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Gevo brings in McDermott for SAF facilities

A master services agreement with McDermott is expected to lead to a final EPC agreement for Gevo's Net-Zero 1 SAF project in South Dakota.

Gevo, Inc. has entered into a Master Services Agreement (MSA) with a subsidiary of McDermott International, Ltd to provide front end engineering and early planning services for Gevo’s development of multiple sustainable aviation fuel facilities in North America, according to a news release.

The first facility, Net-Zero 1, is expected to be located near Lake Preston, South Dakota. The Net-Zero 1 plant is expected to produce up to 65 million gallons of sustainable aviation fuel (SAF), diesel, renewable gasoline that, when consumed, is designed to have a lifecycle net-zero greenhouse gas footprint.

Under the scope of the MSA, McDermott will provide engineering, execution planning and pricing for the engineering, procurement, and construction (EPC) phase of Gevo’s Net-Zero 1 project. The MSA is expected to lead to a final EPC agreement with Gevo for its Net-Zero 1 project to be finalized in coordination with the timing of Gevo’s financing activities for its Net-Zero 1 project.

“Gevo’s Net-Zero Plant Design with its focus on carbohydrates as feedstock, has been carefully chosen for its exceptional cost-effectiveness, reliability, and scalability to meet the surging demand for sustainable aviation fuel and renewable hydrocarbons. This MSA is the first step towards adding McDermott as a project EPC partner. In addition to Axens, Praj, and Fluid Quip, adding McDermott to our team, fortifies further our capabilities in project execution and modularization, especially when teamed with Praj. In an increasingly challenging project environment over the past years, this collaboration is designed to ensure we stay on track, manage costs, execute our NZ-1 project, and be capable of executing additional NZ projects,” stated Chris Ryan, president and chief operating officer of Gevo.

“Gevo is a premier provider in the fast-growing sustainable aviation fuel market. This agreement marks the commencement of a collaborative relationship through which we will support Gevo’s low-cost delivery and speed-to-market goals for its novel alcohol-to-jet process design which incorporates Axen’s ethanol-to-jet process,” said Vaseem Khan, senior vice president of McDermott. “We believe we have the experience and expertise to deliver a standardized, modularized, and repeatable design for this and Gevo’s future Net-Zero projects.”

The Net-Zero 1 plant will not only contribute to sustainable aviation fuel production but also has the potential to generate 550 million pounds of high-value nutritional products annually. Electricity needed to power the plant will come from wind energy, ensuring a sustainable and environmentally friendly approach to fuel production. Additionally, renewable natural gas (RNG) from captured methane emissions of manure from dairy cattle and livestock may be used to meet the thermal energy needs of the plant, making the fuel production even more sustainable.

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H2 Green Steel evaluating North American projects

Sweden’s H2 Green Steel is evaluating projects in North America in partnership with Vale.

Swedish green steel start-up H2 Green Steel is considering projects in North America through a joint feasibility study with Vale that would enable sustainable steel production.

The company said it would explore the potential to produce low-carbon steel value chain products like green hydrogen and hot briquetted iron in industrial centers in North America as well as Brazil.

H2 Green Steel yesterday closed on a €1.5bn equity private placement co-led by new investor Hy24, together with existing investors Altor, GIC and Just Climate. The transaction also includes new investors Andra AP - fonden and Temasek as well as a group of existing investors that continue to support H2 Green Steel with additional equity funding, including AMF, Cristina Stenbeck, Hitachi Energy, IMAS Foundation, Kinnevik, Schaeffler, Vargas and Wallenberg Investments holding company FAM.

The proceeds of that transaction will finance the construction and development of H2 Green Steel’s flagship large-scale green steel plant in Boden, Sweden. Groundworks have been ongoing on the site in Boden since summer 2022, and through this transaction H2 Green Steel takes another big leap towards start of operations end of 2025.

The plant will deliver steel with up to 95 percent less CO2 emissions compared to steel produced with traditional blast furnace technology. This is made possible by replacing coal in the production process with hydrogen, produced on-site with Europe’s largest electrolyzer, using electricity from renewable sources.

