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House budget bill would repeal clean energy incentives

The Republican budget bill unveiled Wednesday would repeal recently established tax incentives for clean hydrogen and sustainable aviation fuel, among others.

A Republican-led bill introduced in the US House of Representatives would repeal clean energy incentives passed into law as part of the Inflation Reduction Act, according to the text of the bill.

The legislation, unveiled Wednesday by House Majority Leader Kevin McCarthy, would repeal credits for clean hydrogen, sustainable aviation fuel and clean fuel, advanced manufacturing, and clean electricity investment and production, among others.

“Congress should not waste time or energy on political messaging bills that do not advance the national interest,” said American Clean Power Association CEO Jason Grumet in response to the plan. “The American Clean Power Association is interested in working with Republicans and Democrats on permitting reform, energy security, and the real challenges facing the energy sector and our economy.”

The White House budget office also issued a statement in opposition to the bill, noting that it “would repeal tax credits from the Inflation Reduction Act that are leading to hundreds of billions of dollars in private sector investment in the United States and thousands of jobs.”

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Loop Energy touts hydrogen parity with diesel

The Vancouver-based manufacturer believes its fuel cell system will allow the industry to achieve cost parity with diesel by up to eight years earlier than previously possible.

Loop Energy, a designer and manufacturer of hydrogen fuel cells for commercial mobility, will unveil its landmark 120 kW fuel cell system at IAA Transportation 2022 in Hannover, Germany, today.

The Vancouver-based fuel cells manufacturer believes this new product is a significant achievement in advancing the global hydrogen industry and the transition of commercial transport industries by achieving fuel cost parity with diesel by up to eight years earlier than previously possible, according to a news release.

The 120 kW fuel cell system, the S1200, builds on Loop Energy’s existing technology to provide an additional efficiency gain of 20% when it generates electricity. The S1200 is designed to deliver up to 60% in net system efficiency. This efficiency enables an electric vehicle powered by a Loop Energy fuel cell to deliver up to 54% fuel to wheel efficiency compared to the typical fuel to wheel efficiency delivered by a diesel engine powered vehicle of 20% to 25%.

Loop Energy believes the S1200 and its next-generation technology will significantly benefit commercial vehicle manufacturers, fleet operators and associated industries, as well as the global clean energy transition as governments seek to reach net zero emissions by 2050, the release says.

Loop Energy has achieved this efficiency gain because of its patented eFlow™ fuel cell architecture, the company says. Specifically, Loop Energy uses a signature trapezoid plate with narrowing channels for its bipolar plates, which increases gas velocity down the plate to deliver superior performance for fuel efficiency, and power output.

For fleet managers, operators of commercial vehicles and the wider hydrogen infrastructure market, that means less hydrogen fuel used per kilometer, lowering the total cost of ownership of hydrogen-electric commercial vehicles.

Fuel costs make up roughly half of the total cost of ownership for heavy-duty hydrogen vehicles, which makes advancement in fuel efficiency a significant factor in creating a tipping point for commercial transition from diesel to clean fuels.

Loop Energy’s presence at IAA Transportation 2022 also signifies its commitment to the European continent, where it plans to expand its presence and customer base. Loop Energy already has offices in Italy and the UK, and is actively engaged with OEMs across the region. Loop Energy is also active in Asia, with its new manufacturing facility in Shanghai.

The S1200 opens up a new market for Loop Energy as the product is specifically designed for medium- to heavy-duty commercial vehicles, which is a step up in power range and scope compared to its other fuel cell products.

The S1200 is delivered as a complete fuel cell system which simplifies and quickens integration for vehicle OEMs, and makes it a ready-to-adopt solution for heavy-duty transportation and power system applications.

“With the launch of our new fuel cell system, we are proud to be leading the way in making transport electrification economically viable,” Loop Energy President & CEO Ben Nyland said in a statement. “The S1200 brings world-leading fuel efficiency levels for medium to heavy-duty vehicles, crucially making the total cost of ownership lower and bringing fuel cost parity forward by four-to-eight years.”

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Pending renewable fuels SPAC deal adds green hydrogen to business model

The companies in a pending renewable fuels SPAC takeover will add green hydrogen production to its syngas to gasoline plus other products process. Its first facility will be constructed in Maricopa, Arizona.

The companies in a pending renewable fuels SPAC takeover will add green hydrogen production to its syngas to gasoline plus other products process, according to a press release.

CENAQ Energy Corp., a special purpose acquisition company focused on energy and energy transition, and Bluescape Clean Fuels Intermediate Holdings, a renewable feedstock company, said that the Inflation Reduction Act of 2022 contains incentives for the production of green hydrogen that should allow the addition of green hydrogen at the post-combination company, Verde Clean Fuels, Inc.

By adding an external source of green hydrogen to Verde’s STG+® process, Verde expects to be able to utilize approximately two-thirds less feedstock while maintaining the same gasoline output with no change in total capital expenditures for its first facility to be constructed in Maricopa, Arizona, the release states.

