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Interview: State Senator Kevin S. Parker on New York’s proposed hydrogen legislation

New York has a relative dearth of planned hydrogen projects within its borders. Could new legislation change this state of mind?

New York is among the few U.S. states with legislation supporting clean hydrogen in the works. With relatively few planned hydrogen projects compared to fellow economic powerhouses California and Texas, New York has not one but two bills aiming to help get the fledgling sector off the ground.

The first one, Senate bill 2023-S8455, aims to authorize the New York State Energy Research and Development Authority – or NYSERDA – “to administer a program to provide funds related to enabling clean hydrogen projects.” It was introduced in January 2024 and is currently in the Energy and Telecommunications Committee. 

The second one, 2023-S378A, was first introduced in January 2023, and aims to “create a credit for hydrogen produced in New York State using renewable energy.” It was reported and committed to the Finance Committee this past February. 

Senator Kevin S. Parker, chairman of the Senate Energy and Telecommunications Committee, is sponsoring both bills, convinced that hydrogen, while not a silver bullet, is an important building block for a clean energy economy. 

It’s still uncommon for states to embrace subsidies to encourage clean hydrogen production and demand, mostly because many legislatures are waiting for the final 45V tax credit guidelines. Once they come out – some say in the next couple of months – industry participants will know which boxes hydrogen needs to tick to be qualified as clean. Credits and incentives at the state level will likely follow suit. 

New York would rather not wait. 

“We’re the Empire State, right? We try to lead and so we’re not really waiting for them,” Senator Parker said in an interview. “I’m hoping that we do enough work in this space to inform what their guidelines are as opposed to us just waiting for them to tell us what to do.” 

“Part of the reason why you’re seeing activity at the state level is the lack of leadership that we’ve gotten on the federal level on these issues, both around policy and resources,” he added. “Although I acknowledge the huge contribution of the Biden administration in the Inflation Reduction Act, states have to provide leadership at this moment.” 

According to the version available on the New York State Senate website, bill S378A defines “eligible renewable hydrogen” as “produced with electricity generated from renewable energy systems […] physically located within the jurisdiction of the New York independent system operator; and delivered to a customer in New York State.”

Unlike Colorado’s recently enacted Advance the Use of Clean Hydrogen Act, the New York proposal bills don’t include hourly matching or new renewables, also known as additionality, as eligibility criteria yet. That’s something being addressed in amendments the Energy and Telecommunications Committee is currently working on, alongside broader definitions of clean hydrogen that go beyond green hydrogen.

It does say the program would support “at a greater rate” eligible curtailed renewable hydrogen, which is produced using electricity from a renewable energy system that “has seen its electricity output curtailed.” 

“The market itself is going to need to mature in order for states to determine what kind of business they want to attract and what mechanism they want to use,” said Bridget van Dorsten, a hydrogen senior research analyst at Wood Mackenzie. “It’s understandable to some extent that states have left their options open, just because the hydrogen market is so embryonic.” 

Only seven of the over 550 U.S. clean fuels projects recorded by ReSource – which include clean hydrogen and ammonia, CCS, and sustainable aviation fuel projects – are located in New York. That’s a little over 1%. By contrast, around 19% of projects are in Texas and nearly 13% are in California. 

Despite the small number, the state has a reputation for clean hydrogen innovation and leadership. 

In March, Governor Kathy Hochul announced more than $16 million for clean hydrogen research, development, and demonstration projects, and industry leader Plug Power, which is in the process of building what it says is one of the largest green hydrogen plants in the U.S. in Genesee County, has its headquarters in the state. 

Its vast hydropower resources – in 2022, 21% of New York’s in-state power generation was hydroelectric, according to the U.S. Energy Information Administration – make it a good candidate to develop a strong clean hydrogen industry, with the help of state subsidies. 

“The way the federal subsidy is going to be structured could increase or decrease the importance of state-level subsidies,” said van Dorsten. “As it stands, if hourly matching is passed the way that it's said to, with the deliverability and the additionality clauses as well, having a state-level incentive would maybe make or break a project.”