Since launch in 2021, H2 Green Steel has raised more than €1.8 billion of equity in three financing rounds. The company closed its series A equity round of €86 million in May 2021 and announced the close of its series B1 round of €260mn October 2022. On the debt side, H2 Green Steel announced in 2022 the structure for its debt financing of over €3.5 billion and renewed commitment letters in July 2023.

Morgan Stanley & Co. International plc acted as sole financial advisor to H2 Green Steel in the private placement.

In the green industrial hubs, Vale is expected to build and operate briquette plants, which will feed direct reduction reactors for the production of HBI and other metallics. The number of industrial hubs that will be built, their location and production capacity will be defined following feasibility studies to be developed jointly by the two companies.

In July, Vale and H2 Green Steel also signed an agreement to supply direct reduction pellets to the Boden plant. Vale expects to reach a production capacity of 100 million tons of agglomerates (briquettes and pellets) after 2030.

“We announced early on our journey that we want to explore other geographies where we can accelerate the decarbonization of the steel value chain. Both Brazil and parts of North America have great potential due to the access to both renewable energy sources, high quality iron ore, and political willingness to support decarbonization projects and it’s a great opportunity for us to explore our partnership with Vale beyond the pellet supply to our flagship plant in Boden,” said Kajsa Ryttberg-Wallgren, EVP growth and hydrogen business of H2 Green Steel, in a news release.

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Region-by-region availability of Energy Attribute Certificates

RMI takes a look at theoretical regional availability of Energy Attribute Certificates for purposes of compliance with 45V tax credit guidelines.

RMI has put forward an analysis of the theoretical availability of Energy Attribute Credits across U.S. regional electricity zones to determine if there is enough 45V-qualifying electricity to meet the needs of the seven winning Regional Clean Hydrogen Hubs.

In summary, the analysis finds preliminarily that, “There are enough projected tax credit-qualifying EACs available to meet the stated electrolytic hydrogen production goals across Regional Clean Hydrogen Hubs.”

However, the report adds that “the system of markets and contracts required to access EACs is underdeveloped, and this is a critical challenge to both market formation and the effective operation of the tax credit.”

Read the full report here.

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Sumitomo invests in Colorado direct air capture company

Sumitomo’s investment in Global Thermostat includes a commercial partnership to develop projects in the US, Europe, Middle East and Asia markets.

Sumitomo Corporation, through the Group’s U.S.-based Presidio Ventures, Inc., has announced its investment in Global Thermostat, PBC, a U.S.-based company that develops and deploys a leading technology for directly capturing carbon dioxide from the atmosphere, according to a news release.

In conjunction with the investment, the companies have signed a letter of intent to develop a new line of global business for carbon capture and sequestration centered around Global Thermostat’s pioneering Direct Air Capture (DAC) technology.

DAC technology directly captures CO2 from the atmosphere and has attracted attention as one of the leading potential solutions for achieving negative emissions on a large scale. When used in combination with underground storage or mineralization solutions, it is likely to have a key role in reducing atmospheric carbon dioxide.

Global Thermostat has been developing DAC technology for more than a decade and has been recognized by the International Energy Agency (IEA) as one of the leading international companies developing large-scale DAC technology. In continually advancing its capture system, the firm has developed a proprietary solution consisting of fans which blow air through contactors with customized surface geometry and sorbents to optimize CO2 capture rates and overall cost.

At the end of 2022, Global Thermostat succeeded in putting a commercial-scale DAC facility into operation at its U.S. headquarters in Commerce City, Colorado, with the capacity to capture more than 1,000 metric tons of CO2 per year, one of the largest operating DAC plants ever. It is now expanding its operations globally.By combining Sumitomo Corporation’s global network and Global Thermostat’s leading DAC technology, the two companies will jointly identify and develop business opportunities in Carbon Capture, Utilization, and Storage (CCUS), including both underground storage and mineralization, in the U.S., Europe, Middle East and Asia markets.