The green hydrogen incentives are in the form of 10-year production tax credits that equate to as much as $3.00 per kilogram of green hydrogen produced. Verde’s initial facility is anticipated to use green hydrogen volumes that would result in the generation of approximately $20m per year of production tax credits. The generation of these production credits could provide Verde with new and attractive financing alternatives.

Bluescape is currently in discussions with several green hydrogen providers to either acquire electrolyzer assets or form a joint venture to provide green hydrogen to Verde’s initial facility as well as to planned future Verde renewable gasoline facilities.

The parties announced the signing of the merger in August, and have since twice extended the deadline for completing the combination. The deadline is now February 16, 2023.

The business combination values BCF at an implied $280m enterprise value and a pro forma equity value of approximately $500m.

Imperial Capital is serving as financial advisor to CENAQ. Vinson & Elkins L.L.P. is serving as legal counsel to CENAQ.

Kirkland& Ellis LLP is serving as legal counsel to BCF.

Baker Botts L.L.P. is acting as legal counsel to Imperial Capital.

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Japanese shippers form hydrogen supply consortium

Japan’s big three shippers have formed a consortium along with JSE Ocean to establish a global liquefied hydrogen supply chain.

Japan’s big three shippers have formed a partnership to establish a global liquefied hydrogen supply chain.

Kawasaki Kisen Kaisha, Mitsui O.S.K. Lines, and Nippon Yusen Kabushiki Kaisha have joined JSE Ocean, a subsidiary of Japan Suiso Energy, to establish the marine transport of LH2 at a commercial scale.

JSE remains the majority shareholder of JSE Ocean with 50.2% of stock, while the shipping companies hold 16.6% each, according to a news release.

JSE Ocean was established in January 2023 to research the marine transportation of LH2 by using a large-scale LH2 carrier. JSE and the three Japanese shipping companies with extensive knowledge and experience in the energy transport business will establish the marine transport of LH2 at a commercial scale through JSE Ocean.

The parties will collaborate to explore the safe and efficient operation of the world’s first large-scale LH2 carrier by 2024, as well as develop a viable marine transportation business scheme. Furthermore, the LH2 carrier will be powered by hydrogen, significantly reducing CO2 emissions during operation.

In August 2021, Japan’s New Energy and Industrial Technology Development Organisation (NEDO) allocated a grant from the Japanese government’s Green Innovation Fund to JSE, Iwatani Corporation and ENEOS Corporation for the “Liquefied Hydrogen Supply Chain Commercialization Demonstration Project”.

In this project, JSE will establish the world’s first large-scale hydrogen liquefaction and transportation technology, involving an initial 30,000 tons of hydrogen per year before upscaling. JSE will also demonstrate a comprehensive and reliable global liquefied hydrogen (LH2) supply chain, covering hydrogen production, liquefaction, export from Australia, marine transportation, and import.

As part of its Basic Hydrogen Strategy, Japan has committed to source 3 million tons/year of hydrogen by 2030, 12 million tons/year by 2040, and 20 million tons/year by 2050.

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Exclusive: Morgan Stanley mandated for green ammonia facility

Morgan Stanley is the mandated investment banker for a green ammonia developer that’s raising debt and equity for its first facility in Texas.

First Ammonia is working with Morgan Stanley as its investment banker as it seeks to raise debt and equity for a flagship green ammonia project in Texas.

The New York City-based developer is moving toward financial close this year on the first 100 MW train of a 300 MW project at the Port of Victoria, Texas. Morgan Stanley has held the mandate since last year, but it has not been previously reported.

First Ammonia did not respond to requests for comment. Morgan Stanley declined to comment.

In an interview last year, First Ammonia CEO said the 100 MW train of the Port of Victoria project is estimated to cost $300m, while the full 300 MW will cost between $900m – $1bn. Each 100 MW module will produce up to 100,000 MTPA of green ammonia.

The project is expected to be the first in First Ammonia’s global pipeline of green ammonia facilities that will eventually add up to 5 million MTPA of production within 10 years.

The firm has contracted with Haldor Topsoe for 5 GW of solid-oxide electrolysis for its project portfolio. It is seeking a partner to provide 45V-compliant renewable energy to power electrolysis at Port of Victoria, as reported exclusively by ReSource.

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Pharma and fuels tech provider could be ready for public listing

International biotechnology firm Insilico Medicine is applying the algorithms that produce novel drugs to synthesizing more sustainable petrochemical fuels and materials.

Insilico Medicine, a global biotechnology firm serving the pharmaceutical and carbon-based energy industries, could be ready for a public listing in the next phase of its corporate evolution.

Insilico, founded in Baltimore and now based in Hong Kong, has raised about $400m in private capital to date and is in the position of a company that would be exploring a public listing in the US and Hong Kong, CEO Alex Zhavoronkov said in an interview. He declined to say if he has hired a financial advisor to run such a process but said a similar company in his position would have.

The generative AI platform that the company uses to produce novel drugs can be applied to produce more sustainable carbon-based fuels, Zhavoronkov said. The objective is to maximize btu and minimize CO2, making the fuels burn longer and cleaner.

