Resource logo with tagline

IPP retains banker for California plant sale

An independent power producer has retained a banker for a sale of a decades-old gas plant in California. Aging gas plants have been in the sights of clean fuels developers looking to retrofit or use facilities for clean fuel production and combustion.

GenOn, an independent power producer, has hired Solomon Partners to sell a 54 MW gas plant in California, according to sources familiar with the matter.

The plant, Ellwood, is located in Goleta, in Santa Barbara County, and was shuttered and retired by GenOn as of 2019. It reached COD in 1973 and ran two Pratt & Whitney FT4C-1 gas turbine engines.

Ellwood previously interconnected via Southern California Edison, a utility that is pursuing multiple natural gas decarbonization projects, including a hydrogen-blending initiative with Bloom Energy.

A teaser for the sale of Ellwood, which was issued last week, notes there is an opportunity to install a battery energy storage system at the site, one of the sources added.

Elsewhere in California, investment firm Climate Adaptive Infrastructure and developer Meridian Clean Energy are seeking to demonstrate decarbonization in peaker plants at the much newer gas-fired Sentinel Energy Center. Their plans include hydrogen blending.

GenOn declined to comment. Solomon Partners did not respond to requests for comment.

Unlock this article

The content you are trying to view is exclusive to our subscribers.
To unlock this article:

You might also like...

Macquarie invests in Dutch SAF developer SkyNRG

By 2030 SkyNRG aims to build its dedicated SAF facilities in Europe and the US under offtake arrangements with strategic partners.

Macquarie Asset Management will support the growth of sustainable aviation fuels (SAF) with an initial investment of up to €175m in SkyNRG via the Macquarie GIG Energy Transition Solutions (MGETS) Fund.

The investment will support SkyNRG’s next phase of growth and help achieve its goal to become a major SAF producer.

BofA Securities Europe S.A. acted as sole private placement agent to SkyNRG. Clifford Chance LLP acted as legal advisor to SkyNRG. RBC Capital Markets acted as sole financial advisor and Freshfields Bruckhaus Deringer LLP as legal counsel to Macquarie Asset Management.

Additional terms of the investment were not disclosed.

By 2030 SkyNRG aims to build its dedicated SAF facilities in Europe and the US, in cooperation with strategic offtake partners. To date, SkyNRG has secured partnerships with, amongst others, KLM Royal Dutch Airlines and Boeing with envisaged long term commitments of up to €4bn in SAF purchases.

SkyNRG has been at the forefront of the development of SAF since it was founded over 14 years ago by, amongst others, Theye Veen and Maarten Van Dijk. They initially focused on creating a market for SAF and supplied the world’s first commercial flight using SAF in 2011. Since then, SkyNRG has expanded and is active in R&D, advisory services and in selling SAF. Today, the company provides SAF to airlines and corporates around the world and is still one of the leading and most active participants on the SAF market.

The SAF industry is benefitting from significant tailwinds, including voluntary corporate offtake commitments aligned to net-zero targets and growing political and regulatory support. This includes the European blending mandate (ReFuelEU) that requires the use of SAF, and the Biden Administration’s SAF Grand Challenge and the Inflation Reduction Act in the US, which is encouraging the use of SAF via strong tax incentives. By 2050, SkyNRG estimates that such incentives will create demand for up to €650bn of investment in the sector and accelerate the aviation industry’s transition away from fossil jet fuels.

Philippe Lacamp, CEO of SkyNRG, commented: “It is critical that SAF production capacity is developed now to enable the aviation industry to meet its net-zero goals. We are very proud that Macquarie has made this strategic investment in our business and are confident that they, with the ongoing support of our existing shareholders, will provide us with the resources and expertise we need to accelerate our growth journey towards becoming a major player in the SAF industry.”

Mark Dooley, Global Head of MAM Green Investments, said: “We have a track record for backing businesses working at the forefront of the energy transition. This is an exciting milestone for us, as our first SAF investment. SkyNRG has been a pioneer in SAF, with an entrepreneurial spirit and a strong commercial focus. We look forward to collaborating with the SkyNRG team as they grow their business and advance solutions to decarbonize the aviation industry.”

Read More »

California Resources considering equity investments in hydrogen, ammonia projects

California Resources management is evaluating equity investments in four California hydrogen and ammonia projects, starting with Lone Cypress, a 30-tons-per-day blue hydrogen facility.

California Resources management continues to evaluate potential equity investments in projects for which the company has signed carbon management agreements, including California hydrogen and ammonia projects, as it moves toward a separation of the carbon management business, Carbon Terravault.

