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Fuel cell towboat receives U.S. Coast Guard ok

The towboat is being designed as a first-of-its-kind vessel using new, cleaner, fuel cell technology that works by converting stored methanol to hydrogen.

Maritime Partners, LLC, a provider of maritime financing solutions primarily focused on Jones Act vessels, has received a Design Basis Agreement from the U.S. Coast Guard for the M/V Hydrogen One towboat that includes e1 Marine hydrogen generator technology that will be utilized for the vessel’s power plant.

M/V Hydrogen One is being designed as a first-of-its-kind vessel using new, cleaner, fuel cell technology that works by converting stored methanol to hydrogen, according to a news release. The produced hydrogen is output, on-demand, to the fuel cell to generate power for the vessel. A successful string test of this technology was completed in Gothenburg, Sweden, in June 2023, proving it to be a viable option as the sole power generation source for vessel propulsion.

“The signing of this agreement opens the pathway for us to deploy our technological capabilities,” said Bick Brooks, co-founder and CEO of Maritime Partners. “With this, Hydrogen One is one step closer to becoming the world’s first vessel to utilize hydrogen generator technology greatly reducing emissions, increasing efficiency and providing a model for cleaner energy use as the industry continues to seek ways to decarbonize.”

The DBA process was established by the U.S. Coast Guard to set the rules for new and novel technology proposed for installation on marine vessels. Maritime Partners worked with several industry leaders on the Hydrogen One project, including Seattle-based Elliott Bay Design Group, who is designing the towboat; Bourg, La.-based Intracoastal Iron Works who is the selected shipyard; e1 Marine, RIX Industries, Power Cell Group, among others, in order to work through the U.S. Coast Guard requirements.

“Maritime Partners is strongly committed to developing and utilizing sustainable, clean energy solutions, as the entire maritime industry continues to seek alternative fuel options that are cleaner, greener and more efficient. The development of Hydrogen One is part of that commitment,” said Dave Lee, Maritime Partners’ VP of Technology & Innovation.

The signing of this DBA ensures that as the M/V Hydrogen One project advances Maritime Partners will be working towards an agreed upon framework with the U.S. Coast Guard for the design, arrangement, and engineering aspects of the power system and associated safety systems for plan review, inspection, and eventual certification of the M/V Hydrogen One.

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OCI Global supplying low-carbon ammonia for German fertilizer

OCI will supply COMPO EXPERT with ammonia that guarantees a 60% lower carbon footprint than the industry standard from its facilities in Texas.

OCI Global, a producer of nitrogen, methanol, and hydrogen products is supplying COMPO EXPERT, a producer of high-quality specialty fertilizers and biostimulants, with lower carbon ammonia for use in the production of COMPO EXPERT’s NPK fertilizers, with the first delivery having taken place this week, according to a news release.

COMPO EXPERT will initially replace 25% of the ammonia it uses at its facility in Krefeld, Germany, with OCI’s lower carbon product this year and has plans in place to further increase the ratio of OCI supplied lower carbon ammonia in its production over the next two years.

OCI will supply COMPO EXPERT with ammonia that guarantees a 60% lower carbon footprint 60% than the industry standard from its facilities in Texas, USA via OCI’s proprietary ammonia terminal and distribution hub at the Port Of Rotterdam.

OCI has supplied COMPO EXPERT with ammonia for fertilizer production for over a decade and the switch to lower carbon ammonia is testament to both companies’ commitment to sustainability and the decarbonization of their products.

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ZeroAvia forms hydrogen aviation fuel partnership with Masdar

The UAE-owned renewable energy company will work with the aviation firm to build aircraft refueling infrastructure.

ZeroAvia has signed a partnership agreement with the UAE’s Masdar to explore hydrogen production and supply, initially in North America and Europe, in order to establish hydrogen-powered commercial flights, according to a news release.

The partnership will also try to establish clean flight operations in the UAE.

Masdar is targeting 1 million tons of green hydrogen production per year by 2030. The state-owned company’s Green Hydrogen division is already involved in aviation projects targeting the production of green hydrogen.

ZeroAvia, based in the UK and US, is backed by American Airlines and recently acquired California-based fuel cell stack innovator HyPoint.

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H2B2 to go public in $750m SPAC deal

The Madrid-based hydrogen platform H2B2 Electrolysis Technologies has reached a deal to go public in a SPAC deal with RMG Acquisition Corp. III.

