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Green data center and hydrogen complex planned for Virginia

Plans for the Surry Green Energy Center include 1 GW of data, green hydrogen production, and four to six 250 MW SMRs to service massive power needs in a region heavily populated with data centers.

Green Energy Partners, a Virginia-based property and project development company, has secured 641 acres in Surry County with plans to create an integrated green hydrogen and data center complex, according to a news release.

Building the Surry Green Energy Center will include 1 GW of data, green hydrogen production, and four to six small modular reactors (added over time) generating about 250 MWe each.

“The SGEC may also incorporate energy storage capabilities to balance supply and demand at the fully integrated site,’ the release states.

The plan is to begin constructing the data centers now, with electricity provided by the grid.  In the future, the data centers would interconnect to new sustainable power from the co-located on-site SMRs.

The release mentioned the NuScale VOYGR SMR, which can power electrolysis for green hydrogen to burn on-site or blend into natural gas lines that cross through the property.

Data centers in Loudoun County, Virginia alone use about 20% of Virginia’s power capacity while handling upwards of 70% of the world’s data traffic, the release states.

“Considering the exponential data and energy growth today, the Surry Green Energy Center will provide much-needed support to America and the world’s internet traffic with positive national security implications — at a site that is highly suited for new nuclear today.”

Surry County Economic Development and the Department of Energy’s Idaho National Laboratory have cooperated with knowledge and various levels of support on the green energy center.

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Electric Hydrogen agrees 1 GW electrolyzer supply with AES

The supply reservation agreement includes commercial requirements for AES to order up to 1  GW of 100 MW electrolyzer plants from Electric Hydrogen.

Electric Hydrogen has reached a comprehensive framework supply agreement with The AES Corporation for up to 1 GW of large-scale electrolyzer plants to produce low-cost, green hydrogen from renewable energy, according to a news release.

This supply reservation agreement includes commercial requirements for AES to order up to 1  GW of fully integrated, low-cost 100 MW electrolyzer plants from Electric Hydrogen.

“AES’ expertise in power markets, project development and new technology integration are best-in-class,” said Raffi Garabedian, CEO of Electric Hydrogen. “We’re excited to help AES deliver on the promise of green hydrogen and look forward to partnering with them on their future hydrogen projects.”

Electric Hydrogen’s 100 MW high-tech electrolyzer plants feature the capability to follow variable renewable energy resources allowing customers to optimize energy use and maximize project returns, the release says. The plants are designed and manufactured in the US, and the company is presently pre-fabricating its first customer-sited plant in Texas and has two operating plants in California.

“Electric Hydrogen’s innovative technology and large-scale product enables AES to offer cost effective decarbonization solutions for our customers in the most difficult to decarbonize sectors,” said Ashley Smith, Chief Innovation Officer, AES. “AES is taking steps to secure our supply chain proactively as we strategically grow our green hydrogen business.”

Electric Hydrogen’s roadmap to scale high-rate manufacturing in the US is intended to make green hydrogen competitive with fossil fuel resources by 2030. That roadmap also will allow US electrolyzer manufacturing to outstrip low-tech electrolyzer alternatives, such as alkaline products currently mass-produced in China.

The procurement reservation agreement enables AES to develop additional green hydrogen projects, capitalizing on EH2’s project scale, efficiency and low capital costs.

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SOEC electrolyzer maker Sunfire attracts EUR 500m

German electrolyzer maker Sunfire added new equity investors including GIC and secured a loan from the European Investment Bank.

The German electrolyzer manufacturer Sunfire has raised EUR 215 million in a Series E equity financing round, further complemented by a term loan of up to EUR 100 million provided by the European Investment Bank (EIB).

In addition, Sunfire has access to approx. EUR 200 million from previously approved, undrawn grant funding to support its growth, according to a news release. This makes Sunfire one of the best capitalized electrolyzer manufacturers in the industry.

Sunfire announces the successful completion of a substantial Series E financing round, raising EUR 215 million in equity capital. The new investment will further boost the company’s critical role in ramping up the hydrogen economy. Sunfire welcomes LGT Private Banking, GIC, Ahren Innovation Capital, and Carbon Equity as new investors. The transaction is subject to customary regulatory approvals and is expected to close in Q2 2024.

