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Nel files motion to dismiss Iwatani’s wrongdoing case

Nel is employing a defense strategy to have the case dismissed primarily on procedural grounds, asserting that the complaint does not meet the required legal standards to proceed to trial.

Nel ASA last week filed a motion to dismiss a wrongdoing case brought by Iwatani Corporation of America over the problematic deployment of hydrogen fueling stations in California.

In its motion to dismiss the case brought by Iwatani, Nel presents several legal arguments challenging the sufficiency of Iwatani’s First Amended Complaint (FAC) under federal and state legal standards, with the response largely centered on procedural grounds.

Iwatani, one of Japan’s largest industrial gas companies, alleges that Nel and former and current executives, including its CEO, engaged in deceptive practices, such as misrepresenting the capabilities and reliability of their hydrogen fueling stations, known as H2Stations, which were sold to Iwatani in 2019 and later deployed in California with disastrous results.

Nel argues that Iwatani’s FAC fails to state a claim upon which relief can be granted. Specifically, Nel contends that the FAC does not meet the requirements for pleading fraud (under Rule 9(b)) and that the economic loss rule bars Iwatani’s claims for fraud and related torts, as these claims seek recovery for purely economic losses that are typically recoverable under contract law, not tort law.

Lawyers for Nel also invoke the economic loss rule, which limits plaintiffs to contractual remedies for purely economic or commercial losses, to argue that Iwatani’s fraud and related tort claims are inappropriate. Nel asserts that Iwatani’s allegations involve disappointed expectations rather than misconduct that would warrant a tort-based recovery.

  1. Insufficiency of Fraud Allegations (Federal Rule of Civil Procedure 9(b)):
    • Nel claims that Iwatani’s FAC fails to sufficiently allege fraud. Rule 9(b) requires that the circumstances constituting fraud be stated with particularity. Nel argues that Iwatani’s allegations do not specify who made the fraudulent statements, when these statements were made, or how the statements were fraudulent.
  2. Specific Challenges to Various Counts:
    • Fraud Claims: Nel argues that the FAC lumps all defendants together without distinguishing their roles or specifying the fraudulent acts they individually committed.
    • Unfair Competition and Other Claims: Similar to the fraud claims, Nel argues that other claims like unfair competition, breach of contract, and declaratory relief are also inadequately pleaded because they rely on the same insufficiently detailed allegations of wrongdoing.
  3. Lack of Specificity in Allegations:
    • Nel highlights that Iwatani fails to provide the specific details necessary to link alleged misrepresentations to specific defendants, thus failing to give adequate notice to each defendant about the nature of the alleged misconduct for which they are individually responsible.

In a separate motion to dismiss the charges brought by Iwatani against individual defendants Jon André Løkke, Stein Ove Erdal, Håkon Volldal, and Robert Borin, Nel presents several key arguments focused on jurisdictional issues, specifically challenging the personal jurisdiction of the United States District Court, Central District of California over these non-resident individual defendants. 

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OCI Global hires advisors for strategic review

Dutch chemicals producer OCI Global has hired advisors to explore potential asset monetizations. It is also in talks with offtakers that could take an equity stake in its Texas blue ammonia project, with strong demand spurring the company to evaluate an expansion at the site.

OCI Global has retained advisors as part of its strategic review to explore potential asset monetizations, CEO Ahmed El-Hoshy said today.

The aim of the asset sale exploration is to bridge the gap between the combined value of the individual assets in the company’s portfolio and the discount on holding company shares, El-Hoshy said.

The decision to pursue the asset sales came after “constructive dialog” with Inclusive Capital, he said, an activist shareholder that has been pushing for the dispositions.

OCI CFO Hassan Badrawi added that he expected to provide an additional update before the end of the year, and that there was “strong interest in the active discussions.”

In the meantime, OCI is exploring adding a second line at its Texas blue ammonia project, a 1.1 mtpa facility under construction in Beaumont, Texas. 

“We’re currently in advanced discussions regarding long-term offtake and potential equity participation, reflecting strong commercial interest and an increasing appetite from strategics to pay a premium to secure long-term low-carbon ammonia, given regulatory scores,” El-Hoshy said.

Any further expansion at the site will benefit from enhanced project economics, with cost benefits deriving from an early-mover advantage, as well as the ability to leverage existing infrastructure and utilities, El-Hoshy added.

“With this in mind – and against the backdrop of a positively evolving regulatory environment – we are prudently evaluating a second line at the site to capitalize upon anticipated demand,” he said, noting that the expansion would bring its clean fuels capacity in total to 2.8 million tons.

“With the incentives that are being provided for the utility space and the power space in Japan and Korea, there is, for many of the offtakers, a requirement to have an equity participation in the low-carbon ammonia,” El-Hoshy said.

The strategic investors could come with lower return requirements, allowing for a higher premium for the transfer of equity in the project, he said.

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Green hydrogen developer seeking platform capital

A UK-based green hydrogen developer is looking for investment partners to take a stake in its green hydrogen/ammonia platform consisting of several globally based projects.

