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Nel speeding US electrolyzer plant site selection following IRA passage

Norway-based Nel is aiming to expand in the US with the goal of supplying large-scale hydrogen projects as the company seeks to overcome a negative earnings trend

Norway-based Nel is speeding its efforts to find a US location in order to capitalize on what it expects will be a booming electrolyzer market following the passage of the Inflation Reduction Act.

Nel, the largest maker of electrolyzers in the world, with over 3,500 units installed globally, is aiming to expand in the US with the goal of supplying large-scale hydrogen projects as the company seeks to overcome a negative earnings trend, CEO Håkon Volldal said on Nel’s 3Q22 earnings call on 20 October.

Volldal expects large orders for electrolyzers to fuel profitability in the coming years, with the US now leading the push for scale in the hydrogen industry. The company is aiming to close its US site-selection process in 1H23.

This month, Nel received a nearly $60m purchase order from Australian company Woodside Energy for alkaline electrolyzer equipment that will be used at a project in Oklahoma. The company will also supply 200 MW of alkaline electrode stacks to an undisclosed buyer in the US amounting to EUR 45m of value.

“We’re moving from 10, 20 megawatt projects to 150, 200, 250 megawatt projects, and over time even bigger projects,” Volldal said. “So it’s a nice learning curve, and it fits into our strategy of selecting high-quality customers that have a high potential of reaching FID and that are willing to commit to placing orders early on.”

‘Pedal to the metal’

While the European Union has emphasized its desire to provide policy support for the hydrogen industry, the Inflation Reduction Act and its $3 / kg incentive for green hydrogen has created an advantage for US-based projects, Volldal said.

“The US has taken the lead,” he said, noting that, for Nel, the direct implications of the IRA are that it will help its customers improve business cases for building hydrogen facilities.

Additionally, US projects have surpassed European projects in scale, in part due to policy support.

“Europeans take it step by step. They do a small demo plant and then they might consider a phase 1 investment into a larger facility,” Volldal said, “whereas in the US, it’s pedal to the metal. They go large immediately, especially now with the funding.”

As a result of the increasing number of expected high-quality projects in the US, Nel is accelerating its process to select a site for a new US-based plant with 4 GW of capacity. “We expect the US to be a key market for Nel going forward, and it could be a global hydrogen hub and also Nel’s second home,” Volldal added.

Nel is looking for a site where it can build both PEM and alkaline electrolyzers, with the exact location depending on the availability of qualified labor, cooperation with universities, favorable logistics, and additional policy support.

“There’s a lot of changes happening on the support side in terms of available schemes and grants,” Volldal said. “So it might be that it’s wise to call options on a few different sites and then make the absolute final decision when there’s more clarity on how much money you can get in support.”

Negative EBITDA

Nel reported EBITDA of negative USD 21m in the third quarter period ending September 30, worse than the negative USD 11m of EBITDA it reported in the same period last year, according to an earnings release.

For the nine months ending September 30, Nel’s EBITDA was negative USD 54.5m.

Nel earnings presentation

The company is growing its order intake and backlog, including a record 3Q22 for order intake. The October order from Woodside will also propel a strong 4Q22 for backlog growth, Volldal said, with the orders reflected in Nel’s profitability starting in 2023 and 2024.

The outlook for Nel is “extremely positive,” Volldal said, as evinced by its growing pipeline and concern among customers about tightness in the near-term supply of electrolyzers.

“This is why we are investing – this is why we are running with negative EBITDA,” Volldal said. “Because we need to see order intake and backlog growth.”

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PCC Hydrogen to build ethanol-to-hydrogen pilot

The Indiana plant will convert ethanol into high purity, negative carbon index green hydrogen using a patented reforming process coupled with carbon capture.

PCC Hydrogen Inc, a low carbon/negative carbon hydrogen production company based in Louisville, KY, is pleased to announce plans to construct a pilot hydrogen production plant in Cloverdale, IN, according to a news release.

PCC H2’s plant will showcase the efficient conversion of logistically friendly ethanol into high purity, negative carbon index green hydrogen using a patented reforming process coupled with the capture of the processes pure CO2 byproduct. By providing a readily available, negative carbon index hydrogen close to the point of need, the Company is enabling the decarbonization of the economy in a cost effective and commercially viable way.

The Company has engaged Plant Process Group (PPG), a leading Houston based design, engineering, fabrication, construction, and commissioning services company to support the project with plans to have the pilot plant operational by first quarter 2024. PPG has decades of experience designing and building facilities for the refining industry, chemicals manufacturers, and biofuels producers.

