of its 50% stake in Fertiglobe to ADNOC, and the sale of its Iowa Fertilizer Company to Koch Industries, bringing in $6.2bn in total net proceeds.

However, OCI has received additional inbound inquiries from potential acquirers for the remaining business, leading it to re-open the review, CEO Ahmed El-Hoshy said last month on OCI’s 4Q23 earnings call.

“As such, OCI is exploring further value creative strategic actions across the portfolio, including the previously announced equity participation in its Texas blue clean ammonia project,” he said, adding: “All options are on the table.”

The comments echoed the remarks of Nassef Sawiris, a 40% shareholder of OCI, who recently told the Financial Times that OCI could sell off most of its assets and become a shell for acquisitions.

In the earnings presentation, El-Hoshy took time to lay out the remaining pieces of the business: in particular, OCI’s 350 ktpa ammonia facility in Beaumont; OCI Methanol Group, encompassing 2 million tons of production capacity in the US and a shuttered Dutch methanol plant; and its European ammonia/nitrogen assets.

Texas blue

The Texas blue ammonia project is a 1.1 million-tons-per-year facility that OCI touts as the only greenfield blue ammonia project to reach FID to date. The company has invested $500m in the project as of February 24, out of a total $1bn expected investment, according to a presentation.

“Commercial discussions for long-term product offtake and equity investments in the project are at advanced stages with multiple parties,” El-Hoshy said. “This reflects the very strong commercial interest and increasing appetite from the strategics to pay a price premium to secure long-term low-carbon ammonia.”

El-Hoshy’s comments highlight the fact that, unlike most projects in development, OCI took FID on the Texas blue facility without an offtake agreement in place. The executive did, however, highlight the first-mover cost advantages from breaking ground on the project early and avoiding construction cost inflation.

Additionally, the project was designed to accommodate a second 1.1 mtpa blue ammonia production line, which would be easier to build given existing utilities and infrastructure, El-Hoshy said, allowing for an opportunity to capitalize on additional clean ammonia demand at low development costs.

“Line 2 probably has the biggest advantage, we think, in North America in terms of building a plant where a lot of the existing outside the battery limits items and utilities are already in place,” he said, emphasizing that by moving early on the first phase, they avoided some of the inflationary EPC pressures of recent years. 

At the facility OCI will buy clean hydrogen and nitrogen over the fence from Linde, and Linde, in turn, will capture and sequester CO2 via an agreement with ExxonMobil.

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Renewable hydrogen developer to launch series A round next month

A Colorado-based renewable hydrogen developer has hired an advisor and will launch a series A funding round next month.

NovoHydrogen, the Colorado-based renewable hydrogen developer, will launch a series A capital raise in the middle of March to take on a new investor for project development and hiring, CEO Matt McMonagle said in an interview.

The company has hired GreenFront Energy Partners to run the process, McMonagle said.

NovoHydrogen builds its projects onsite with customers, as close to end use as possible, he said. The company serves transportation (heavy road transport, shipping and aviation), industrial (cement, glass, metal, steel, food, etc.) and power (peaking power and diesel generator replacement). Most of Novo’s customers are users of grey hydrogen looking to decarbonize. In the case of cement, they are looking to replace diesel for their trucks and coal and natural gas for their kilns.

“We first look to see if we can put our projects on our customer sites and make it there,” McMonagle said. “If we can’t do that, we’ll do offsite, but we still try to be as close to customers as possible to minimize that midstream component or distribution component.”

About 30 projects are in development in the US, ranging from a few megawatts to hundreds of megawatts, McMonagle said. NovoHydrogen’s most active markets are the West coast, Northeast, Appalachia, Texas and the Rocky Mountains, though the company is not geographically constrained.

The company aims to begin construction on its first projects by the end of this year, possibly early next year, McMonagle said. The first project could reach COD in 2024.

NovoHydrogen recently announced that it has closed its seed funding round and appointed four executives to its board of directors. Each of those executives represent an investor that participated in the seed round, McMonagle said.