Hive Energy is looking to raise development capital by means of a primary equity raise to support the on-going development costs for Hive’s global green hydrogen and green ammonia portfolio and supporting the advancement of its three core projects to FID.

A subsidiary of Hive Energy, Hive Hydrogen is a green hydrogen and green hydrogen-based derivatives development platform. Hive Hydrogen has a diversified global portfolio of projects supported by ~16GW of dedicated solar and wind pipelines across Europe, Africa, and LATAM to supply cost-competitive green hydrogen and ammonia to local and international markets, the company said on its website.

Its most advanced projects are in South Africa and Spain, targeting the 1st COD between 2027/2028, with another project in Chile targeting COD in 2030. Over 340,000 ha of land have been secured across these three projects for the installation of ~16GW of renewable generation assets and ~8GW hydrogen/ammonia production assets.

Hive Hydrogen’s business model provides investors with attractive development returns across a pipeline of advanced and earlier-stage projects.

Hive is seeking one or more partners to provide an investment into our green hydrogen/ammonia portfolio, taking a stake in the platform of up to 50%.

Hive Energy brings a ‘Developer DNA’ to the projects, having developed more than 2.7GW of solar PV/BESS with a further 8.5GW of green energy projects in the pipeline.

More information about Hive’s projects can be found on its website.

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NET Power and Rice Acquisition garner additional $275m PIPE commitments

The original transaction in December concerns NET Power’s 300 MW Serial Number 1 project near Odessa, Texas.

ET Power and Rice Acquisition Corp. II have announced an additional $275m of PIPE commitments in connection with their proposed business combination, according to a news release.

Occidental has increased its commitment to the PIPE by $250m, bringing its total investment to $350m, while the Rice family has committed an additional $25m, bringing their total investment to $125m.

“We believe NET Power’s technology can accelerate emissions reductions in our existing operations and ultimately supply emissions-free power to the Direct Air Capture facilities and sequestration hubs we are developing, the release states.”

The new commitments bring the expected gross proceeds of the business combination to $845m for NET Power, consisting of approximately $345m from RONI’s trust account (assuming no redemptions), and approximately $500m from the PIPE raised entirely at $10 per share of common stock.

Assuming no RONI shareholders exercise their redemption rights, the combined company is expected to have a market capitalization in excess of $2bn.

“Since announcing the transaction in December 2022, NET Power has continued to make excellent progress towards commercialization of its utility-scale power plant, including FEED commencement on the Occidental-hosted Serial Number 1 (“SN1”) project near Odessa, Texas,” the release states. “In support of the plant, NET Power expects Occidental will be a key offtaker of the clean power generated by SN1.”

It is anticipated that Occidental will manage the transportation, storage, and utilization of the captured CO2 from SN1.

“We believe NET Power’s technology can accelerate emissions reductions in our existing operations and ultimately supply emissions-free power to the Direct Air Capture facilities and sequestration hubs we are developing,” Vicki Hollub, president and CEO of Occidental, said in the release.

Following this additional commitment, Occidental’s ownership stake in the combined company will increase to approximately 39%, assuming no redemptions.

NET Power expects $200m of net proceeds from the business combination and the PIPE to fully fund corporate operations through commercialization of SN1, which is expected to be operational in 2026.

The net proceeds above $200m are expected to support SN1 capital needs and future commercial origination efforts.

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Exclusive: American Clean Power to advocate for ‘grandfathering’ in 45V rules

The clean energy trade group plans to continue promoting the concept of “grandfathering” for early-mover green hydrogen projects in response to IRS guidance for 45V rules, according to industry sources familiar with the plans.

Clean energy industry trade group American Clean Power (ACP) plans to continue championing the concept of “grandfathering” in the green hydrogen sector, arguing that it is critical for the economic viability of early green hydrogen projects under the Inflation Reduction Act’s clean hydrogen tax credits, according to sources familiar with the group’s plans.

Grandfathering would allow these projects to adhere to less stringent annual time-matching requirements before transitioning to an hourly regime.

ACP, through its previously released Green Hydrogen Framework, has proposed to grandfather in the early-mover projects under annual time-matching as long as they start construction before January 1, 2029. That’s in contrast to guidance for the 45V clean hydrogen tax credit that would require renewable energy generation associated with green hydrogen projects to be matched hourly beginning in 2028.

The trade group, which consists of 800 clean energy companies, previously argued against too-soon hourly matching in a November white paper. Representatives of ACP did not immediately respond to requests for comment.

In response to the IRS guidance, ACP is seeking to underscore that, without grandfathering, early projects will have to be designed from the start to meet hourly matching requirements, significantly increasing costs and negating the benefits of annual time matching, sources said.

The notice of public rulemaking on 45V was issued on December 26, and is open for public comment for 60 days. The tax credit rules, which would require strict adherence to the so-called three pillars approach for incrementality, temporal matching, and deliverability, are viewed by some in the industry as overly burdensome.

