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JERA and ExxonMobil to develop low-carbon hydrogen and ammonia project

JERA and Exxon will explore JERA's potential ownership and offtake participation in a low-carbon hydrogen project at the Baytown Complex.

JERA Co., Inc. (“JERA”) has reached a Project Framework Agreement with ExxonMobil to jointly explore the development of a low carbon hydrogen and ammonia production project in the United States, according to a news release.

ExxonMobil is currently developing what is expected to be the world’s largest low-carbon hydrogen production plant at its Baytown Complex east of Houston, Texas, United States. The plant is slated to have an annual production capacity of approximately 900,000 tonnes of low-carbon hydrogen and annual production capacity of more than one million tonnes of low-carbon ammonia. The Project aims to commence production in 2028.

Under the terms of the agreement, JERA and ExxonMobil will explore:

・JERA’s ownership participation in the Project

・JERA’s procurement of approximately 500,000 tonnes annually of low-carbon ammonia produced by the Project for demand in Japan

JERA is playing an important role in the energy transition and is taking on the challenge of expanding renewable energy and developing zero-emission thermal power technologies. In 2020, the Company established a JERA Zero CO2 Emissions 2050 goal of achieving net zero CO2 emissions from domestic and overseas businesses by 2050.

JERA will continue to contribute to global decarbonization and solving energy problems by building and expanding low carbon hydrogen and ammonia supply chains in cooperation with leading domestic and overseas companies.

“Cooperation among leading companies is essential to establish supply chains for ammonia, hydrogen, and other products that are key to zero-emission thermal power,” said Steven Winn, JERA’s Senior Managing Executive Officer and Chief Global Strategist. “We believe that working together with ExxonMobil, who is actively promoting investment in carbon capture and storage (CCS) and hydrogen, will contribute to the transition to a global decarbonized society.”

“Building world-scale projects for new markets requires supply, demand and supporting regulation to all come together in sync,” said Dan Ammann, President of ExxonMobil Low Carbon Solutions. “We appreciate JERA’s leadership in helping advance the hydrogen economy and see this agreement as an important catalyst.”

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BayoTech hires VP of development

The new hire, Jack Hedge, will be responsible for leading the development of hydrogen projects in North America.

New Mexico-based BayoTech Hydrogen has hired Jack Hedge as its new vice president of hydrogen hub development, according to a press release.

Hedge will be responsible for leading the development of hydrogen projects in North America. He will lead a team that is developing relationships with host property managers, community stakeholders, regulators, and local government officials who are interested in decarbonization.

“BayoTech is on the verge of making hydrogen production local and hub development is how we achieve it,” said BayoTech President & CEO, Mo Vargas. “Jack has years of experience in developing and executing major projects for some of the most recognized ports in the nation. That experience paired with his dedication to clean energy projects is exactly why we thought he was the right person to lead this phase of growth. We are delighted to have Jack’s leadership, passion for making the world better and experience both as a developer and as a project host to support customers decarbonization goals and drive projects to completion.”

“I am excited to begin this next chapter and blend all my previous experience into something truly meaningful and impactful. Working with the team at BayoTech we will lead the way to truly “smart, sustainable and equitable” supply chains,” Hedge said in the release.

Prior to joining BayoTech, Jack served as president of Utah Inland Port Authority, where he was responsible for developing and building one of the nation’s leading sustainable intermodal logistics hubs. Jack has also worked as the director of cargo and industrial real estate for the Port of Los Angeles where he lead the development, leasing, and asset management functions of the largest container port complex in North America.

BayoTech last year agreed to a memorandum of understanding with Carbon Clean under which the two parties will work togeterh on a demonstration facility to evaluate, design, and operate a carbon capture plant at a BayoTech site in North America which is expected to be operational by the end of 2022.

Investors in BayoTech include Newlight Partners, Opal Fuels, Nutrien, The Yield Lab, Cottonwood Technology Fund, Sun Mountain Capital and Caterpillar Venture Capital Inc.

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SAF developer closes on development capital investments

The development capital milestone will allow the company to reach FID on a $4.2bn SAF facility in Louisiana.