H2B2 Electrolysis Technologies, Inc. (H2B2), a global green hydrogen platform that provides bespoke integrated solutions across the hydrogen value chain, and RMG Acquisition Corp. III (Nasdaq: RMGC) (RMG III), a publicly-traded special purpose acquisition company, have entered into a definitive agreement to take H2B2 public via a business combination, according to a news release.

Under the terms of the proposed transaction, H2B2’s stockholders will roll 100% of their equity holdings into the combined public company.

The base purchase price of $750m is subject to adjustment based on the results of the proposed capital raise transaction described below. H2B2 is separately undertaking a capital raise transaction, which is expected to close prior to the proposed transaction. The capital raise transaction is being led by Natixis Partners Iberia S.A. and BCW Securities LLC, an affiliate of RMG III. Subject to the terms and conditions of the merger agreement for the business combination, post-capital raise transaction stockholders of H2B2 will roll 100% of their equity into the surviving corporation.

Cohen & Company Capital Markets is acting as capital markets advisor to RMG III.

Skadden, Arps, Slate, Meagher & Flom (UK) LLP is acting as legal advisor to RMG III.

Pérez-Llorca is acting as Spanish counsel to RMG III.

Natixis Partners Iberia S.A. and BCW Securities LLC are acting as co-private placement agents to H2B2.

Latham & Watkins LLP is acting as legal advisor to H2B2.

Since its founding in 2016, H2B2 has become a key player in the green hydrogen energy sector, the news release states. H2B2 is focused primarily on the United States and European markets, but is also expanding in Latin America and Asia-Pacific, where H2B2 has secured a role in several strategic projects. In particular, H2B2 has been selected as a participant in the IPCEI Hy2Tech (Important Projects of Common European Interest) program, through which it has been approved by the European Commission to receive up to € 25 million in connection with H2B2’s development and manufacturing capacity for both stacks and electrolyzers.

In 2019, the California Energy Commission awarded H2B2 a grant for the development of a green hydrogen production facility, SoHyCal plant, in Fresno, California. This 3 MW plant is to begin production in May 2023, with an additional 6 MW of hydrogen capacity and 15 MW of associated solar PV to be constructed during Phase II. In addition, in 2022, Ecopetrol, the leading oil company in Colombia, began working with H2B2 and recently welcomed it into its group of strategic partners as part of its broader plan to decarbonize and develop green hydrogen energy. H2B2 has also recently entered the Indian market through a joint venture with GR Promoter Group and the creation of GreenH.in Electrolysis.

Key Investment Highlights

  • A leading global green hydrogen platform: Capabilities spanning the entire value chain of green hydrogen production, including R&D, manufacturing proprietary electrolyzer technology, project development, EPC, O&M, green hydrogen production, storage and delivery.
  • Customer-centric business model: H2B2 provides tailor-made and scalable solutions worldwide, with a one-stop-shop approach, offering design, development, EPC, electrolyzers, offtake agreements, financing, and O&M services.
  • Proprietary and flexible electrolysis technology: Currently utilizing proven PEM technology in the supply of its manufactured electrolyzers but is also developing next generation technologies (AEM & SOEC) in-house.
  • Global company with the ability to identify and deliver unique projects of different scale across its target markets: A robust and diversified pipeline of over 260 projects, with an expected aggregate capacity of approximately 5.6 GW of identified potential projects. H2B2 is currently working with significant customers such as Ecopetrol, GP Joule, Cepsa and Tecnicas Reunidas.
  • Industry leading management team: The H2B2 management team has over 200 years of combined experience in engineering and financing renewable energy projects and have worked together as a team for more than 20 years in renewable hydrogen.

Bob Mancini, CEO of RMG III, commented that “RMG III and H2B2 are dedicated to accelerating the energy transition through the advancement of next-generation energy infrastructure. As a pioneer in the development of green hydrogen production facilities, and supported by an industry leading team, we are confident that H2B2 is well positioned to further expand and execute on its impressive pipeline of opportunities.”

Anselmo Andrade, CEO of H2B2 has confirmed that “With the operations that we have underway, we are seeking to strengthen not only the international business that we are currently developing, but our operational capacity worldwide. The business and technological development of H2B2 will be bolstered as a result of this transaction with RMG III, thus making the energy vector of hydrogen key to decarbonization.”

Antonio Vázquez, President of the Board of Directors of H2B2, has indicated that “The proposed business combination with RMG III that has been announced to the investor community reaffirms our letter of intent announced in January earlier this year, and together with the capital raise transaction on which we are working, gives us confidence to move forward with the goal of obtaining the necessary funds from the markets and visibility to finance the future growth of H2B2.”