The capturing and sequestration of atmospheric carbon is widely recognized as essential to keeping the global temperature rise below the 1.5 degree target. Together, Sumitomo and Global Thermostat aspire to establish a complete economic system that will provide a foundation for the widespread, global implementation of Direct Air Capture.

In developing the carbon capture value chain, Sumitomo Corporation and Global Thermostat will also explore opportunities in the production of e-fuels, produced by synthesizing CO2 and hydrogen.

“We are excited to be Sumitomo’s technology partner as we pursue our goal of a carbon-neutral economy. Our proven and fundamentally advantaged technology will enable the cost-effective and efficient capturing of atmospheric CO2 for sequestration or commercial uses,” said Paul Nahi, CEO of Global Thermostat.

Shinichi “Sandro” Hasegawa, Head of Energy Innovation Initiative America for Sumitomo Corporation of Americas, commented, “We are pleased to sign a letter of intent for a commercial partnership with Global Thermostat. We believe that DAC is one of the most important technologies for addressing climate change and the realization of a carbon-neutral society.

“Through our collaboration with Global Thermostat, we will promote and realize carbon dioxide removal from ambient air through Direct Air Capture with Carbon Storage, as well as focus on synthetic fuel production based on the captured CO2,” said Hasegawa.

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Developer Profile: Green hydrogen developer finds strength in numbers

Clean Energy Holdings is assembling a coalition of specialized companies as it seeks to break into the novel green hydrogen market.

Nicholas Bair draws a direct line from his childhood on an Oregon dairy farm to the coalition of specialized companies that, as the CEO of Clean Energy Holdings, he is now assembling in pursuit of key-player status in the green hydrogen industry.

“We created our own milk from our own hay,” he says, of his family’s organic dairy farm in Klamath Falls, near the California border. He adds, using an expression he often repeats: “Everything was inside the battery limits.”

This phrase – “inside the battery limits” – represents what Bair, who is forty-one and a chemist by trade, is trying to achieve with The Alliance: a broad, self-contained battery of partners with specialized competencies working in coordination on the challenges of developing and operating groundbreaking green hydrogen projects.

“We’re doing everything from soup to nuts,” he says.

CEH and The Alliance are planning to build roughly $1bn worth of projects per year over the next ten years, Bair says. As a launching point, the parties are advancing a green hydrogen facility – called Clear Fork – near Sylvester, Texas that would churn out 30,000 kg per day in phase 1 starting in 4Q24. The hydrogen would be produced using electrolyzers powered by a 325 MW solar farm, while ancillary facilities at the site would be powered by a gas turbine capable of blending up to 70% hydrogen.

As members of The Alliance, Equix Inc. is acting as the EPC for the solar and gas turbine portion of the project, while Chart Industries is providing tankers, trailers, and liquefaction to transport hydrogen from the site in northwest Texas. Meanwhile, Hartford Steam Boiler – an original contributor to standards written by the American Society of Mechanical Engineers – will provide quality assurance and control; Coast 2 Coast Logistics is responsible for trucking; and The Eastman Group provides permitting and facilities management.

‘First-of-kind’

Although a renewable project, the green hydrogen concept is similar to most refinery EPC contracts, since many of them are first-of-kind with significant liquidated damages, Bair says. Additionally, the green hydrogen projects are “married to renewables, and you need the cryogenics and the distribution in between.”

Before starting Clean Energy Holdings, Bair was the founder and CEO of Bair Energy, a program and construction manager for infrastructure and energy projects – a service that Bair Energy is providing as a member of the Alliance. A period of low natural gas prices made Bair Energy’s specialty – geothermal power – less competitive, and Bair, seeking to develop his own projects instead of managing projects for others, sought to branch out into new types of energies.

Bair Energy itself consists of professionals that have been cherry-picked from the industry, Bair says. Candice McGuire, a veteran of Shell and Technip, is Bair’s chairman; chief operations officer John Strawn recently joined from Technip; and wind-industry veteran Peder Hansen has joined as VP and chief engineering manager.

“Our experience on the team is taking first-of-kind, developing it, and getting it to market,” he says. With The Alliance, “We went out and found the best at what they do, put them on lump-sum order, and brought them to the table early to figure out how to make their product talk to the other person’s product, so we can have a guarantee,” he says.