DG Fuels, a SAF developer, has closed investment transactions with two Japanese companies, according to a news release.

With the investments in DGF made by aviner & co., inc., Chishima Real Estate Co., Ltd. (Chishima) and an undisclosed investor, DGF has now exceeded its minimum investment target as part of its final round of parent level development capital needed to fund the remaining expected expenses required to reach FID, including the ongoing FEL 3 and related expenses.

ReSource previously reported that DGF was working with Stephens and Guggenheim as investment bankers to advance a capital raise.

The relatively modest balance of the maximum $30m capital raise is expected to fund in the next few months. DGF currently expects that FID on its proposed $4.2bn, 180 million gallon per year SAF facility in Louisiana to occur in early 2024.

The Louisiana SAF facility will be the template for multiple other such facilities to be built across North America, Europe and Asia.

Yoshiyuki Shibakawa, representative director of Chishima said, “We believe the SAF to be produced by DG Fuels makes a significant contribution to reducing CO2 emissions in the aviation industry. Through its partnership with DG Fuels, we will contribute to the decarbonization of the aviation industry.”

Aviner, which is active in aircraft management and renewables, has worked closely with DGF as its strategic partner and representative in Japan and broader Asia to market DGF’s SAF product to off-takers in the Asia Pacific region as well as jointly studying potential production of SAF by DGF in the region.

“SAF sits right in between aviation and energy which are the prime focus of ours. We have strong belief in the DGF team and are excited to be part of this project. SAF produced by DGF’s high carbon conversion efficiency technology uses woody biomass feedstock which will not face limitation in feedstock supply and we expect DGF’s technology and know-how can be replicated in various locations around the world.” said Hideyuki Yamanaka, CEO of aviner.

“The DG Fuels facility will produce 180 million gallons of zero carbon emissions SAF,” said Michael C. Darcy, CEO of DG Fuels, The facility itself has a very minor atmospheric emissions and zero water discharge to the local environment and will bring 600 new permanent operating jobs and up to 2,100 construction jobs over three years to the local community.”

“We have worked diligently with our investors in implementing this long-term relationship to mutually focus on decarbonizing the aviation sector in a responsible manner,” said Christopher J. Chaput, president and CFO of DG Fuels. “The DG Fuels SAF product relies on no feedstock that would negatively impact the food supply and our highly efficient production process allows us to profitably sell SAF to airlines at attractive prices.”

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Black Hills Energy studying hydrogen production from coal

BHE will partner with Babcock & Wilcox to study the cost and economics of deploying chemical looping technology at commercial scale to produce hydrogen from Powder River Basin coal and a nearly pure stream of CO2.

Black Hills Energy (BHE) has selected its BrightLoop hydrogen generation technology from Babcock & Wilcox for the feasibility study of a proposed project to produce clean hydrogen from coal and capture carbon dioxide (CO2) emissions at BHE’s Neil Simpson Power Plant in Gillette, Wyo.

BrightLoop is a novel chemical looping technology that can use a variety of fuels to produce clean energy with complete CO2 capture, according to a news release from the companies.

BHE will partner with B&W to study the cost and economics of deploying the BrightLoop chemical looping technology at commercial scale to produce low carbon intensity hydrogen gas from Powder River Basin (PRB) coal and a nearly pure stream of CO2 suitable for beneficial use or storage without the need for expensive carbon separation equipment.

“As the United States and much of the world transitions to near-zero emissions fuels, our BrightLoop technology – which captures COand other pollutants while producing hydrogen – can provide a vital pathway to utilize our abundant natural resource of coal in a net-zero world,” said B&W Executive Vice President and Chief Operating Officer Jimmy Morgan.

“We are excited to utilize our highly experienced U.S. engineering team to work with BHE to develop a solution that will help them achieve their goals of creating and preserving jobs, diversifying Wyoming’s energy production and establishing new markets for the state’s natural resources,” Morgan said. “We thank BHE for this opportunity and for the confidence they have shown in B&W’s BrightLoop technology.”