Sunfire-CEO Nils Aldag said, “This substantial financing round is good news for Europe’s leading role in hydrogen production and for the European clean-tech industry. I am delighted to welcome additional investors backing our vision, product offering, and capabilities to deliver industrial electrolyzers at pace and scale. With this new capital, we are uniquely positioned to further accelerate our company’s growth and industrialization plans to meet the fast-growing demand for electrolysis technologies.”

In addition to the new investors, existing shareholders have increased their investment in Sunfire – among them Lightrock, Planet First Partners, Carbon Direct Capital, the Amazon Climate Pledge Fund, and Blue Earth Capital.

In line with Sunfire’s commitment to financial diversification, the company has also secured a credit of up to EUR 100 million from the European Investment Bank (EIB), which provides increased capacity to boost its development and industrialization of solid oxide electrolyzers.

Sunfire’s pressurized alkaline and high-temperature solid oxide electrolysis technologies are a key enabler of the transition to renewable energy, offering a scalable and efficient means of producing green hydrogen. The company targets installing several gigawatts of electrolysis equipment by 2030 in large-scale green hydrogen projects, securing a leading position in the fast-growing global electrolyzer market.

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Norway-based HydrogenPro signals push into U.S. with new CEO hire

The OEM for alkaline electrolyzers is targeting the US for growth with the hire of Tarjei Johansen, who has held senior roles in Houston.

HydrogenPro ASA has appointed Tarjei Johansen as new chief executive officer, according to a press release.

The interim CEO and founder of HydrogenPro Richard Espeseth will return to his former position as business developer and technology leader in the company.

Johansen has held senior roles at the Houston-based operations of Bureau Veritas, Kemira, and Schlumberger, according to his LinkedIn account.

HydrogenPro is a technology company and an OEM for high pressure alkaline electrolyzer and supplies large scale green hydrogen plants. It has partnered with DG Fuels in the US, among others, to supply hydrogen for sustainable aviation fuel via its electrolyzers.

“US will be HydrogenPro’s most important market in the coming years, and Tarjei brings 25 years of experience in this market. Tarjei is a merited leader known for his multifaceted strategic execution skills, drive and ability to energize organizations. We are confident that Tarjei together with the Company´s executive team and board of directors will continue the development of HydrogenPro as a leading provider of green hydrogen technology,” said Ellen Hanetho, chair of the board of directors of HydrogenPro.

“I am excited to join HydrogenPro to promote its leading green hydrogen technology in a fast-growing energy transition market. I will work alongside my colleagues to create customer- and shareholder value every day,” said Johansen.

Johansen enters his new position on December 1st this year. He will move back to Norway where HydrogenPro is headquartered.

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Of CfDs and RFNBOs: Untangling the global hydrogen policy web

US ammonia and hydrogen project developers are increasingly looking to Japan and South Korea as target markets under the belief that new rules for clean hydrogen and its derivatives in Europe are too onerous.

Much fuss has been made about the importance of pending guidance for the clean hydrogen industry from US regulators. Zoom out further and major demand centers like the European Union, Japan, and South Korea have similarly under-articulated or novel subsidy regimes, leaving US clean fuels project developers in a dizzying global tangle of red tape. 

But in the emerging global market for hydrogen and ammonia offtake, several themes are turning up. One is that US project developers are increasingly looking to South Korea and Japan as buyers, turning away from Europe following the implementation of rules that are viewed as too onerous for green hydrogen producers.

The other is that beneath the regulatory tangle lies a deep market, helping to answer one of the crucial outstanding questions that has been dogging the nascent ammonia and hydrogen industry: where is the offtake? 

Many projects are proceeding towards definitive offtake agreements and final investment decisions despite the risks embedded in potential changes in policy, according to multiple project finance lawyers. In most cases, reaching final agreements for offtake would not be prudent given the raft of un-issued guidance in these major markets, said the lawyers, who acknowledge a robust offtake market but may advise their clients against signing final contracts.