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Turnt up about turndown ratios

Optimizing electrolysis for renewables depends not just on how far you can turn the machine up, but how far you can turn it down. We asked electrolyzer makers: how low can you go?

Optimizing electrolysis for renewables depends not just on how far you can turn the machine up, but how far you can turn it down.

A consensus is growing around the importance of turndown ratios for electrolyzers, with a variety of use cases for green hydrogen requiring the machines to be run at low levels during periods of high power pricing.

Proton exchange membrane (PEM) electrolyzers are known for their ability to quickly ramp production up and down, but manufacturers of all stripes have begun to tout their technologies’ turndown ratios, with implications for capital costs and the levelized cost of producing hydrogen from renewable power.

Simply put, some electrolyzer plant operators will likely seek to lower hydrogen production during periods of high power pricing, since the cost of electricity is the largest operating expense. But cycling the electrolyzers completely off and on can lead to added system degradation, giving importance to the ability of the machines to run at low levels.

A study from the National Renewable Energy Laboratory (NREL) analyzes a US grid buildout through 2050, noting favorable locations and seasonality for power pricing as something of a guideline for green hydrogen development. The study notes that the lowest achievable turndown ratio is a main factor in minimizing hydrogen levelized cost along with the number of hours a system can operate at that minimum level – something that applies to all types of electrolyzers.

“When you start to look at hourly costs from the data in different locations, you see that all of this renewable buildout is going to create opportunities in given locations where you going to have a lot of renewable generation and not a lot of load on the system and that’s going to drive the cost for that energy down,” said Alex Badgett, an author of the study at NREL.

To be sure, the fast-moving technological environment for electrolysis leaves open the possibility for efficiency gains and disruptive innovation. And a variety of factors – balance of plant, energy efficiency, system degradation – also influence plant economics. But the lowest possible turndown ratios will drive opportunities for green hydrogen developers, Badgett said.

ReSource reviewed available spec sheets for electrolyzer providers and asked every maker of PEM and SOEC systems to detail the turndown capabilities of their machines. Alkaline electrolyzers were left out of the analysis given their more limited load flexibility, as their separators are less effective at preventing potentially dangerous cross-diffusion of gasses. Some manufacturers are fully transparent regarding turndown ranges while others declined to comment or did not reply to inquiries.

‘Not trivial’

In designing projects, developers are analyzing hourly energy supply schedules and pairing the outlook with what is known about available technology options.

“Some electrolyzers like to operate at half power, and others like to operate at full power, and in any given system, you can have between 10 and 50 electrolyzers wired and plumbed in parallel,” said Mike Grunow, who leads the Power-to-X platform at Strata Clean Energy.

“Our thought process even goes down to: let’s say you have to operate the H2 plant at 25% throughput. Do you operate all of the electrolyzers at 25%, or do you turn 75% of the electrolyzers off and only operate 25% at full power?”

The difference in the schemes, he added, is “not trivial as each technology has different efficiency curves and drivers of degradation.”

Different use cases for the hydrogen derivative, meanwhile, lead to different natural selection of technologies, Grunow said, adding that the innovation cycle is now happening every 12 months, requiring a close eye on advances in technology. 

Electrolyzer start-up Electric Hydrogen, a maker of PEM electrolyzers, is commercializing a 100 MW system that can turn down to 10%, according to Jason Mortimer, SVP of global sales at the company.

HyAxium, another start-up, can turn its system down to 10%, according to its materials. Norway-based Hystar, which recently announced plans to build a plant in the US, also promotes a 10% turndown ratio.

A more established PEM electrolyzer provider, Cummins, advertises turndown ratios of 5% for its machines. Sungrow Power, a China-based manufacturer, similarly advertises 5% for PEM electrolyzers.

Siemens Energy has a minimum turndown ratio per stack of 40%, but for a single system it can be less in exceptional cases, according to Claudia Nehring, a company spokesperson.

“We focus on large systems” – greater than 100 MW – “and currently consider this value to be appropriate, taking into account the optimization between efficiency, degradation and dynamics, but are working on an improvement,” she said via email.

ITM Power declined to provide details but said its turndown capabilities are “to be expected” for a market leader in this technology. Materials from German-based H-Tec Systems note a modulation rate down to 10%.

Additional PEM makers Nel, Ohmium, Elogen, H2B2, Hoeller Electrolyzer, Plug Power, Shanghai Electric, and Teledyne Energy Systems did not respond to requests for information.

