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Food company in $8bn aviation fuel JV

The company is seeking to obtain its own fuel storage tanks in Rotterdam and Houston. Its motto: "Your Trusted Source for Sugar, Chicken Paws, and Jet Fuel Commodities."

Nate’s Food Co has entered a joint venture agreement for the sale of $8bn in aviation fuel, according to a press release.

This joint venture involves a direct collaboration with a highly regarded refinery allotment holder, ensuring the company a reliable monthly allotment of up to 8 million barrels of aviation fuel. This commitment translates into an annual supply of 96 million barrels.

Nate’s Food Co’s CEO, Nate Steck expressed his enthusiasm for this pivotal partnership, stating, “This joint venture represents a remarkable achievement for the Company as we solidify our position in the aviation fuel market. The ability to maintain a consistent and substantial supply of jet fuel empowers us to efficiently meet our clients’ needs and ensures our sustainable growth within the industry.”

According to the release, the company’s next strategic step is to obtain its own fuel storage tanks in Rotterdam, Netherlands and Houston, Texas. We have made substantial progress in this regard, as our joint venture partner has introduced us to tank farms, and we are in the process of securing a tank storage agreement with a tank farm. The tank storage agreement enables us to purchase fuel from our Joint Venture partner and distribute it within our extensive buyer network.

The company can potentially increase the monthly allotment under the joint venture to meet any surging demand. The company plans to leverage this newly secured supply chain to cultivate and engage potential buyers for aviation fuel as part of the joint venture.

Nate’s Food Co has already established a vast network of buyer’s agents who will promptly initiate the sales process for the aviation fuel supply under the joint venture agreement.

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Ares acquires RNG developer

Ares has made a strategic investment to acquire RNG developer Dynamic Renewables in a process run by Lazard.

Dynamic Renewables, a full-service developer, owner and operator of waste management and anaerobic digestion renewable fuel projects across the U.S., has been acquired by fund managed by Ares Management’s Infrastructure Opportunities strategy, according to a news release.

In addition, an unregulated affiliate of NorthWestern Energy has acquired a small minority stake in the company.

Terms of the deal were not disclosed. Lazard acted as financial advisor to Dynamic on the transaction. Husch Blackwell served as legal counsel to Dynamic. Latham & Watkins LLP served as legal counsel to Ares.

The investment from Ares is intended to support Dynamic in the further development and construction of its broader pipeline of renewable natural gas (“RNG”) assets located throughout the U.S. Ares has approximately $14.9bn in infrastructure equity and debt assets under management as of March 31.

Founded in 2011, Dynamic is a leading fully integrated origination, development, financing and operations platform that provides waste recovery solutions focused on the dairy and food processing industries. Dynamic has a material project development pipeline and is currently overseeing the construction of six assets, which are expected to be operational by the end of 2023 and forecasted to generate a combined total of more than 4,000 MMBtu per day of renewable natural gas. These six projects are projected to mitigate more than 300,000 metric tons of carbon dioxide emissions per year.

Dynamic is also the owner of BC Organics, a flagship asset developed by the Company. Located in Brown County, Wisconsin, BC Organics is a large-scale biorefinery facility that sources dairy manure feedstock from eleven multigenerational farms and comprises sixteen anaerobic digester tanks capable of processing 900,000 gallons of manure per day. BC Organics will produce carbon negative transportation fuel and provide its partner dairy farms with a long-term, sustainable manure management solution that converts the feedstock into clean water and reusable animal bedding.

Dynamic is led by its co-founders – Chief Executive Officer Duane Toenges, Chief Technology Officer Dan Nemke and Executive Vice President of Special Projects Karl Crave – who have worked together in the anaerobic digestion industry for nearly two decades.

“We are excited about the business we have built in Dynamic and our current momentum,” said Toenges. “Ares brings a wealth of experience in investing and developing projects in the renewable natural gas industry. They have expressed their support for the Company and our strategy in achieving our next phase of growth. Further, the recent commissioning of our BC Organics project is a tremendous milestone for Dynamic, and we look forward to completing additional projects this year for our strategic partners.”