Mark Stege, Black Hills Energy’s vice president of Wyoming operations agreed, adding, “Over 30 years of research has led us to this opportunity to unite clean energy technology with Wyoming’s important and abundant energy resources. We appreciate the partnership with B&W and the prospect of leveraging innovative hydrogen technology to deliver efficient energy to customers.”

B&W’s BrightLoop chemical looping technology is part of its ClimateBright suite of decarbonization and hydrogen technologies. The BrightLoop process uses a proprietary, regenerable particle and has been demonstrated to effectively separate CO2 while producing hydrogen, steam and/or syngas.

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exclusive

Government money still top of mind for early movers in US hydrogen

Gaining access to funding from government and other agency sources is top of mind for many developers seeking to de-risk their projects and reach FID. But only hydrogen, ammonia, and other clean fuels projects exhibiting “the best in the business” are garnering support from government financing agencies and commercial lenders, experts say.

The US Department of Energy came out this week with the news that it was not yet ready to release the long-awaited winners of its $8bn hydrogen hubs funding opportunity, as Secretary of Energy Jennifer Granholm noted Monday at the Hydrogen Americas Summit in Washington, DC.

The delay disappointed many in the industry, who are also waiting for crucial guidance from the IRS on rules for clean hydrogen tax credits.

Gaining access to funding from government and other agency sources is top of mind for many developers seeking to de-risk their projects and reach FID. But only hydrogen, ammonia, and other clean fuels projects exhibiting “the best in the business” are garnering support from government financing agencies and commercial lenders.

Speakers on a financing panel at the summit yesterday pointed to the successful FID of the Air Products-backed NEOM green hydrogen project in Saudi Arabia as an effective project finance model, where major sponsors working together helped to de-risk the proposal and attract support from export credit agencies and global banks.

In the US, large players like ExxonMobil (Hydrogen Liftoff Hub), NextEra (Southeast Hydrogen Network), and Chevron (ACES Delta) have applied for DOE hydrogen hubs funding, according to the results of a FOIA request, joining major utilities and other oil and gas companies like bp and Linde in the running for funds.

In addition to inadequate regulatory guidance, some developers have already started grumbling that the proposed government assistance will not be enough to meet the scale of decarbonization needs. And the nascent clean fuels project finance market still needs to sift through techno-economic challenges in order to reach its potential, according to comments made yesterday on a panel called Financing Clean Hydrogen.

Leopoldo Gomez, a vice president of global infrastructure finance at Citi, sees a big role for the project finance framework for hydrogen facilities undertaken by independent project developers as well as strategics looking to strike the appropriate risk allocation for new projects.

And Michael Mudd, a director on BofA’s global sustainable finance team, said hydrogen projects are similar in many ways to established facilities like power and LNG, but with additional complexities, like understanding the impact of intermittent power and how to appropriately scale technologies.

Credibility

This year, Pennsylvania-based Air Products along with ACWA Power and NEOM Company finalized and signed an $8.5bn financing agreement for NEOM the project, which will build 4 GW of renewables powering production of up to 600 tons per day of hydrogen. The National Development Fund and the Saudi Industrial Development Fund kicked in a total of $2.75bn for the project, with the balance covered by a consortium of 23 global lenders.

“It is very important from the financing side to make sure the parties that are at the table are the best in the business, and that’s what we’re seeing with the projects that are able to receive either commitments from the DOE Loan Programs office or from commercial lenders and export credit agencies,” Gomez said.

Highly credible engineering firms are also critical to advance projects, and the EPCs themselves might still need to get comfortable integrating new technologies that add more complexity to projects when compared to power generation or LNG projects.

“The bottom line is that having someone that’s very credible to execute a complex project that involves electrolyzers or carbon capture or new renewable power generation within the parameters of the transaction” is critical for providing risk mitigation for the benefit of investors, Gomez added.

Funding sources

Additional funding sources are intended to be made available for clean fuels projects as part of the Inflation Reduction Act, the panelists said.

Most notably, tax credit transferability and the credits in section 45Q for carbon capture and sequestration and 45V for clean hydrogen are available on a long-term basis and as a direct-pay option, which would open up cash flows for developers.