The European Union rules for green hydrogen and its derivatives became law in June, and included several provisions that are proving challenging for developers and their lawyers to structure around: prohibiting state-subsidized electricity in the production of green hydrogen, and the requirement that power for green hydrogen be purchased directly from a renewable energy supplier. 

Taken together, the policy developments have pushed many US project developers away from Europe and toward Japan and South Korea, where demand for low-carbon fuels is robust and regulations are viewed as less burdensome, if still undefined, experts say.

Developers are carefully choosing jurisdictions for their target offtake markets, “limiting their focus to North Asian rather than European buyers, with the expectation that certain standards and regulations will be less strict, at least in the near term,” said Allen & Overy Partners Hitomi Komachi and Henry Sohn, who are based in Japan and Korea, respectively.

Trade association Hydrogen Europe lambasted the new European rules last year while they were still in formation, saying they would cause a “mass exodus” of the continent’s green hydrogen industry to the US.

Make or break

US policymakers delivered a shock blow with last year’s approval of the Inflation Reduction Act – but its full benefits have yet to flow into the clean fuels sector due to outstanding guidance on additionality, regionality, and matching requirements. 

At the same time, the 45V tax credit for clean hydrogen has been called potentially the most complex tax credit the US market has ever seen, requiring a multi-layered analysis to ensure compliance. The US policy uncertainty is coated on top of an already-complex development landscape facing developers of first-of-kind hydrogen and ammonia projects using electrolyzer or carbon capture technologies. 

“Even though folks are moving forward with projects, the lack of guidance impacts parties’ willingness to sign definitive documents, because depending on the guidance, for some projects, it could break the economics,” said Marcia Hook, a partner at Kirkland & Ellis in Washington DC.

Now, US developers seeking access to international markets are contending with potential misalignment of local and international rules, with Europe’s recently enacted guidelines serving as a major example of poorly arrayed schemes. 

Some US developers have already decided it may be challenging to meet the EU’s more rigorous standards, according Hook, who added that, beyond the perceived regulatory flexibility, developers appear to be garnering more offtake interest from potential buyers in Asia.

Projects that depend on outstanding guidance in Asia are also moving ahead, a fact that, according to Alan Alexander, a Houston-based partner at Vinson & Elkins, “represents a little bit of the optimism and excitement around low-carbon hydrogen and ammonia,” particularly in Japan and Korea.

“Projects are going forward but with conditions that these schemes get worked out in a way that’s bankable for the project,” he added. “It’s not optimal, but you can build it in,” he said, referencing a Korean contract where conditions precedent require that a national clean hydrogen portfolio standard gets published and the offtaker is successful in one of the  Korean power auctions.

RED III tape

Unlike the US, the EU has focused on using regulation to create demand for hydrogen and derivative products through setting mandatory RFNBO quotas for the land transport, industry, shipping and aviation sectors, according to Frederick Lazell, a London-based lawyer at King & Spalding.

Lazell called the EU rules “the most fully-developed and broad market-creation interventions that policymakers have imposed anywhere in the world.” As a result, being able to sell RFNBO into Europe to meet these quotas is expected to fetch the highest prices – and therefore potentially the highest premiums to suppliers, he said.

The European guidelines enacted in June introduced several provisions that will make it challenging for US developers to structure projects that meet the EU’s classification for renewable fuels of non-biological origin (RFNBOs).

For one, the European Commission issued guidance that prohibits subsidies for renewable energy generation when it is transmitted via a power purchase agreement through the electrical grid to make RFNBO.

This provision potentially eliminates all green hydrogen-based projects in the US from qualifying as an RFNBO, a managing partner at a US-based investment firm said, given that green hydrogen projects will likely be tied to renewables that are earning tax credits.

“The EC’s decision to include this restriction on State aid makes the EU’s version of additionality more onerous than even the strictest requirements being considered in the US,” lawyers from King & Spalding wrote in a September note, adding that some people in the industry argue that the decision is inexplicable under the RED II framework that authorized the European Commission to define additionality. 