The new board appointees are: Jeremy Avenier, an active investor at Ohmium International; Peyton Boswell, managing partner at Woodfield Renewable Partners; Bruno Franco, partner at Pacífico Energia and managing partner at PWR Capital; and Joseph Malchow, a managing partner at Hanover (a Silicon Valley VC), board member and investor in Enphase and board member and investor in Archaea.

More money

“We will certainly need more money as our projects mature,” McMonagle said. “I do not have the hundreds of millions of dollars on my balance sheet to build these projects.”

An ideal investor will bring accretive capabilities in hydrogen, in a field like value chain equipment or delivery, to the table, McMonagle said.

NovoHydrogen plans to be a long-term owner-operator of its projects, McMonagle said. That is an important point for customers: that the company is not going to sell the project and not care how the next owner operates.

“We want to earn future business from these customers,” McMonagle said, adding that most of them are transitioning piecemeal.

NovoHydrogen and TigerGenCo in November said they would advance development of green hydrogen capacity to reduce reliance on natural gas at the Bayonne Energy Center located in New Jersey. NovoHydrogen will develop and operate the hydrogen production facility to reduce Bayonne’s carbon emissions.

TigerGen owns the power plant and is the offtaker in that project. Ohmium International is providing the PEM electrolyzers in that project. McMonagle said the company may use other electrolyzer providers for future projects.

The company is also a partner in the Aliance for Clean Hydrogen Energy Systems (ARCHES) for the California DOE Hydrogen Hub submission.

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AEM electrolyzer startup conducting Series B capital raise

A maker of anion exchange membrane electrolyzers is undergoing a Series B capital raise.

Versogen, an electrolyzer startup, is conducting a Series B capital raise, with the aim of closing the round in the coming weeks, CFO Tim Krebs said in an interview.

The Delaware-based maker of anion exchange membrane electrolyzers is seeking to raise multiples of its Series A capital raise, Krebs said, which was a $14.5m round completed in May, 2022.

Proceeds from the Series B would allow the company to complete development of its AEM electrolyzer, a 1 MW modular hydrogen generation system, Krebs said. The company is not using a financial advisor.

The Series A funding round was led by Doosan Corporation and its affiliate HyAxiom. Other investors include The Chemours Company, TechEnergy Ventures, Wenstone H2Tech, TOP Ventures America, a CVC arm of Thai Oil Public Company Limited, DSC Investment and CN Innovations Investments Limited. 

Krebs, a former investment banker who has been the CFO of three energy technology companies, expects some existing investors will also participate in Versogen’s Series B round.

Versogen is led by co-founder and CEO Yushan Yan, an electrochemical engineer and inventor. The company touts a technology using low-cost construction materials like an alkaline electrolyzer but a more efficient production process akin to a membrane-based PEM electrolyzer.

Market dynamics

The capital raise is taking place amid a crowded field of electrolyzer startups looking to raise money in order to finalize designs and cement commercial opportunities.

Among others, Electric Hydrogen, a PEM electrolyzer startup, recently raised a $380m Series C; Verdagy raised a $73m Series B in August; and HyAxiom, a developer and manufacturer of fuel cell and electrolyzer solutions, completed a $150m private placement of convertible preferred stock in July.

At the same time, growth equity as well as Series A and Series B funding for climate tech dropped significantly through the first half of 2023.

Series A funding fell 36%, while Series B funding dropped 20% and growth equity investments fell by 64%, according to data from Climate Tech Venture Capital. Series C funding dropped by 72% in 1H23 compared to the same period last year, the same data shows.

Still, the market for electrolyzers is supported by undersupply as green hydrogen projects advance around the world.

James Bowe, a partner at King & Spalding who is advising on several large green hydrogen projects, said the three top manufacturers of electrolyzers are sold out for the next three to four years, potentially providing an opportunity for startups to fill the gap. Bowe made the comments yesterday during a panel at the Reuters North America Hydrogen conference in Houston.

Additionally, several catalysts for further electrolyzer demand are on the near-term horizon. The US Department of Energy is expected to announce the winners of up to $8bn in government funding for hydrogen hubs this week, while guidance from the IRS detailing rules to qualify for green hydrogen tax credits should be issued in the coming months.

Further clarity on government support for the hydrogen industry is expected to spur many projects toward final offtake arrangements and final investment decisions, experts say.

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