PEM alternatives

Other forms of electrolysis can also ramp dynamically. And some project developers point to PEM’s use of iridium, part of the platinum metals family, as a drawback due to potential scarcity issues.

Verdagy, for example, has developed an advanced alkaline water electrolysis (AWE) system called eDynamic that it says takes the best of PEM and alkaline technologies while designing out the downsides.

The company’s technology “addresses the barriers that limited traditional AWE adoption by using single-element cells that can operate efficiently at high current densities,” executives said in response to emailed questions. 

“The ability to operate at very high current densities, coupled with a balance of stack and balance of plant optimized for dynamic operation, allow Verdagy’s electrolyzers to operate across a very broad range spanning 0.1-2.0 A/cm2,” they said.

In other words, the machine can turn down to 5%, part of the design that enables operators “to modulate production to take advantage of time-of-day pricing and/or fluctuations in energy production.”

Meanwhile, German-based Thysenkrupp Nucera, another maker of advanced water electrolyzers, advertises a 10% turndown ratio.

SOEC

A relatively new electrolysis technology, the solid oxide electrolyzer cell has also proven to be capable of low turndown ratios. Solid oxide electrolysis is particularly attractive when paired with high-temperature industrial processes, where heat can be captured and fed back into the high-temperature SOEC process, making it more efficient.

Joel Moser, the CEO of First Ammonia, said he chose SOEC from Denmark-based Haldor Topsoe in part because the machines can be turned completely off with no degradation, as long as you keep them warm.

“Generally speaking we expect to ramp up and ramp down between 100% and 10%,” he said. “We can turn them off as long as we keep them warm, and then we can turn them right back on.”

Still, SOEC systems are not without challenges.

“Low stack power and high operating temperature, which in turn requires more ancillary equipment to operate the electrolyzer, are widely viewed as the main drawbacks of SOEC technology,” according to a report from the Clean Air Task Force, which explores SOEC technology and its commercial prospects. “SOEC systems are also considered to have a shorter operating life due to thermal stress.”

Additional makers of SOEC machines Bloom Energy, Ceres, Elcogen, Genvia, SolydERA, and Toshiba did not respond to inquiries.

At NREL, researchers are watching for more automation and scale in the electrolyzer production process to bring costs down. Increasing efficiency through balance-of-plant improvements is another opportunity to reduce system costs.

In addition, more analysis of how large electrolyzer projects will impact the future electrical grid is required, according to Badgett.

The NREL team modeled the hourly marginal cost at any given time in any location in the US, but the model assumes that the electrolyzer takes energy without impacting the cost of energy.

“When we start to get to gigawatt-scale electrolysis,” he said, “that’s going to significantly impact prices, as well as how the grid is going to build out.”

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Exclusive: Riverstone Credit spinout preparing $500m fundraise

Breakwall Capital, a new fund put together by former Riverstone Credit fund managers, is preparing to raise $500m to make project loans in decarbonization as well as the traditional energy sector. We spoke to founders Christopher Abbate and Daniel Flannery.

Breakwall Capital is preparing to launch a $500m fundraising effort for a new fund – called Breakwall Energy Credit I – that will focus on investments in decarbonization as well as the traditional energy sector.

The founders of the new fund, Christopher Abbate, Daniel Flannery, and Jamie Brodsky, have spent the last 10 years making oil and gas credit investments at Riverstone Credit, while pivoting in recent years to investments in sustainability and decarbonization.

In addition to bringing in fresh capital, Breakwall will manage funds raised from Dutch trading firm Vitol, for a fund called Valor Upstream Credit Partners; and the partners will help wind down the remaining roughly $1bn of investments held in two Riverstone funds.

Drawing on their experience at Riverstone, Breakwall will continue to make investments through sustainability-linked loans across the energy value chain, but will also invest in the upstream oil and gas sector through Valor and the new Breakwall fund.

“We’re not abandoning the conventional hydrocarbon economy,” Flannery said in an interview. “We’re embracing the energy transition economy and we’re doing it all with the same sort of mindset that everything we do is encouraging our borrowers to be more sustainable.”

In splitting from Riverstone Credit, where they made nearly $6bn of investments, the founders of Breakwall said they have maintained cordial relations, such that Breakwall will seek to tap some of the same LPs that invested in Riverstone. The partners have also lined up a revenue sharing arrangement with Riverstone so that interests are aligned on fund management.