Carbon Terravault, a JV with Brookfield, has so far signed four carbon dioxide management agreements, bringing the total injection rate to 610,000 MTPA of CO2, with 200,000 targeted to its Elk Hills reservoir and 410,000 MTPA targeted in the Sacramento basin area.

CEO Francisco Leon said in prepared remarks yesterday that Carbon Terravault is still in the early stages and must achieve certain milestones before initiating a separation, “such as an EPA Class VI permit approval, project FID, line of sight to first CO2 injection and first cash flow among others.”

In the meantime, the company and Brookfield have “preserved the right to invest into the equity of all four projects,” Leon said, starting with a review of the Grannus Blue Ammonia and Hydrogen Project and the Lone Cypress Hydrogen Project.

Grannus aims to be California’s first blue ammonia and hydrogen facility producing 150,000 MT per annum of blue ammonia and 10,000 MT per annum of blue hydrogen, while Lone Cypress is a 30-tons-per-day blue hydrogen facility at Elk Hills.

“We’re reviewing not only the cost profile of those businesses, but the market, in a lot of cases” – such as with hydrogen – “is not very well developed, but there’s a lot of interest. And that also requires understanding the offtake contracts and in the depth of the market, in where they best place the hydrogen and the ammonia.”

He added, “We’d like to have a decision this year on Lone Cypress in particular. That’s going to be the first project we’re reviewing the equity. We think these markets will develop nicely in California. There’s a lot of support again by IRA, hydrogen has 45V that supports it, but we’re seeing a lot of potential demand for the product. So at both Brookfield and CRC, we have retained that ability to invest in the equity and it’s something that gets us very excited about participating in these new energy verticals.”

The JV has the right to participate in the Lone Cypress blue hydrogen facility up to and including a majority equity stake, a presentation shows.

“You should expect to see over time as we do more and more of these that we’re going to have multiple models,” Chief Sustainability Officer Chris Gould said last year in an interview with ReSource, noting that a typical financial structure may emerge as the industry matures.

The company this week said it signed storage-only CDMAs with Yosemite Clean Energy and InEnTec Inc. for 40,000 and 100,000 MTPA of CO2 injection, respectively. The four combined agreements amount to 12% of the company’s pore space.

CRC also submitted Class VI permit applications for a new development area, called CTV IV, for an additional 34 million metric tons, bringing Carbon Terravault’s total potential permitted storage to 174 million metric tons or over 85% of its stated 2027 target of 200 million metric tons.

The Elk Hills complex includes a gas-fired power plant, and the company is evaluating whether the plant would move with a potential spin-off of Carbon Terravault. CRC is conducting a second FEED study in two years – the first with Flour, now with NextDecade – to evaluate the installation of a carbon capture system at the plant.

Addressing the need for a second FEED study, Leon said, “We’ve had a lot of inflationary pressures over the last two years. We want to make sure it’s the project that not only delivers that ability to reduce that CO2 emission footprint, but it’s also a profitable project.”

Read More »

Nevada plant on track for SAF production this year

The facility, which changed hands last year, is nearly through the conversion of a renewable diesel plant to sustainable aviation fuel production.

New Rise Renewables, a renewable energy company, today announced the inauguration its new 3200 barrel-per-day renewable sustainable aviation fuel (SAF) facility located at the Reno-Tahoe Industrial Complex in Storey County, Nevada.

The facility is nearly through the conversion of its existing renewable diesel plant as part of a groundbreaking effort to revolutionize the aviation industry by producing sustainable aviation fuel (SAF). It is scheduled to commence SAF production in the summer of 2024, according to a news release.

Camber Energy, a NYSE-traded energy company, last year reached a deal to acquire 100% of the interests in New Rise Renewables.

The plant was purchased for $499m, representing a purchase price of $750m less $251m of existing company liabilities, according to a securities filing. The seller was RESC Renewables Holdings, a predecessor company to Ryze Renewables, which developed the project.

The parties had reached a framework for the deal in late 2021, subject to purchase price adjustments and other closing conditions.

Reno-based Greater Commercial Lending (GCL) facilitated $112.6m in government-guaranteed credit for the development of New Rise Renewables Reno. Eighty percent of the GCL-arranged financing for New Rise Renewables Reno is guaranteed by the United States Department of Agriculture (USDA) via its 9003 Biorefinery, Renewable Chemical and Biodiesel Production Manufacturing Assistance Program. The financing structure includes participation by GCL parent Greater Nevada Credit Union, other credit unions, insurance companies and secondary market groups.