“If you can use [tax credit transfers] as a contract, you can essentially monetize the tax credits in the form of debt and equity,” Mudd said. And if a highly rated corporate entity is the counterparty on the tax transfer, he added, the corporate rating of the buyer can be used to leverage the project for developers that don’t have the tax capacity.

Still, section 45V is potentially the most complex tax credit the market has ever seen, requiring a multi-layer analysis, according to Gomez, who advised patience among developers as prospective lenders evaluate the potential revenue streams from the tax credit market.

“First and foremost we’ll be looking at cash flows driven by the offtake contract, but it will be highly likely that lenders can take a view on […] underwriting 10 years of 45V at a given amount,” Gomez added.

Crucial guidance on how to conduct a lifecycle emissions analysis is still outstanding, however, making it difficult to bring all project parties to the table, according to Shannon Angielski, a principal at law and government relations firm Van Ness Feldman.

“It’s going to hinge on how the lifecycle analyses are conducted and how you have some transparency across states and borders” regarding the potential for a green premium on clean hydrogen, she added.

Agency support

In Canada, the Varennes Carbon Recycling plant in Quebec has received CAD 770m of provincial and federal support, primarily from the Canada Infrastructure Bank and the province of Quebec, noted Amendeep Garcha of Natural Resources Canada.

Around CAD 500m of funding from the Canada Infrastructure bank is also going to support hydrogen refueling infrastructure, Garcha said, with the aim of establishing a hydrogen highway that will form the basis of the hydrogen ecosystem in Quebec.

Pierre Audinet, lead energy specialist from World Bank Group, noted how the international development agency was stepping in to provide support for projects that might otherwise not get off the ground.

“In the world where I work, we face a lot of scarcity of capital,” he noted, adding that the World Bank has backed the implementation of clean fuels policies in India with a $1.5bn loan.

Additionally, the World Bank has supported a $150m project in Chile, providing insurance and capital for a financing facility that will reduce the costs of electrolyzers. Chile, while it benefits from sun and wind resources, said Audinet, is less competitive when it comes to transportation given its geographic location.

The agency is also working to help the local government in the Northeastern Brazil port of Pecem. Shared infrastructure at the port will help reduce risks for investors who have taken a stake in the port facilities, Audinet said.

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exclusive

Developer Profile: Green hydrogen developer finds strength in numbers

Clean Energy Holdings is assembling a coalition of specialized companies as it seeks to break into the novel green hydrogen market.

Nicholas Bair draws a direct line from his childhood on an Oregon dairy farm to the coalition of specialized companies that, as the CEO of Clean Energy Holdings, he is now assembling in pursuit of key-player status in the green hydrogen industry.

“We created our own milk from our own hay,” he says, of his family’s organic dairy farm in Klamath Falls, near the California border. He adds, using an expression he often repeats: “Everything was inside the battery limits.”

This phrase – “inside the battery limits” – represents what Bair, who is forty-one and a chemist by trade, is trying to achieve with The Alliance: a broad, self-contained battery of partners with specialized competencies working in coordination on the challenges of developing and operating groundbreaking green hydrogen projects.

“We’re doing everything from soup to nuts,” he says.

CEH and The Alliance are planning to build roughly $1bn worth of projects per year over the next ten years, Bair says. As a launching point, the parties are advancing a green hydrogen facility – called Clear Fork – near Sylvester, Texas that would churn out 30,000 kg per day in phase 1 starting in 4Q24. The hydrogen would be produced using electrolyzers powered by a 325 MW solar farm, while ancillary facilities at the site would be powered by a gas turbine capable of blending up to 70% hydrogen.

As members of The Alliance, Equix Inc. is acting as the EPC for the solar and gas turbine portion of the project, while Chart Industries is providing tankers, trailers, and liquefaction to transport hydrogen from the site in northwest Texas. Meanwhile, Hartford Steam Boiler – an original contributor to standards written by the American Society of Mechanical Engineers – will provide quality assurance and control; Coast 2 Coast Logistics is responsible for trucking; and The Eastman Group provides permitting and facilities management.