A second challenge of the EU regulations is the mandate that PPAs be contracted between the RFNBO producer and the renewable energy source. Such a requirement is impossible for electricity markets where state entities are mandated to purchase and supply power, a structure that is common in multiple jurisdictions. Moreover, the requirement would remove the possibility of using a utility or other intermediary to deliver power for green hydrogen production.

“These technical issues may be serious enough for some in the industry to consider challenges before the Court of Justice of the European Union,” the King & Spalding lawyers wrote. “However, it is not yet clear whether there is the appetite or ability to turn such suggestions into a formal claim.”

Go East

Although the subsidy regimes in Japan and South Korea are expected to be less stringent in comparison to the EU, the programs are still not completely defined, which leaves some uncertainty in dealmaking as projects move forward.

The traditional energy sector has always dealt with change-in-law risk, but the risk is heightened now since regulations can change more rapidly and, in some cases, impact ongoing negotiations, said Komachi and Sohn, of Allen & Overy, in a joint email response. 

“Certain regulations coming into force may be contingent or related to the funding plan of the project,” they said. As such, clean fuels offtake frameworks need to facilitate not only the tracking and counting of emissions, they added, but also leave sufficient flexibility as regulatory frameworks evolve.

Japan, through its Hydrogen Basic Strategy, set out targets to increase the supply of hydrogen and ammonia in the country while reducing costs, deploying Japanese electrolysis equipment, and increasing investment into its supply chain. Additionally, Japan is contemplating a contracts-for-difference-style regime to support the gap between the price of clean hydrogen or ammonia and corresponding fossil fuels for 15 years.

Still, standards for “clean hydrogen” have not been clarified, though most observers believe the country will follow a carbon emissions lifecycle analysis in line with IPHE criteria, which is proposed at 3.4 kilograms of carbon dioxide per kilogram of hydrogen. Similarly, rules around “stacking” subsidies in Japan with other jurisdictions such as the Inflation Reduction Act have not been defined.

Meanwhile, Korea is considering carbon emissions standards of up to 4 kilograms of CO2 per kilogram of hydrogen. It is pushing for greater use of hydrogen in part through its Amended Hydrogen Act, requiring electric utilities to buy electricity made from hydrogen in a bidding round starting in 2024. The requirement scales up from 1,300 GWh of general hydrogen in 2025 to 5,200 GWh for general hydrogen and 9,5000 GWh for clean hydrogen in 2028.

Both countries are working to incentivize the entire supply chain for hydrogen and ammonia to ensure the separate pieces of infrastructure will be available on investable and bankable terms, with the aim of creating a demand center when the export centers are developed, Komachi and Sohn added.

They also point out that the emerging clean fuels offtake market will operate in the near term in a more spotty fashion in comparison with the more liquid markets for oil and gas.

“Hydrocarbon markets have gradually moved towards portfolio players, trading and optimization,” said Goran Galic, an Australia-based partner at Allen & Overy. “Smaller market size, technological and regulatory considerations mean that clean fuels, at least initially, require more of a point-to-point approach and so building long-term working relationships between the developers and offtakers is a key aspect of offtake strategy.”

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Exclusive: Mississippi green hydrogen developer assembling banks for debt raise

The developer of a potentially massive network of green hydrogen production, transport and salt cavern storage — estimated to cost billions — is seeking banks to support a project debt raise.

Hy Stor, the developer of hydrogen generation and salt cavern storage, is currently raising “billions” in project finance for the first phase of its home state hub in Mississippi, Chief Commercial Officer Claire Behar said in an interview.

The first phase is expected to enter commercial service in 2026, guided by customers, Behar said.

Connor Clark & Lunn are equity partners in the Mississippi hub and is helping Hy Stor with its debt raise. Hy Stor is working with King & Spalding as legal advisor.

“We are already seeking banks and lining up our needed debt,” Behar said. She declined to say a precise amount the company will raise but said it will be in the billions.

Hy Stor plans to soon announce their renewable development partner to build dedicated off grid renewables, Behar said. The same is true for offtake in non-intermittent 24-hour industries like steel, plastic and fertilizer manufacturing.

“The customers are willing to pay that twenty-to-thirty percent premium that the market would need,” Behar said. “The business case is there.”