“We are thrilled to partner with Dynamic, and our investment is aligned with Ares’ commitment to accelerate the transition to a lower-carbon economy through the Company’s innovative waste management and anaerobic digestion capabilities,” said Andy Pike, partner and co-head of Ares Infrastructure Opportunities. “Dynamic has a demonstrated track record of leadership in the rapidly growing renewable fuels sector, and we look forward to working together to build out its pipeline while supporting local communities in delivering more sustainable waste management practices.”

“We are pleased to further our existing relationship with Dynamic with this minority investment in the Company,” said Brian Bird, president and chief executive officer of NorthWestern. “The investment in Dynamic is a positive step for NorthWestern in meeting its net zero goals and a great opportunity to expand the RNG production capabilities of our service territory and its surrounding area. We are excited about the growth of the RNG industry, the carbon negative fuel that Dynamic’s assets will generate, and the complementary nature of this investment with our long-term goals.”

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Maritime MoU to explore West Coast ammonia feasibility

The study aims to explore possibility to utilize existing ammonia storage terminal at port of Stockton for a pilot demonstration project of ammonia bunkering for car carriers.

American Bureau of Shipping, CALAMCO, Fleet Management Limited, Sumitomo Corporation and TOTE Services, LLC have executed a Memorandum of Understanding (MOU) to jointly conduct a feasibility study with the aim to be one of the pioneers in establishing a comprehensive and competitive supply chain for the provision of clean ammonia ship-to-ship bunkering in the US West Coast.

The study will be conducted at the Port of Oakland, Benicia and nearby major ports in U.S. West Coast, according to a news release.

Ammonia, which does not emit any CO2 when combusted, has long been considered one of the most promising alternative marine fuels to reduce greenhouse gas (GHG) direct emissions within the shipping industry which aligns with the revised International Maritime Organization (IMO) strategy to reach net-zero emissions from international shipping “close to” 2050 on a life-cycle basis.

CALAMCO is a California based cooperative composed of grower members, as well as the largest ammonia distributer in California. The study aims to explore possibility to utilize CALAMCO’s existing ammonia storage terminal at port of Stockton for a pilot demonstration project of ammonia bunkering for car carriers calling at port of Benicia and container vessels calling at port of Oakland as a first step toward wide adoption of ammonia as marine fuel in the US West Coast.

Port of Benicia is one of the key vehicle-handing ports in U.S. West Coast, while Port of Oakland also rank among top 10 of US largest container ports.

Safety assessments are critical to formulate standards for use of ammonia as a marine fuel due to the toxicity of the substance. Relevant government agencies and experts in the US will be engaged in working towards the standardization of safe operation and regulations, the news release states.

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Duke to build end-to-end hydrogen facility in Florida

During times of high energy demand, the system will deliver stored green hydrogen to a combustion turbine that can run on a natural gas/hydrogen blend or up to 100% hydrogen.

Duke Energy will break ground in DeBary, Fla., on a demonstration project in the United States to create clean energy using an end-to-end system to produce, store and combust 100% green hydrogen.

The system is the result of collaboration between Duke Energy, Sargent and Lundy, and GE Vernova and will be located at Duke Energy Florida’s DeBary plant in Volusia County, Fla.

“Duke Energy is constantly evolving and seeking ways to provide clean, safe energy solutions to our customers,” said Melissa Seixas, Duke Energy Florida state president in a news release. “DeBary will be home to Duke Energy’s first green hydrogen production and storage system connected to existing solar for power generation, and we are grateful to the city for allowing this innovative technology in their community.”

The system will begin with the existing 74.5 MW DeBary solar plant providing clean energy for two 1 MW electrolyzer units.

Construction of the project will begin later this year and could take about one year to complete. Duke Energy anticipates the system will be installed and fully functioning in 2024.