‘First-of-kind’

Although a renewable project, the green hydrogen concept is similar to most refinery EPC contracts, since many of them are first-of-kind with significant liquidated damages, Bair says. Additionally, the green hydrogen projects are “married to renewables, and you need the cryogenics and the distribution in between.”

Before starting Clean Energy Holdings, Bair was the founder and CEO of Bair Energy, a program and construction manager for infrastructure and energy projects – a service that Bair Energy is providing as a member of the Alliance. A period of low natural gas prices made Bair Energy’s specialty – geothermal power – less competitive, and Bair, seeking to develop his own projects instead of managing projects for others, sought to branch out into new types of energies.

Bair Energy itself consists of professionals that have been cherry-picked from the industry, Bair says. Candice McGuire, a veteran of Shell and Technip, is Bair’s chairman; chief operations officer John Strawn recently joined from Technip; and wind-industry veteran Peder Hansen has joined as VP and chief engineering manager.

“Our experience on the team is taking first-of-kind, developing it, and getting it to market,” he says. With The Alliance, “We went out and found the best at what they do, put them on lump-sum order, and brought them to the table early to figure out how to make their product talk to the other person’s product, so we can have a guarantee,” he says.

What distinguishes Clean Energy Holdings from other green hydrogen developers is, in fact, the coalition it is building, says Elizabeth Sluder, a partner at Norton Rose Fulbright who is CEH’s legal advisor.

“It’s intended to be one-stop shopping in a vertically integrated structure such that as and when needed for future CEH projects or third party projects that are identified, you have all the various players you need to take it from point A to point B,” she adds.

Because the parties are on standby with a common goal, CEH and its partners can provide lump-sum turnkey services, with some element of bulk pricing potentially factored in, because savings are generated through not having to issue RFPs for partners in future projects.

“The savings in time and money is, I would expect, very valuable,” Sluder says. “And when you apply those principles to long-term strategy and equity investment-type opportunities, the lower capex spend should theoretically benefit the project at large.”

Keeping the pieces moving

Bair runs CEH alongside Co-Founder and President Cornelius Fitzgerald. The two met as children – Fitzgerald was raised on a nearby cattle farm in southern Oregon – and enjoy the uncommon chemistry of childhood friends.

In something of classic pairing, “I’m much more the trumpet, paving the path,” Bair says, while Fitzgerald “usually keeps the pieces moving.”

“Sometimes Cornelius has had the best cup of coffee and takes the lead in meetings. And sometimes I do,” he says. “It’s that ability to rely on each other that set the basis of design in my mind for what a good partner looks like.”

Fitzgerald says they approach the challenge of breaking new ground in green hydrogen with “quiet confidence and humility.” By having a big picture vision as well as “credible and tangible fundamentals for the project” – like land, resource, and water control – the project moved from an idea to a reality, he adds.

“And really we’ve been driving at how to get the best experience and expertise at the table as early as possible,” Fitzgerald says.

Equix, Inc, a civil engineering firm, joined the grouping to build the solar and gas generation portion of the facility, representing the company’s first-ever foray into a hydrogen project, says Tim LeVrier, a vice president of business development at the firm.

“There are many challenges integrating all these types of power sources and energy into creating hydrogen,” Levrier says. “From an electrical engineering standpoint it is extremely challenging to coordinate power switching from one source to another. Another consideration we are having to work through is what to do in regards to producing hydrogen at night. Will there be a battery portion to the project or do we just not produce hydrogen when it is dark? These are all things we are considering and will have to find creative solutions for.”

‘Pathological believer’

CEH recently added Chart Industries to The Alliance, which in addition to furnishing liquefaction, tanks and trailers to move hydrogen, will provide fin fans for cooling and a reverse osmosis system for cleaning water. “We don’t want to give away all our secrets,” Bair says, “but it’s a very efficient process.”

The unique perspective and expertise of partners in The Alliance makes for a fulsome ecosystem around any CEH project, says Jill Evanko, CEO of Chart Industries. With respect to CEH’s projects, Evanko says they are “very targeted, which, with focus, will continue to help evolve the hydrogen economy.”