 

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Shell sells interest in SouthCoast Wind

Shell has sold its 50% interest in SouthCoast Wind, a proposed offshore wind farm off the coast of Massachusetts with 2.4 GW of capacity.

Shell New Energies US LLC (Shell), a subsidiary of Shell plc, has sold its 50% equity share in SouthCoast Wind Energy LLC (SouthCoast Wind) to joint venture partner Ocean Winds North America LLC (Ocean Winds), according to a news release.

Terms of the transaction were not disclosed.

SouthCoast Wind is a 50-50 joint venture between Shell and Ocean Winds, established to develop offshore wind projects off the coast of Massachusetts.

“In-line with our Powering Progress strategy, Shell continues to hone our portfolio of renewable generation projects in key markets where we have an advantaged position,” said Glenn Wright, Senior Vice President, Shell Energy Americas. “We are grateful to Ocean Winds for their years of partnership within this venture, and continue to seek opportunities to provide more energy, with fewer emissions.”

This deal was structured to simultaneously sign and close, with an immediate effective date.

SouthCoast Wind is developing a proposed offshore wind farm in US federal waters about 30 miles south of Martha’s Vineyard and 23 miles south of Nantucket, Massachusetts with an approximate capacity of 2,400 MW via Lease OCS-A 0521, which covers 127,388 acres. Formerly named Mayflower Wind Energy LLC, this joint venture was established in 2018.

Ocean Winds is a 50-50 offshore wind joint venture owned by EDP Renewables and ENGIE.

In the U.S., Shell is a 50-50 partner in an additional offshore wind joint venture, Atlantic Shores Offshore Wind LLC (Atlantic Shores), with EDF-RE Offshore Development, LLC. Atlantic Shores is developing a portfolio of wind farms off the coast of New Jersey and New York.

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Air Liquide invests in two U.S. RNG units

Air Liquide has commenced construction on two dairy-waste RNG units in Pennsylvania and Michigan.

Air Liquide has commenced construction of two new RNG production units located in Center Township, Pennsylvania, and Holland Township, Michigan, treating waste sourced from dairy farms, according to a press release.

The production units will produce biogas from manure feedstock in an anaerobic digester for a total production capacity of 74 GWh, and return the digested waste for the farms’ needs, promoting circular economy in waste management. Using Air Liquide’s proprietary gas separation membrane technology, the biogas will then be purified into RNG and injected into the natural gas grid.

Air Liquide has developed competencies throughout the whole biomethane value chain, starting with biogas production from waste, to its purification into biomethane to be injected into gas grids or compression/liquefaction with storage and transportation to customers. Air Liquide currently has 26 biomethane operational production units in the world for a yearly production capacity of about 1.8 TWh, according to the news release.

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NextEra leads Series B for hydrogen firm

Modern Hydrogen, previously known as Modern Electron, has completed an oversubscribed $32.8m Series B-2 funding round led by NextEra Energy.

Modern Hydrogen has completed an oversubscribed $32.8m Series B-2 funding round led by NextEra Energy, with strategic investors & partners Miura and National Grid Partners also participating, according to a news release.

Existing investors Gates Frontier, IRONGREY, Starlight Ventures, Valo Ventures and Metaplanet continued their participation and expanded their investments as part of the funding round.

Modern Hydrogen will leverage the investment to scale-up the capacity of its hydrogen production units. This will further accelerate decarbonization of gas networks and support distributed production of hydrogen, all without a reliance on new hydrogen pipelines or massive infrastructure upgrades. The capital will also be utilized to expand the company’s clean carbon material offerings and boost its global market presence via the partnership with Miura in Japan.

The company also announced the move away from its previous name, Modern Electron, to shape the new brand of Modern Hydrogen. This new identity reflects its commitment to innovation in the clean hydrogen economy. As Modern Hydrogen, the company will continue to provide the exceptional technology and products its customers have come to expect and will continue expanding offerings of clean energy and materials under the “Modern” umbrella.

The participation of NextEra Energy, Miura, and National Grid Partners in this funding round highlights their confidence in Modern Hydrogen’s vision and potential to clean up one of the largest sources of energy in human civilization today: Natural gas. These strategic investors bring a wealth of expertise in the energy, technology, and industrial equipment market, which will be invaluable as the company continues to scale and innovate.