The primary reason for the spinout, according to Abbate, “was really to give both sides more resources to work with: on their side, less headcount relative to AUM, and on our side, more equity capital to reward people with and incent people with and recruit people with, because Riverstone was not a firm that broadly distributed equity to the team.”

Investment thesis

A typical Breakwall loan deal will involve a small or mid-sized energy company that either can’t get a bank loan or can’t get enough of a bank loan to finance a capital-intensive project. Usually, a considerable amount of equity has already been invested to get the project to a certain maturity level, and it needs a bridge to completion.

“We designed our entire investment philosophy around being a transitional credit capital provider to these companies who only needed our cost of capital for a very specific period of time,” Flannery said.

Breakwall provides repayable short-duration bridge-like solutions to these growing energy companies that will eventually take out the loan with a lower cost of capital or an asset sale, or in the case of an upstream business, pay them off with cash flow.

“We’re solving a need that exists because there’s been a flock of capital away from the upstream universe,” he added.

Often, Breakwall loan deals, which come at pricing in the SOFR+ 850bps range, will be taken out by the leveraged loan or high yield market at lower pricing in the SOFR+ 350bps range, once a project comes online, Abbate said. 

Breakwall’s underwriting strategy, as such, evaluates a project’s chances of success and the obstacles to getting built. 

The partners point to a recent loan to publicly listed renewable natural gas producer Clean Energy – a four-year $150m sustainability-linked senior secured term loan – as one of their most successful, where most of the proceeds were used to build RNG facilities. Sustainability-linked loans tie loan economics to key performance indicators (KPIs) aimed at incentivizing cleaner practices.

In fact, in clean fuels, their investment thesis centers on the potential of RNG as a viable solution for sectors like long-haul trucking, where electrification may present challenges. 

“We are big believers in RNG,” Flannery said. “We believe that the combination of the demand and the credit regimes in certain jurisdictions make that a very compelling investment thesis.”

EPIC loan

In another loan deal, the Breakwall partners previously financed the construction of EPIC Midstream’s propane pipeline from Corpus Christi east to Sweeny, Texas.

Originally a $150m project, Riverstone provided $75m of debt, while EPIC committed the remaining capital, with COVID-induced cost overruns leading to a total of $95m of equity provided by the midstream company. 

The only contract the propane project had was a minimum volume commitment with EPIC’s Y-Grade pipeline, because the Y-Grade pipeline, which ran to the Robstown fractionator near Corpus Christi, needed an outlet to the Houston petrochemical market, as there wasn’t enough export demand out of Corpus Christi.

“So critical infrastructure: perfect example of what we do, because if your only credit is Y-Grade, you’re just a derivative to the Y-Grade cost of capital,” Abbate said.

Asked if Breakwall would look at financing the construction of a 500-mile hydrogen pipeline that EPIC is evaluating, Abbate answered affirmatively.

“If those guys called me and said, ‘Hey, we want to build this 500-mile pipeline,’ I’d look at it,” he said. “I have to see what the contracts look like, but that’s exactly what type of project we would like to look at.”

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EverWind in capital raise for Nova Scotia wind-to-hydrogen complex

EverWind Fuels is soliciting investor bids for a $1bn initial phase of its Point Tupper renewables and hydrogen/ammonia production facility in Atlantic Canada.

EverWind Fuels, the Canada-based renewable fuels developer, is preparing to launch a process to raise an estimated $800m in debt for its Point Tupper ammonia production and export facility near Halifax, according to two sources familiar with the matter.

Citi and CIBC are mandated on the raise.

The company is seeking capital from a variety of investors, one of the sources said. The raise will likely conclude around the middle of the year with Citi stepping up for part of the debt quantum.

EverWind is also in talks with Canadian Infrastructure Bank, one of the sources said.

EverWind, Citi, CIBC and CIB did not respond to requests for comment.

Nova Scotia’s Minister of Environment and Climate Change recently approved the Point Tupper Green Hydrogen/Ammonia Project – Phase 1. Construction should begin this year on phase 1 of the project, consisting of a 300 MW electrolysis plant along with a 600 tonnes-per-day ammonia production facility. The project also involves construction of a liquid ammonia pipeline to a jetty for international shipping and a 230 kW substation that will bring in electricity.

Government support for the project is leading to offtake agreements needed to build out a hydrogen supply chain at scale, a third source said. The project is nearing a $200m offtake agreement for green hydrogen with a large global manufacturer, this source added.

The German groups E.ON and Uniper said in August that they aim to buy up to 500,000 tonnes per year of ammonia each from EverWind, starting in 2025, when the project is set to begin production.

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