What distinguishes Clean Energy Holdings from other green hydrogen developers is, in fact, the coalition it is building, says Elizabeth Sluder, a partner at Norton Rose Fulbright who is CEH’s legal advisor.

“It’s intended to be one-stop shopping in a vertically integrated structure such that as and when needed for future CEH projects or third party projects that are identified, you have all the various players you need to take it from point A to point B,” she adds.

Because the parties are on standby with a common goal, CEH and its partners can provide lump-sum turnkey services, with some element of bulk pricing potentially factored in, because savings are generated through not having to issue RFPs for partners in future projects.

“The savings in time and money is, I would expect, very valuable,” Sluder says. “And when you apply those principles to long-term strategy and equity investment-type opportunities, the lower capex spend should theoretically benefit the project at large.”

Keeping the pieces moving

Bair runs CEH alongside Co-Founder and President Cornelius Fitzgerald. The two met as children – Fitzgerald was raised on a nearby cattle farm in southern Oregon – and enjoy the uncommon chemistry of childhood friends.

In something of classic pairing, “I’m much more the trumpet, paving the path,” Bair says, while Fitzgerald “usually keeps the pieces moving.”

“Sometimes Cornelius has had the best cup of coffee and takes the lead in meetings. And sometimes I do,” he says. “It’s that ability to rely on each other that set the basis of design in my mind for what a good partner looks like.”

Fitzgerald says they approach the challenge of breaking new ground in green hydrogen with “quiet confidence and humility.” By having a big picture vision as well as “credible and tangible fundamentals for the project” – like land, resource, and water control – the project moved from an idea to a reality, he adds.

“And really we’ve been driving at how to get the best experience and expertise at the table as early as possible,” Fitzgerald says.

Equix, Inc, a civil engineering firm, joined the grouping to build the solar and gas generation portion of the facility, representing the company’s first-ever foray into a hydrogen project, says Tim LeVrier, a vice president of business development at the firm.

“There are many challenges integrating all these types of power sources and energy into creating hydrogen,” Levrier says. “From an electrical engineering standpoint it is extremely challenging to coordinate power switching from one source to another. Another consideration we are having to work through is what to do in regards to producing hydrogen at night. Will there be a battery portion to the project or do we just not produce hydrogen when it is dark? These are all things we are considering and will have to find creative solutions for.”

‘Pathological believer’

CEH recently added Chart Industries to The Alliance, which in addition to furnishing liquefaction, tanks and trailers to move hydrogen, will provide fin fans for cooling and a reverse osmosis system for cleaning water. “We don’t want to give away all our secrets,” Bair says, “but it’s a very efficient process.”

The unique perspective and expertise of partners in The Alliance makes for a fulsome ecosystem around any CEH project, says Jill Evanko, CEO of Chart Industries. With respect to CEH’s projects, Evanko says they are “very targeted, which, with focus, will continue to help evolve the hydrogen economy.”

“Chart’s hydrogen liquefaction process as well as associated hydrogen equipment including storage tanks and trailers” – which the company has been manufacturing for over 57 years – “will be sole-source provided into the project. This will allow for efficient engineering and manufacturing to the CEH Clear Fork project schedule,” she says.

In any molecule value chain, hydrogen included, Chart serves customers that are the producers of the molecule, those who store and transport it as well as those who are the end users, Evanko adds. “This allows us to connect those who are selling the molecule with those who need it.”

Looking ahead, CEH is preparing to meet with investors in the lead-up to an April, 2023 final investment decision deadline for the Texas project. And it is being advised by RockeTruck for another RFP seeking fuel cell vehicles to transport hydrogen from the site as the trucks become available – a design that will likely include hydrogen fueling stations at the production facility as well as at the Port of Corpus Christi, Bair says.

CEH also has plans to develop its own geothermal plants and explore the role that nuclear energy can play in green hydrogen. Bair Energy recently hired Eric Young as its VP of engineering and technology from NuScale, where he worked on the research team that received approvals from the U.S. Nuclear Regulatory Commission for a small modular nuclear reactor.

