Clean Energy Holdings (CEH), a green hydrogen firm, has secured offtake for phase 1 of a green hydrogen project currently under development in Clear Fork, Texas.
A critical component of the project’s progress, the letter of intent for hydrogen offtake was signed this week with a European buyer, CEH chief executive Nicholas Bair said in an interview. He declined to name the offtaker but described it as a national energy security issue for the buyer.
The offtake agreement covers the first 30,000 kg per day of production from the site starting in 4Q24, which encapsulates phase 1 of the project. CEH President Cornelius Fitzgerald said the facility will eventually ramp up in four phases to around 130,000 kg per day of production.
CEH, which develops but also plans to own and operate projects, has assembled a coalition of industry partners, which it calls The Alliance, to provide “soup-to-nuts delivery,” Bair said. “We oversee projects from the first day to the last day the lights are on and the last use of each molecule.”
He added: “In the energy transformation, availability, security, and reliability matter.”
In addition to CEH, the group includes Bair Energy, Chart Industries, Equix, RockeTruck, Coast 2 Coast Logistics, The Eastman Group, and, most recently, HSB.
Bair emphasized the importance of the recent $4.4bn merger announcement between Chart Industries and Howden for its impact on vertical integration for CEH’s projects. Chart and Howden said in a press release last week that the merger will expand Chart’s equipment portfolio and process technology offering for multiple molecules and applications across high growth areas, including hydrogen.
“The acquisition gives CEH high confidence in security of supply from the Chart scope, and when paired with Chart’s performance history and customer centric experience, we believe Chart has increased its important position for our platform and our industry in general,” Fitzgerald added.
CEH had already put in a $100m purchase order for equipment with Chart, which is advising The Alliance on liquefaction, storage, reverse osmosis, and water, but the order jumped to $400m in a phased approach over the next 24 – 36 months following the Howden announcement, Bair said.
Project finance
In order to finance the Clear Fork project, CEH is seeking to raise just under $1bn through sponsor equity and project finance debt, using ING as financial advisor, the executives said. The tenor of the debt will likely come in between seven and 10 years, in line with the terms of the offtake agreement.
CEH has received interest from 142 “top notch” investors for the equity piece, and interest from 42 investors that could do both debt and equity, Bair said.
Bair and Fitzgerald declined to discuss pricing for the offtake contract, but noted the terms were “economically responsible” even without factoring in expanded tax credits included in the Inflation Reduction Act. “We meet the hurdle rates of our investors and our bank” without the tax credits, Bair said.
CEH is on a baseline schedule to reach FID on the Clear Fork project by April, 2023, Bair said, and is working with Norton Rose Fulbright as legal counsel.
More projects
Meanwhile, CEH and its partners are seeking to assemble an ambitious pipeline of projects over the next decade, and have held discussions with additional potential offtakers in foreign and domestic markets.
A project announced last year — CEH’s first — seeks to advance a wind-powered green hydrogen plant in Colorado.
With The Alliance, “The amount of intelligence and experience that we’ve had at the table at the early design phase of these projects has been of tremendous value,” Fitzgerald said.
“Once there’s been enough experience and a bit more trust built up within those relationships, now we’re seeing opportunities to start to come from our platform around where an offtake might be needed,” he added, equating it to a development model that “shops backward” from where the molecule is needed.