“As a leading manufacturer of industrial boilers, our mission is to make it ‘actionable’ for our customers to decarbonize the heat. Among the various hydrogen production and transportation pathways, the clean hydrogen production at point of use from natural gas is unique, and bundled with our hydrogen-fired boiler, it will be a great solution to the customers who have limited access to clean hydrogen in the other pathways. Participating in the COP27 last year, I strongly felt the need for immediate climate action. Together with Modern Hydrogen, we will work toward hydrogen deployment as early as possible,” said Daisuke Miyauchi, president & CEO MIURA Co., Ltd.

“National Grid is mobilizing to help our customers reach net zero, and hydrogen plus renewable natural gas are key pillars of our strategy,” said Lisa Lambert, chief technology & innovation officer of National Grid and founder & president of National Grid Partners. “Modern’s technology could help our gas customers adopt clean hydrogen sooner by making low-CO2 hydrogen affordable onsite. Moreover, by pairing Modern’s pyrolysis technology with renewable natural gas in National Grid’s network, we have the potential to achieve negative emissions without the high cost of CO2 capture.”

“NextEra Energy Resources sees Modern Hydrogen’s potential to support the emerging hydrogen economy using technology that can provide clean hydrogen on-site, without liquefaction, transport or storage,” said Elena Bueno-Gonzalez, vice president, Clean Energy Solutions, NextEra Energy Resources. “In addition to our industry-leading wind, solar and battery energy storage portfolio, NextEra Energy Resources offers comprehensive decarbonization solutions, such as renewable natural gas and green mobility. NextEra Energy Resources believes that Modern Hydrogen will enable yet another exciting clean, cost-effective option for commercial and industrial customers.”

“There are 3 million miles of natural gas pipelines in the USA alone. And the delivered price of natural gas is much cheaper than that of delivered electricity, typically by a factor of 3 to 5 times,” explained Tony Pan, co-founder and CEO of Modern Hydrogen. “By stripping out the offending carbon atom from gas at the end of the pipe, before it has a chance to become CO2, Modern’s technology can deliver decarbonized gas – aka clean hydrogen – on location. Thus, Modern can deliver this hydrogen to the end consumer, without the decades and billions of dollars it would take to build out hydrogen infrastructure. Sidestepping the need for new pipes and transmission permits will be invaluable in achieving speed & scale in realizing the clean hydrogen economy.”

“Negative emissions technologies are required to meet humanity’s climate goals,” notes Modern Hydrogen Co-founder and CTO Max Mankin. “We can generate net negative emissions by applying our pyrolysis technology on carbon-neutral gases such as biogas. The solid carbon we pull out from the gas is directly weighed, so every ton of solid carbon we put into products and building materials are verifiable emissions captured, avoided, and utilized.”

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Exclusive: Pan-Atlantic developer planning e-methanol project in West Texas

A clean fuels developer with projects on both sides of the Atlantic is pursuing an e-methanol project in West Texas with an estimated cost of between $800m – $900m.

Green fuels developer ETFuels is planning an e-methanol project in West Texas.

Following the blueprint of projects in development in Finland and Spain, ETFuels has leased land and the Lone Star State is in the early stages of determining the feasibility of the project, which would require between 300 MW – 500 MW of renewables, Director Patrick Woodson said.

Depending on the ultimate size of the project, it would cost between $800m – $900m and produce 80,000 to 120,000 tons per year of e-methanol on site, he said, which would then be trucked to end markets.

“We like the modularity of projects of that size,” he said, noting “more optionality to bring projects to market.”

Woodson, the former CEO and Chairman of E.ON Climate & Renewables, a renewables developer, said ETFuels would develop the renewables portion of the project internally.

The company is still exploring likely target markets for the e-fuels, but Woodson noted that they perceive robust demand for green methanol from the shipping industry.

“We understand the decarbonization challenges faced by the shipping industry are significant, with question marks over pricing and supply availability at scale, and we are addressing these head-on,” ETFuels CEO Lara Naqushbandi said in a news release last year.

