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Green hydrogen developer in active discussions for California FID this year

A green hydrogen developer is in active discussions with counterparties as it pursues a final investment decision for its first project.

Houston-based green hydrogen developer Element Resources is in active discussions to reach FID this year on its first green hydrogen project slated for Lancaster, California.

The company had engaged Houlihan Lokey in recent months to lead a capital raise for the project, according to two sources familiar with the matter. The Houlihan mandate had involved raising non-dilutive debt, a process that is believed to have been shelved, said one of the sources.

“We are steadily working our way to an FID this year and are pulling together all parts of the project,” Element CFO Avery Barnebey said via email in response to inquiries. He declined to comment further.

A Houlihan representative did not respond to an email seeking comment.

The Lancaster facility, which is targeted to begin commercial operations in early 2025, will be built on 1,165 acres and consist of 135 MW of solar-powered electrolysis capacity, according to the company’s website. At full capacity, the 18,750 mt per annum of hydrogen produced by the facility will serve the growing demand for clean mobility fuels as well as clean energy for manufacturing.

Element is led by founder and CEO Steve Meheen, an oil & gas industry veteran. Barnebey is a former director of corporate development at California Resources Corporation.

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SAF developer planning Kansas facility

Azure is targeting a final investment decision by early 2025.

Azure 2023 Inc., a SAF developer, is planning development of a production facility in Cherryvale, Kansas.

Since June 2023, Azure has been progressing a FEED study, which is on track for completion in 2024.

Azure is targeting a final investment decision by early 2025; if approved, the company is targeting to reach first production in 2027, according to a news release.

The facility would use commercially proven technology, allowing for efficiency in speed to market and future expansion. Once fully operational, the facility will produce approximately 135 million gallons per year of renewable fuels, primarily SAF. The use of Azure’s SAF will reduce global aviation emissions by approximately 1 million tons per year, equivalent to removing emissions from roughly 200,000 cars annually.

Azure has received significant support from the local government. On December 18, the Montgomery County Commission approved various tax incentives to help support the project. These incentives include a 10-year property tax exemption and an exemption on sales tax on construction materials and labor.

Azure’s goal of producing SAF with the lowest emissions is further supported through an executed letter of intent with CapturePoint Solutions to explore the opportunity to tie-in to its existing and operating carbon dioxide (CO2) sequestration network and infrastructure.

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Hyzon promotes from within for key executive roles

The heavy-duty fuel cell vehicle maker is in the midst of a search for a permanent CFO.

Hyzon Motors has promoted two members on its senior leadership team to execute a strategy of developing and manufacturing hydrogen-powered fuel cell systems and the deployment of fuel cell electric vehicles, according to a news release.

Jiajia Wu has been named interim Chief Financial Officer, responsible for overseeing all financial operations including financial planning and analysis, accounting, and reporting.

Before joining Hyzon in 2021 as Chief Accounting Officer, Wu served as the Global Director of Cost & Technical Accounting and Reporting at UL Solutions. Prior to that role, she held various positions at EY.

Hyzon has launched a search for permanent CFO.

Pat Griffin, formerly President of Vehicle Operations, has been named President of North America and will oversee and manage Hyzon’s North America business regions, including full commercial, operational, and financial responsibilities. He will continue leading Hyzon’s global engineering, procurement, and operation efforts, and overseeing fuel cell production, US-based vehicle development and production, and US operations.

Griffin previously held leadership roles at multiple transport companies, including as CEO at Crane Carrier Company and President of Light Duty Truck & EV Solutions at Fontaine Modification.

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HIF, Idemitsu, and MOL to cooperate on e-fuels supply chain

HIF Global will assess demand for CO2 in its eFuels production facilities around the world. Idemitsu will study the capture of CO2 in Japan. MOL will examine the transportation and shipping of CO2 from Japan and eFuels to Japan.

HIF Global, an eFuels company, Idemitsu Kosan, the Japanese petroleum company and Mitsui O.S.K. Lines, Ltd. (MOL), the international shipping company, have reached an agreement to develop an eFuels supply chain between HIF facilities and Japan.

The agreement also outlines how the companies will explore the potential for supplying carbon dioxide (CO2) from Japan for use as a feedstock for the eFuels production process in HIF facilities under development in the USAAustralia and Chile, according to a news release.

HIF Global will assess demand for CO2 in its eFuels production facilities around the world. Idemitsu will study the capture of CO2 in Japan. MOL will examine the transportation and shipping of CO2 from Japan and eFuels to Japan.