The resulting oxygen will be released into the atmosphere, while the green hydrogen will be delivered to nearby, reinforced containers for safe storage. During times when energy demand is highest, the system will deliver the stored green hydrogen to a combustion turbine (CT) that will be upgraded using GE Vernova technology to run on a natural gas/hydrogen blend or up to 100% hydrogen. This will be the nation’s first CT in operation running on such a high percentage of hydrogen.

“Duke Energy anticipates hydrogen could play a major role in our clean energy future,” said Regis Repko, senior vice president of generation and transmission strategy for Duke Energy. “Hydrogen has significant potential for decarbonization across all sectors of the U.S. economy. It is a clean energy also capable of long-duration storage, which would help Duke Energy ensure grid reliability as we continue adding more renewable energy sources to our system.”

Readily available hydrogen is a dispatchable energy source, meaning it is available on demand. It can be turned on and off at any time and is not dependent on the time of day or the weather, like sun, wind or other renewable energy sources known as intermittent.

Dispatchable energy provides a needed element of reliability that will enable us to add more intermittent energy sources, yet still ensure we can meet customer demand, even during extended periods of high demand. Using solar energy to generate green hydrogen enables solar plants to be optimized. Relying on intermittent energy sources without available dispatchable energy sources would put our future electric system at risk of having insufficient energy to serve customer demand.

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Waste-to-hydrogen developer hires advisor for equity raise

A California developer of waste-to-hydrogen projects has mandated a boutique advisor to raise equity for early-stage project development and is planning a larger funding round in early 2024.

Clean Energy Enterprises, the holding company of awaste-to-hydrogen project developer based in Long beach, California, hasmandated a financial advisor to raise equity for early-stage development, CEO Jean-LouisKindler said in an interview.

Costigan Capital Partners, of Vancouver, Canada, has beenretained to raise an early round of $5m, Kindler said. That liquidity, split evenlybetween a demonstration project in California and operations, will last aboutone year.

Clean Energy is the holding company of WaysH2, which is thecompany developing the projects.

Next year Clean Energy will conduct a raise of equity anddebt between $30m and $50m, Kindler said.

Clean Energy, which is owned by five founding partners and earlyfriends-and-family backers, is also narrowing options for the first WaysH2 commercialproject in the US, Kindler said. The company has a client that will use hydrogenfor municipal transportation in the southwest.

The group has a relationship with Spanish EPC firm TechnicasReunidas and plans to pursue another demonstration project in either Spain or Portugal.

The technology play is waste-to-hydrogen at landfillprojects to serve end users in local mobility and waste processing energyrequirements.

He pointed to California’s SB 1383 regulations, which mandatesa reduction of organic waste disposal by 75% by 2025.

“It will be used locally,” Kindler said of the hydrogen. Thecompany is also in discussions with foreign ammonia producers. “We want to beclose to our clients.”

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Exclusive: Renewable fuels firm hires advisor for topco raise

A renewable fuels firm with operations in California has hired a bulge bracket bank to raise project and platform capital for new developments in the Gulf Coast.

Oberon Fuels, a California-based renewable fuels developer, has hired Morgan Stanley for a topco and project capital raise to launch soon, CEO Rebecca Bordreaux said in an interview.

The company, backed by Suburban Propane, plans to reach COD on its next facility in the Gulf Coast in 2026, Boudreaux said. Late last year the company hired its first CFO Ann Anthony and COO Derek Winkel.

Oberon produces rDME at its Maverick Innovation Center in Brawley, California and recently established a partnership with DCC Fuels focused on Europe.

The location of the Gulf Coast facility is not public, Bordreaux said, though the company aims to reach FID on it this year. When operational it would produce 45,000 mtpy of methanol, or a comparative amount of rDME. Capex on the facility is in the range of $200m.

The company is shifting toward production of methanol as a shipping fuel, she said. New opportunities also include using DME as a renewable hydrogen carrier, as the fuel is easily transportable and compatible with many existing logistical networks.

Oberon is also preparing to issue $100m of municipal bonds from the state of Texas, Bordreaux said.

More than $50m has been raised by the company to date, with Suburban Propane being the largest investor and customer in California, Bordreaux said. The company has a third project in the pre-FEED phase.

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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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