Read More »
exclusive

IPP retains banker for California plant sale

An independent power producer has retained a banker for a sale of a decades-old gas plant in California. Aging gas plants have been in the sights of clean fuels developers looking to retrofit or use facilities for clean fuel production and combustion.

GenOn, an independent power producer, has hired Solomon Partners to sell a 54 MW gas plant in California, according to sources familiar with the matter.

The plant, Ellwood, is located in Goleta, in Santa Barbara County, and was shuttered and retired by GenOn as of 2019. It reached COD in 1973 and ran two Pratt & Whitney FT4C-1 gas turbine engines.

Ellwood previously interconnected via Southern California Edison, a utility that is pursuing multiple natural gas decarbonization projects, including a hydrogen-blending initiative with Bloom Energy.

A teaser for the sale of Ellwood, which was issued last week, notes there is an opportunity to install a battery energy storage system at the site, one of the sources added.

Elsewhere in California, investment firm Climate Adaptive Infrastructure and developer Meridian Clean Energy are seeking to demonstrate decarbonization in peaker plants at the much newer gas-fired Sentinel Energy Center. Their plans include hydrogen blending.

GenOn declined to comment. Solomon Partners did not respond to requests for comment.

Read More »
exclusive

Advisor Profile: Cameron Lynch of Energy & Industrial Advisory Partners

The veteran engineer and financial advisor sees widespread opportunity for capital deployment into early-stage renewable fuel companies.

Cameron Lynch, co-founder and managing partner at Energy & Industrial Advisory Partners, sees prodigious opportunity to pick up mandates in the hydrogen sector as young companies and early movers attract well-capitalized investors looking for auspicious valuations.

The firm, a three-year-old boutique investment banking outfit with offices in New York and Houston, is broadly committed to the energy transition, but is recruiting for new personnel with hydrogen expertise, Lynch said, adding that he is preparing for a new level of dealmaking in the new year.

“I think we can all expect 2023 will be even more of a record year, just given the appetite for hydrogen,” Lynch said. “Hydrogen is one of our core focuses for next year.”

Cameron Lynch

Lynch started his career as a civil & structural engineer and moved into capital equipment manufacturing and leasing for oil & gas, and also industrial gasses –things like cryoge

nic handling equipment for liquid nitrogen. He started the London office of an Aberdeen, U.K.-based M&A firm, before repeating that effort in New York.

Founding EIAP, Lynch and his business partner Sean Shafer have turned toward the energy transition and away from conventional energy. The firm works on the whole of decarbonization but has found the most success in the hydrogen space.

Earlier lifecycle, better valuations

Hydrogen intersects with oil& gas, nuclear, chemicals, midstream companies, and major manufacturing.

Large private equity funds that want to get into the space are realizing that if they don’t want to pay “ridiculous valuations for hydrogen companies” they must take on earlier-stage risk, Lynch said.

Interest from big private equity is therefore comparatively high for early-stage capital raising in the hydrogen sector, Lynch said, particularly where funds have the option to deploy more capital in the future, Lynch said.

“They’re willing to take that step down to what would normally be below their investment threshold.”

Lynch, who expects to launch several transactions in the coming months with EIAP, has a strong background in oil & gas, and views hydrogen valuations as a compelling opportunity now.

“It’s very refreshing to be working on stuff that’s attracting these superb valuations,” Lynch said.

There’s a lot of non-dilutive money in the market and the Inflation Reduction Act has been a major boon to investors, Lynch said. For small companies, getting a slice of the pie is potentially life changing.

Sean Shafer

The hydrogen space is not immune to the macroeconomic challenges that renewables have faced in recent months and years, Lynch said. But as those same challenges have accelerated the move toward energy security, hydrogen stands to benefit.

Supply chain issues post-COVID pose a potential long-term concern in the industry, and equity and debt providers question the availability of compressors and lead times.

“I would say that’s one of the key issues out there,” Lynch said. There’s also the question of available infrastructure and the extent to which new infrastructure will be built out for hydrogen.

EIAP sees the most convincing uses for hydrogen near term in light-weight mobility and aerospace, Lynch said. The molecule also has a strong use case in back-up generation.

Hydrogen additionally presents companies in traditional fossil fuel verticals the opportunity to modernize, Lynch said, citing a secondary trade EIAP completed earlier this year

California’s Suburban Propane Partners acquired a roughly 25% equity stake in Ashburn, Virginia-based Independence Hydrogen, Inc. The deal involved the creation of a new subsidiary, Suburban Renewable Energy, as part of its long-term strategic goal of building out a renewable energy platform.

Read More »

Welcome Back

Get Started

Sign up for a free 15-day trial and get the latest clean fuels news in your inbox.