Saudi Arabia’s state oil company Aramco is a user of the technology and participated in Insilico’s $95m Series D (oversubscribed and split between two sub-rounds) last year through its investment arm Prosperity7.

Petrochemistry is going to be needed well into the future, Zhavoronkov said. In addition to renewable energy and other ESG efforts, the efficiency of petrochemicals should be a top priority.

“If you burn certain petrochemicals in certain combinations, you can achieve a reasonably clean burn and an energy efficient burn,” he said. For specific tasks like space travel or Formula 1 racing, combined fuels produce the necessary torque, and generative chemistry can achieve those objectives in a more sustainable way. “I think that we can make the world significantly cleaner just by modifying petrochemical products.”

The technology can also be used to make organic matter in petrochemical products degrade more quickly, which is useful in the case of plastics, Zhavoronkov said.

The company’s AI is primarily based in Montreal and in the drug discovery business in China, but fuel research takes place in Abu Dhabi. Zhavoronkov said he has hired a lot of “AI refugees” from Russia and Ukraine to work at the latter location. The company has 40 employees in the UAE and will likely scale to 70.

Insilico is capitalized for the next two years or so, he said. That doesn’t account for revenue, which closed at just under $30m in 2022. The petrochemical and materials business is under the AI research arm of the business, which is covered by funds raised to date.

“Our board would probably not allow me to reinvent myself as an energy play,” Zhavoronkov said. But the board does not object to applying resources to petrochemical products.

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Exclusive: Green hydrogen developer planning capital raises for distributed portfolio

A developer of US green hydrogen projects will need to access the project equity, debt and tax equity markets in the near term for a pipeline of distributed assets nationwide.

NovoHydrogen, the Colorado-based renewable hydrogen developer, will be in the market for project financing for a portfolio of distributed green hydrogen projects in 2024, CEO Matt McMonagle said.

The company, which recently agreed to a $20m capital raise with Modern Energy, is aiming to attract additional private equity and infrastructure investors for the projects it is developing, the executive said.

“The opportunity is really there for attractive risk-adjusted returns at the project level based on how we’re structuring these projects with long-term contracted revenue,” he said.

The company plans to bring its first projects online in late 2024 or 2025.

“We don’t have the project financing set at the point that we can announce, but that’s something myself and my team have done in our careers,” McMonagle said, adding that he’s focused on bankability since founding the company. “We wanted to be as easy for the lenders to underwrite as possible.”

No financial advisors have been attached to the project financings, McMonagle said. A recently announced Series A, first reported by ReSource in February, gave the company exposure to investors that want to participate in project financings, he said.

“We’ll really be ramping that process up, likely after the new year,” McMonagle added, declining to say how much the company would need to raise in 2024.

NovoHydrogen doesn’t have a timeline on a Series B, he said.

Distributed pipeline

The company looks to do onsite projects adjacent to consumption, McMonagle said. The first projects that will go online will be 10 MW and smaller.

“Typically the permitting is straightforward in that we’re adding equipment to an already impacted industrial site,” McMonagle said. He declined to elaborate on where these projects are located or what customers they will serve.

The company also has off-site, or near-site projects, where production is decoupled from consumption. But the company still calls those distributed because they are being developed with a targeted customer in mind.

“We want to be as close as possible to that customer,” he said. Those off-site projects typically are larger and will begin coming online in 2026 and 2027.  

In Texas NovoHydrogen has two large-scale green hydrogen developments in production, co-located with greenfield renewables projects, McMonagle said. Partners, including EPC, are in place for those efforts. The company also has projects in West Virginia, Pennsylvania, New Jersey and along the west coast.

“Where can we add the most value and have the biggest competitive advantage?” McMonagle said of the company’s geographic strategy. “We have very specific go-to-markets in each of those regions which we feel play to our strengths.”

NovoHydrogen is a member of the Pacific Northwest Hydrogen Hub and is involved with the Appalachian Regional Clean Hydrogen Hub (ARCH2), though not in line to receive DOE funding through that hub.

Post-IRA, green hydrogen projects will look much like renewables deals from the equity, tax equity and debt perspectives, he said.

“We’re structuring and setting up our projects to take advantage of that existing infrastructure and knowledge base of how to finance deals,” he said. New options on transferability will enable additional financing options as well.

No flipping

NovoHydrogen does not plan to flip projects before COD, McMonagle said.

“We are planning to deploy hundreds of millions if not billions of dollars in capex for these projects, and we’ll certainly need to partner with folks to deploy that capital,” McMonagle said. “But we will remain in deals with our customers because that relationship is really the fundamental value that we bring in our business.”

Hydrogen projects are different from renewables in that the customers need greater assurances of resiliency, security of supply and performance, than in a space like solar, he said.

Flipping projects before COD would be inconsistent with the trust required to attract offtakers.

“We don’t believe doing a flip reflects that level of importance and support and, frankly, incentive, behavioral incentive, that we have to show to our customers,” he said.

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