ACP’s position is that the project finance market can handle some changes midstream in long-term agreements, but not fundamental shifts like transitioning from annual to hourly time matching. 

This switch could lead to a dramatic decrease in green hydrogen production and a concurrent exponential increase in production costs. Investors, anticipating these risks, might finance green hydrogen production agreements as if they were under an hourly regime from the beginning, thereby eliminating the initial benefits of annual time matching, according to the sources familiar.

A Wood Mackenzie study estimates that hourly time matching requirements could result in a price increase of 68% in Texas and 175% in Arizona, for example.

ACP, according to sources, stresses that the absence of grandfathering would create an economic cliff for agreements straddling both accounting systems. This would add to project costs, potentially discourage customer interest in green hydrogen, and hinder the industry’s maturation, the sources explained. In contrast, grandfathering first-mover projects under an annual time matching regime would ensure competitive production costs, driving demand for green hydrogen, the trade group believes.

Moreover, sources explained that ACP’s position is that the transition from annual to hourly matching without grandfathering would likely necessitate assuming hourly matching from the onset in power purchase agreements, leading to higher hydrogen costs from the start. This could delay green hydrogen industry development and give an advantage to blue hydrogen with early adopters, potentially excluding green hydrogen from the market.

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Exclusive: Ammonia plant sale paused until commercial operations

The sale process for a Texas ammonia plant has been paused until the facility reaches commercial operations.

Gulf Coast Ammonia, the developer of a world-scale ammonia plant in Texas City, Texas, has paused a sale process until the plant reaches commercial operations, according to two sources familiar with the matter.

The process to sell the plant, which will produce 1.3 million tons of ammonia per year, was underway earlier this year, led by Jefferies as sellside advisor. The plant was expected to reach COD in 2023, according to documentation.

The project was initiated by Agrifos Partners LLC and advanced to FID in collaboration with joint venture development partners Mabanaft and Macquarie Capital. Following the FID taken in late 2019, GCA is wholly owned by a joint venture of Mabanaft and Lotus Infrastructure (formerly known as Starwood Energy).

GCA is investing $600m towards the construction, operation, and ownership of the ammonia plant, which is situated on land owned by Eastman Chemical Company within Texas City’s industrial park. It includes a portion of Eastman’s port access. 

In tandem with the ammonia plant construction, Air Products is building a $500m steam methane reformer to provide hydrogen to the plant via pipeline. Air Products noted in a recent investor presentation that the SMR project recently came onstream.

Officials at Lotus, Mabanaft, and Jefferies did not reply to inquiries seeking comment.

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exclusive

Green hydrogen developer in exclusivity with new investor

New York-based green hydrogen developer Ambient Fuels is in exclusivity with a new investor, with proceeds from the capital raise slated to fund project development and acquisitions.

Ambient Fuels, the New York-based green hydrogen developer, is in exclusivity with a new investor for a bilateral capital raise, CEO Jacob Susman said in an interview.

Susman declined to name the private equity provider but said the backing will allow Ambient to develop several projects, as well as acquire projects from other developers. The deal is proceeding without the help of a financial advisor.

Once the company reaches its run rate, Ambient plans to complete three to four projects per year costing $50m and up, Susman said, with the first expected to reach operation in 2025.

The company’s initial geographic focus is on the Gulf Coast, centered on the Port of Corpus Christi, Susman said. New York, California, the Pacific Northwest and traditional wind energy states in the Midwest and West are areas of additional work.

Hydrogen hubs

Ambient is closely following the DOE hydrogen hub applications process, Susman said. Which regions are awarded funding could make a difference for where the company locates new projects.

According to ReSource‘s project tracker, Ambient is involved in at least two of the hubs that were encouraged by the DOE to submit a final application: California’s Alliance for Renewable Clean Hydrogen Energy Systems (ARCHES), and the Port of Corpus Christi Green Hydrogen Hub.

In 2021 Ambient completed a funding round led by SJF Ventures. Several other VC funds and angel investors also participated.

Open for offtake business  

Ambient is looking for offtakers in industries that use the molecules for feedstock and energy but need to meet decarbonization targets.

The company is working to provide hydrogen as an industrial feedstock and energy source to sectors including transportation, oil and gas, mining, glass and steel production and automobile manufacturing. Supplying hydrogen for ammonia fertilizer is another target market.

Advisors with clients in those industries should reach out to Ambient, Susman said.

M&A strategy

Ambient strives to be a fully integrated devco with the resources, capital and expertise to take a project to fruition, Susman said. Projects developed by smaller companies can look to Ambient as a buyer for their projects.

“We want to be a home for those great projects that are being developed independently,” Susman said. “Absolutely we will be acquiring projects.”

Smaller developers with good projects could also be targets for takeover with the backing from the new investor, Susman said. The firm could also make a technology buy in software for project development, operations, or possibly the equipment side, though Susman said there’s a low probability of that.

Financial advisors that have leads on good projects Ambient can acquire are welcome to pitch, Susman said.

Susman said he is not in a hurry to exit Ambient and can see the company being independently financed for years to come.

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