Cesar Norton, President & CEO of HIF Global, said: “At HIF Global, we are developing a portfolio of eFuels facilities that would recycle approximately 25 million tonnes per year of CO2, equivalent to the emissions from over 5 million cars. Carbon neutral eFuels are an immediate replacement for fossil fuels across the global transport sector. Initiatives like this collaboration will bring us a step closer to fueling our world with renewable energy as we strive towards net zero emissions now.”

Hiroshi Tanaka, General Manager (Carbon Neutral Transformation Department) of Idemitsu Kosan said: “As part of our commitment to sustainability, Idemitsu is actively working towards establishing a robust supply chain for eMethanol and eFuels. We recognize the importance of these low environmental impact alternatives in our business and their versatility. Through strategic collaborations such as this, we are confident in our ability to take a leading role in reducing carbon emissions in both the energy and transportation sectors. Additionally, we see tremendous potential in the development of various business opportunities within the supply chain. We look forward to exploring and capitalizing on these opportunities together.”

Hirofumi Kuwata, Senior Managing Executive Officer of MOL, said: “Mitsui O.S.K. Lines is pleased to be working with HIF Global and Idemitsu Kosan to develop a value chain for CO2, synthetic fuel, and synthetic methanol, contributing to decarbonization throughout the lifecycle. We will establish efficient maritime transport of CO2, synthetic methanol, and synthetic fuel within the supply chain connecting Japanese and overseas projects.”

The parties will also discuss the sale and purchase of eFuels and analyze the resulting greenhouse gas emissions reduction.

eFuels are made using electrolyzers powered by renewable energy to separate hydrogen from oxygen in water. The green hydrogen is combined with recycled carbon dioxide to produce carbon neutral eFuels, which are chemically equivalent to fuels used today and can therefore be dropped-in to existing engines without requiring any modifications.

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Illinois ethanol company seeking offtaker for SAF project

Seeking to diversify into new markets, Marquis, a family-owned ethanol producer based in Illinois, is looking for an offtaker for its first sustainable aviation fuel plant.

Marquis, a family-owned ethanol producer based in Illinois, is seeking an offtaker for its first sustainable aviation fuel plant.

The company, which is developing the plant in partnership with LanzaJet, an SAF firm, recently completed a feasibility study for the project, and is looking for airlines or users of renewable diesel as offtakers, Dr. Jennifer Aurandt Pilgrim, the company’s director of innovation, said in an interview.

Marquis owns and operates a 400 million gallon per year ethanol plant – the largest dry-grind ethanol plant in the world – which produces sustainable ethanol for fuel and chemicals as well as a feed for the aquaculture and poultry industries.

The company will divert roughly 200 million of those gallons to make 120 million gallons per year of SAF and renewable diesel, Aurandt said, noting that Marquis is looking to branch into new markets where ethanol is a feedstock.

“As more electric vehicles come on, there will be about a 3 billion gallon demand destruction for ethanol, and SAF is one of the great markets that we can diversify into,” she said.

Aurandt said financing for the SAF facility will ultimately depend on who the offtaker is.

Use cases

United Airlines, Tallgrass, and Green Plains Inc. recently formed a joint venture – Blue Blade Energy – to develop and then commercialize SAF technology that uses ethanol as its feedstock.

SAF using corn as a feedstock does not currently qualify for incentives in the Inflation Reduction Act, which uses standards laid out by the International Civil Aviation Organization that effectively exclude corn-based SAF from qualifying.

Marquis and other ethanol producers are pushing for the adoption of a lifecycle greenhouse gas model, known as GREET, developed by the Argonne National Laboratory, that would allow corn-based feedstock to qualify, said Dustin Marquis, the company’s director of government relations.

The company is also looking to attract partners to set up operations in the Marquis Industrial Complex, which is touted as a 3,300-acre industrial site with natural gas lines, access to multiple forms of transportation, and carbon sequestration on-site.

“We’re looking for other businesses where there would be either vertical integration or business synergies between the two organizations,” Marquis said.

Marquis said in a news release it would develop two 600 ton per day blue hydrogen and blue ammonia facilities along with manufacturing for carbon neutral bio-based chemicals and plastics.

CO2 utilization

In its production process, Marquis makes 1.2 million tons of biogenic CO2 per year, and has applied for an EPA Class IV permit for sequestration.

“We like to say it’s direct air capture with the corn plant,” Aurandt said, adding that the CO2 is purified via fermentation to 99.9% pure, and will be injected into a formation that sits beneath the Marquis Industrial Complex.

The company is additionally developing a CO2 utilization project with LanzaTech, which would augment ethanol production using CO2 as a feedstock. The project was recently awarded an $8.54m grant from the US Department of Energy, the largest award in the category of corn ethanol emission reduction.