“We’re a technology-driven owner-operator,” Bair says. “We’re all technologists, which means we’re pathological believers in technology. We’re all looking for transformational energy.”

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Gas-fired peaker sale touts hydrogen blend potential

An equity process for 25% ownership of a California peaker plant includes plans to blend up to 30% hydrogen as part of the sales pitch, according to a teaser.

An opportunity to acquire 25% of the Sentinel Energy Center in California includes decarbonization initiatives like blending 30% hydrogen and installation of on-site battery storage, according to two sources familiar with the matter.

Project Oasis is being run by CIBC, the sources said. Voltage Finance, an entity managed by Guggenheim Partners Investment Management, is exploring the sale of its 25% indirect equity interest in the 850 MW generating facility in Riverside County.

The facility has more than 75% of its capacity contracted through 2027, according to a teaser seen by ReSource. The potential to execute a long-term green hydrogen offtake contract on several of Sentinel’s turbines is being evaluated.

“Sentinel is pursuing the implementation of hydrogen blending capabilities and has advanced the engineering and design through an agreement with a global OEM with beta testing expected in Q1 2025,” the document states.

Sentinel is also co-located with 15 MW of battery storage.

Guggenheim and CIBC did not respond to requests for comment.

Diamond Generating holds a 50% stake in Sentinel. The remaining 25% interest is owned by California-based fund manager Climate Adaptive Infrastructure (CAI), which bought its stake from Partners Group last year.

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US hydrogen developer auditioning bankers

A US-based clean fuels developer has large capital needs for unannounced green hydrogen projects in California and Illinois, as well as an ammonia facility in Texas.

A US-based clean fuels developer has large capital needs for unannounced green hydrogen projects in California and Illinois, as well as an ammonia facility in Texas.

Avina Clean Hydrogen has yet to formally engage an investment banker to raise the equity and debt needed for a trio of projects under development in the US, CEO Vishal Shah said in an interview.

The company, which recently announced the formation of a strategic advisory board composed of executives from companies like Cummins, bp and Rolls Royce, will need $600m or more of debt and between $200m and $300m of equity, as previously reported by ReSource. Capital raising talks are focused on the operating company and project level.

Capital raises for Avina’s 700,000 mtpa green ammonia project in the Texas Gulf Coast and a larger operating company raise will launch next month, Shah said.

“The amounts that we are going to need to raise have gone up,” Shah said. “We are working with a number of banks but we’ve not engaged anyone formally.”

Buildout of the Texas project has been accelerated. The company recently announced an agreement with KBR for that project, which is scheduled to come online next year.

Project level capital has been raised for Texas and a green hydrogen project in Southern California, Shah said. An additional green hydrogen project in Illinois is in development as well.

Finding the renewable power

Renewable power needs for these facilities are big, but Shah said the company doesn’t see a shortage of power. Instead, developers are facing interconnection issues and subsequent cost increases.

Hydrogen developers in California are in many cases offering higher prices for renewable energy than other buyers, Shah said. The issue is that credit-worthy investment counterparties are often seen as more attractive offtakers regardless of the higher price offers from aspiring hydrogen producers.

“I would say California is different,” Shah said. “The offtake market is a challenge.”

There are renewables developers with a genuine interest in hydrogen looking at the sector as a long-term play, Shah said. But for some without a strategic interest in hydrogen, a community choice aggregator offering a 15-year offtake is more certain than a hydrogen developer offering a 10-year offtake; higher price can be seen as a trade-off.

“That’s the nature of the beast, right now.”

Regulatory uncertainty

Investors looking into the space are hesitating to deploy capital in some cases because of uncertainty around IRA clarifications, particularly with regards to the PTC qualifications, Vishal said.

“A lot of the customers, lenders, everybody’s waiting to make decisions,” Vishal said. Offtakers also have hesitations. “Nobody wants to sign long-term contracts in an environment where pricing is not clear.”

Shah said investors should look for offtake when investing in projects. Avina has two of three contracts signed for each of its projects.

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