When asked if traditionally carbon intensive industrial manufacturing interests were actively seeking to co-locate with Hy Stor in Mississippi, Behar said the company has been advancing those agreements and hopes to have announcements soon. 
There is evidence of this type of activity in the state. Recently American steel manufacturer Steel Dynamics announced Columbus, Mississippi as the location of its upcoming aluminum flat rolled millwith a focus on decarbonization. Job postings for engineering roles at a separate facility detail plans to convert biomass into a direct carbon replacement suitable for steelmaking. 

Hy Stor hopes to have announcements in the coming weeks about a co-location opportunity, she added. Both domestic and international strategics are interested in the geology offering co-located salt cavern storage and geography offering river and deepwater port logistics networks, as well as highway and rail corridors.

Off-grid renewable generation means the company is not at the mercy of transmission interconnection queues. It also offers reliability because the lack of grid adage helps guarantee performance, and affordability because the company doesn’t have to pay utility rates, Behar said. Additionally, the electricity is decoupled from the grid and therefore absolutely decoupled from fossil fuels, which is important to Hy Stor’s prospective offtakers.

“This is what customers are demanding,” Behar said, adding that first movers are highly dedicated to decarbonization, needing quantitative accounting for all scope emissions, driven often by pressure from their customers.

The company has received a permit to take 11,000 gallons per minute of unpotable water from the Leaf River in Mississippi, Behar said, and is also looking at in-house wastewater treatment and water recycling.

Don’t go after gray users

Behar said the concept that users of gray hydrogen are the first targets for green hydrogen developers is misguided.

“The refineries, the petrochemicals, for them hydrogen is an end product already used within their system,” Behar said. “Those are not going to be the first users that are going to pay us a premium for that zero carbon.”

Hy Stor is instead focusing on new greenfield facilities that can co-locate.

“We’ve purposefully outsized our acreage,” she said of the 70,000 acres the company has purchased outside of Jackson, Mississippi, the Mississippi River Corridor, and the state’s southern deepwater ports in Gulfport and Port Bienville. New industrial projects can co-locate and have direct access to the salt cavern storge.

Looking forward the company’s acreage and seven salt domes mean they are not constrained by storage, Behar said. At each location, the company can develop tens and hundreds of caverns.

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Exclusive: Biomethane firm planning funding round

A biomethane solutions provider with projects in Europe and the US is planning a fifth round of funding to launch early next year, with a need to raise additional project debt.

Electrochaea, the US- and Europe-based biomethane developer, will go to market in 1Q24 for a new round of equity funding, with a near term need for project debt as well, two executives told ReSource.

The company, which was spun out from an incubator at The University of Chicago with offices in Denmark, has projects in Denmark, Colorado, New York and Switzerland. It is backed by Baker Hughes and, from early fundraising efforts, Munich Venture Partners, senior director Aafko Scheringa said. The former investor participated in its most recent (fourth) $40m funding round.

Electrochaea uses a patented biocatalyst that converts green hydrogen and carbon dioxide into BioCat Methane, a pipeline-grade renewable gas.

The average size of a project is roughly $25m, Scheringa said.

Funds from the next round will provide three years of working capital, CEO Mitch Hein added.

Electrochaea has not worked with a financial advisor to date, Hein said, adding that he may have need for one for new processes but has not engaged with anyone.

Scheringa said he is working to achieve commercialization on a pipeline of projects, with a 10 MWe bio-methanation plant in Denmark being farthest along with a mandatory start date before 2026.

Electrochaea has a bio-methanation reactor system in partnership with SoCalGas at the US Department of Energy’s National Renewable Energy Laboratory (NREL) Energy System Integration Facility in Golden, Colorado, though Hein said a project in New York is as advanced in its development.

Bio-methane can be burned in place of natural gas with no systems degradation issues, so gas offtakers are a natural fit for Electrochaea, Scheringa said. Cheap clean electricity paired with available CO2 is critical, so the company will look to places like Texas, Spain, Scandinavia, Quebec and the “corn states” of the US Midwest, for new projects.

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