ETFuels attracted financial backing last year from France-based SWEN Capital Partners, with Green Giraffe providing financial advisory services.

For its Spain project, the company is developing a 100,000 ton green methanol plant, including 420 MW of solar PV and 120 MW of onshore wind capacity powering 220 MW of electrolyzers.

It expects to take a final investment decision on the Spain project by 2025, with production anticipated for 2028, according to the company website.

ETFuels as a third project in development in Finland, powered by “relentless” Arctic winds.

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Exclusive: Plug Power enlists bank to evaluate financing options

The cash-burning company is working with a bulge-bracket American bank to evaluate debt financing options to help stave off a liquidity crisis.

Plug Power is working with Goldman Sachs to evaluate a capital raise in the form of debt financing to shore up its balance sheet, sources said.

The New York-based company recently said it was at risk of a liquidity crisis in the next 12 months if it is not able to raise additional capital, noting it was exploring various options for bringing in financing.

Its total cash and cash equivalents as of September 30 stood at $567m, representing a decline of $580m for the quarter, according to SEC filings. The company also has nearly $1bn of restricted cash balances stemming from sale-leaseback transactions, of which $50m becomes available per quarter.

In a shareholder letter and on its 3Q23 earnings call, executives outlined the financing options that are on the table for the company, including a debt raise, funding from the Department of Energy’s Loan Programs Office, and bringing in project equity partners for its facilities.

The company is “evaluating varied debt financing solutions to support [its] growth,” according to the shareholder letter. CFO Paul Middleton added on the call that they’ve had “some expressions of offers for ABL-like facilities” as well as restricted cash advance facilities. 

CEO Andy Marsh said the company would need to raise between $500m – $600m, according to a news report from Barron’s.

Representatives of Plug Power and Goldman Sachs declined to comment.

Plug is also working towards a conditional commitment from the DOE Loan Program Office to finance plants in its green hydrogen network. 

“The framework that we’re working on with them is a $1.5bn platform that would fund our green plants and would fund from construction phase onwards,” CFO Middleton said, adding that the funding could amount to as much as 80% of the projects. 

Middleton said he expected the DOE loan, if granted, would start funding in early 2Q24, and could even be used to back lever some of its existing plants in Texas and New York.

The company’s stock traded today with a $2.34bn market cap, while its outstanding debt consists of a $200m convertible note issued in 2020.

The notes traded around 130 cents of par before Plug’s going concern announcement, and subsequently dropped to trade in the high-70s, with quotes this week in the 80s.

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California renewables developer taps advisor for capital raise

Utility-scale solar and storage developer RAI Energy has tapped an advisor for a capital raise. The company is evaluating co-development conversion for green ammonia production at projects in Arizona and California.

RAI Energy, the utility-scale solar and storage developer, has hired an advisor as it pursues a capital raise.

The company is working with Keybanc Capital Markets in a process to raise up to $25m, according to two sources familiar with the matter.

In an interview, RAI Energy CEO and owner Mohammed S. Alrai said the company “is excited about having [Keybanc] act as our financial advisors on this fundraising round.” He noted that RAI is first a solar-plus-storage developer and is approaching investors as such.

However, RAI is evaluating co-development conversion for green ammonia production at two of its project sites in Arizona and California, he said.

“Hydrogen is a natural next step,” Alrai said of his company, adding that the end-product would be green ammonia for use in fertilizer production and industrial sectors. Pure hydrogen could also be kept for use in transportation.

A variety of partnerships would be required to develop hydrogen at RAI’s solar sites, Alrai said. The company could need advisory services to structure those partnerships.

RAI is working with engineers on the hydrogen question now and is open to additional technology and finance advisory relationships, he said. The company is also evaluating several electrolyzer manufacturers.

“It’s an open book for us right now,” Alrai said of hydrogen production. “We’re always open to talking to people who can help us.”

For hydrogen project development, RAI would seek project level debt and equity similar to its solar developments, Alrai said. Early-stage project sites in Colorado and New Mexico could also be candidates for hydrogen co-development.

Keybanc delined to comment for this story.

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