“We can increase the amount of ethanol that we produce here by 50%,” Aurandt said. “So we could make 200 million gallons of ethanol per year” from CO2, she added, noting that the pilot demonstration will be the largest CO2 utilization project in North America. It is expected to be operational in late 2024.

The SAF plant and the CO2 utilization project will use hydrogen for refining and as an energy source, respectively, Aurandt said.

Gas Liquid Engineering is the EPC for the CO2 unit, and Marquis will use compressors from Swedish multinational Atlas Copco.

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Hydrogen developer raising equity for US and EU projects

A Washington, DC-based hydrogen developer has hired an advisor to raise equity for three projects in California, and is laying the groundwork for a second capital raise in the EU.

SGH2 Energy, a Washington D.C.-based hydrogen developer, is in the early stages of a process to raise project equity for its three California projects.

Morgan Stanley has been retained to run the process, which could result in taking on two investors, CEO Robert Do said in an interview. The company hopes to have the process wrapped up within three months, he added.

Do declined to disclose the amount he is seeking to raise, but said the company prefers a strategic investor that can co-develop projects outside of California.

Meanwhile, SGH2 has filled out 70% of the senior debt commitments it will need for its Lancaster, California plant, Do said. At the Lancaster plant, SGH2 plans to produce up to 12,000 kilograms (1,380 MMBtu) of clean hydrogen per day, and 4.5 million kilograms per year (517,000 MMBtu) from the conversion of 42,000 tons per year of rejected recycled mixed-paper waste.

An additional set of three projects in Germany, Belgium and Holland will need an equity provider as well, Do said. That process could launch at the end of this year and the company could hire additional financial advisors.

A less expensive proposition

In addition to the Lancaster plant, SGH2 is advancing a Bay Area agricultural waste-to-hydrogen project in Stockton and a Sierra Valley forest residue-to-hydrogen plant.

Lancaster has offtake agreements for 10 years, and the company is in talks with the same offtaker for the other projects.

SGH2’s process requires about five acres of land for a project, as opposed to about 300 acres for solar-powered electrolysis, Do said. The process also requires less water.

“It gives us a cost-competitiveness where we can be two-to-three times cheaper,” Do said.

SGH2 is exporting that process to Europe, Do said. The EU is still going through iterations of new legislation, particularly the Renewable Energy Directive III, that could clarify SGH2’s place in that market.

“Until the legislation is clear it’s hard to really launch the project and know what kind of support you’re getting,” Do said. SGH2 has sites, feedstock and development partners in place for Europe.

SGH2 was spun off from a technology development company that raised about $50m from various VC firms and energy companies, Do said. He is the controlling owner of SGH2.

Do plans to expand across the globe and will be raising money to fund projects in Korea, South Africa and elsewhere.

“There will be indeed opportunities for us to work with additional bankers and funders,” he said.

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Exclusive: Northeastern offshore wind sale kicks off

A major European energy firm has retained a banker and launched a process to sell a large portfolio of offshore wind developments in the northeastern US.

Ocean Wind I & II, Orsted’s offshore wind developments in New Jersey amounting to 2.5 GW of capacity, are for sale via an auction, according to two sources familiar with the matter.

Jefferies is the exclusive financial advisor on the sale, which is codenamed Project Hummer, the sources said. The process launched this month.

Denmark-based Orsted had previously halted development of Ocean Wind I and II as impairments on the projects climbed above $5bn. And the sale process comes amid the firm’s broader pullback from the offshore wind sector.

In an earnings call this month, Orsted CEO Mads Nipper said the company had plans to sell up to DKK 115bn (USD 16.6bn) in assets by 2030 as it accelerates divestments to boost its balance sheet.

Orsted also said it would withdraw from offshore wind markets in Norway, Spain and Portugal and cut its target for 2030 installed renewable capacity from 50 GW to 35 – 38 GW.

The company has a preference for a new owner acquiring 100% of both Ocean Wind leases and all associated development assets, the sources said.

Targeted COD for the two developments is 2029 and 2031, while estimated capex for each is USD 7.1bn (98 turbines) and USD 7.7bn (82 turbines), respectively.

New Jersey has accelerated offshore wind solicitation schedules and has recently awarded two contracts for 2.4 GW at $112.50/MWh and 1.3 GW at $131.00/MWh compared to the $98.10/MWh for Ocean Wind I and $84.03/MWh for Ocean Wind II awarded back in 2019 and 2021.

Orsted and Jefferies did not respond to requests for comment.

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