“Chart’s hydrogen liquefaction process as well as associated hydrogen equipment including storage tanks and trailers” – which the company has been manufacturing for over 57 years – “will be sole-source provided into the project. This will allow for efficient engineering and manufacturing to the CEH Clear Fork project schedule,” she says.

In any molecule value chain, hydrogen included, Chart serves customers that are the producers of the molecule, those who store and transport it as well as those who are the end users, Evanko adds. “This allows us to connect those who are selling the molecule with those who need it.”

Looking ahead, CEH is preparing to meet with investors in the lead-up to an April, 2023 final investment decision deadline for the Texas project. And it is being advised by RockeTruck for another RFP seeking fuel cell vehicles to transport hydrogen from the site as the trucks become available – a design that will likely include hydrogen fueling stations at the production facility as well as at the Port of Corpus Christi, Bair says.

CEH also has plans to develop its own geothermal plants and explore the role that nuclear energy can play in green hydrogen. Bair Energy recently hired Eric Young as its VP of engineering and technology from NuScale, where he worked on the research team that received approvals from the U.S. Nuclear Regulatory Commission for a small modular nuclear reactor.

“We’re a technology-driven owner-operator,” Bair says. “We’re all technologists, which means we’re pathological believers in technology. We’re all looking for transformational energy.”

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Exclusive: Advanced Ionics raising $12.5m, seeking pilot project partners

Advanced Ionics, an electrolyzer developer based in the Midwest, is approaching a close on the second tranche of its Series A and is seeking sponsors for pilot projects in Texas and elsewhere.

The company’s Symbiotic electrolyzers use steam by tapping into excess heat from industrial settings, thereby lowering electricity needs for water splitting to 35 kWh per kg, with 30 kWh per kg possible. That compares to industry averages over 50 kWh per kg.

Advanced Ionics, the Milwaukee-based electrolyzer developer, is about six weeks out from closing a second tranche of its Series A and is seeking new partnerships for pilot projects in the US, Chief Commercial Officer Ignacio Bincaz told ReSource.

Bincaz, based in Houston, is working to close the second $12.5m tranche, which is roughly the same size as the first tranche. The company has technical teams in Wisconsin but could build out those as well as commercial capabilities in Houston.
The company’s Symbiotic electrolyzers use steam by tapping into excess heat from industrial settings, thereby lowering electricity needs for water splitting to 35 kWh per kg, with 30 kWh per kg possible. That compares to industry averages over 50 kWh per kg.

“We just put together our first stack, Generation One, which are 100 square centimeters,” Bincaz said. Generation Two stacks will come later this year, but to get to Generation Three — commercial size, producing between 7 and 16 tons per day — the company will have to conduct a Series B about one year from now.

“For that, we need to hit certain benchmarks on durability of a stack,” he said. “The money will go toward scaling up and getting the data expected by investors to get us to Series B.”

Aside from equity provisions, Advanced Ionics is looking for sponsors for pilots and related studies, Bincaz said. “There’s different ways that we’re looking for collaboration.”

Between 2027 and 2028 the company expects to have commercial-size Generation Three stacks in the market.

Pilot projects

Advanced Ionics has two pilot projects in development with Repsol Foundation and Arpa-E (US Department of Energy), respectively.

The Repsol project is a Generation One development producing 1 kilogram per day, Bincaz said. The government project will be the first Generation Two project.

Another pilot is in development with a large energy company that Bincaz declined to name. The company is also exploring pilot projects with bp, which is an investor in the company.

After four or so pilot projects of ascending scale, the company will look to do its first industrial-scale project using real process heat or steam, integrated into a hydrogen-use process like ammonia manufacturing or chemical refining.

“We’re talking to companies in Asia, companies in Europe, companies in the US,” he said, specifically naming Japan and Singapore. “I’m in early conversations.”

Advanced Ionics’ first tranche Series A was led by bp ventures, with participation from Clean Energy Ventures, Mitsubishi Heavy Industries, and GVP Climate.

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