PCC H2 is also working closely with the Town of Cloverdale and Putnam County to support the establishment of the first negative carbon index hydrogen production facility of its kind in the world. The production facility expects to hire local personnel at competitive wages and benefits.

Tim Fogarty, PCC H2 CEO, stated “We are excited to work with the Town of Cloverdale and Putnam County to showcase our groundbreaking technology. The Cloverdale location is ideal for the construction and operation of our first production facility given existing local hydrogen demand and the potential for broad adoption of low cost, negative carbon index hydrogen to help decarbonize the local economy in a financially rational way.”

Hydrogen generated from the PCC H2 process can be used in myriad applications ranging from hydrogen combustion engines to fuel cells (fuel cell powered loaders, trucks, other rolling stock, and for fuel cells in non-grid connected BEV charging stations). Furthermore, PCC H2 is exploring the use of its hydrogen to lower the emissions profile of any heating/calcining process. Finally, the Company is leveraging the logistically friendly nature of ethanol to produce hydrogen at smaller, distributed facilities closer to the point of use, diminishing the adverse added expense of transporting liquid hydrogen over long distances.

Cloverdale Town Manager, Jason Hartman, added “Cloverdale is extremely pleased to support the construction of the first of its kind negative carbon index hydrogen production plant that will decarbonize local industry while offering competitively priced jobs to the local community.”

The PCC H2 core reformer at the pilot plant will be mounted on three skids and operate 24/7. The company expects to break ground at the site this Summer.

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Raven SR raises $20m from strategic investors

Wyoming-based renewable fuels company Raven SR has closed a USD 20m strategic investment.

Wyoming-based renewable fuels company Raven SR has closed a $20m strategic investment, according to a press release.

Chevron U.S.A., ITOCHU Corporation, Hyzon Motors Inc. and Ascent Hydrogen Fund participated. Raven SR plans to build modular waste-to-green hydrogen production units and renewable synthetic fuel facilities initially in California and then worldwide.

Raven SR’s Steam/CO2 Reformation process involves no combustion, unlike incineration or gasification. The company’s process can also produce other renewable energy products such as synthetic liquid fuels (diesel, Jet A, mil-spec JP-8), additives and solvents (such as acetone, butanol, and naphtha) and sustainable aviation fuel (SAF).

The investment follows an agreement between Raven and Hyzon Motors to build up to 250 hydrogen production facilities across the United States and globally. Hyzon Motors, with US operations based in Rochester, New York, is a supplier of fuel cell-powered commercial vehicles.

Raven SR’s first renewable fuel production facilities will be built at landfills and will produce fuel for Northern California hydrogen fuel stations and for Hyzon’s hydrogen hubs. These initial facilities are expected to process approximately 200 tons of organic waste daily, yielding green hydrogen and producing on-site energy.

Raven SR’s production units are modular. In addition to landfills, they can also be placed at wastewater treatment plants and agriculture sites.

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Drax Group sells carbon removal credits for future US projects

C-Zero, an environmental consultancy, will purchase carbon dioxide removals credits from Drax representing 2,000 metric tons of permanently stored carbon.

Carbon removals and renewable energy company Drax Group today announced a carbon removals deal with C-Zero Markets (C-Zero), an environmental consultancy.

C-Zero will purchase carbon dioxide removals (CDR) credits from Drax representing 2,000 metric tons of permanently stored carbon under the terms of the agreement. The deal, which converts a previous MoU into a firm offtake agreement, is connected to Drax’s future deployment of carbon negative BECCS in the U.S., according to a news release.

“Organizations like C-Zero and the clients it supports are looking to permanent, engineered carbon removals that are high-integrity to ensure their climate commitments are achieved,” said Laurie Fitzmaurice, President, Carbon Removals at Drax. “As those deadlines approach, experts predict demand will soar for CDRs that are credible, quantifiable, and auditable – like those provided through BECCS by Drax – making now the smartest time to invest.”

This latest agreement between Drax and C-Zero is a clear indicator that demand for BECCS-derived carbon removals continues to increase. Today’s announcement comes just weeks after a firm offtake deal with Karbon-X, and Drax inked MoUs with Respira and C-Zero prior to that.

Drax also launched an independently operated business unit headquartered in Houston, Texas, at the beginning of the year with the intent of becoming the global leader in large-scale carbon removals. This business unit will oversee the development and construction of Drax’s new-build BECCS plants in the US and internationally, and it will work with a coalition of strategic partners to focus on an ambitious goal of removing at least 6 Mt of CO2 per year from the atmosphere.

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Exclusive: Modular green ammonia firm launches capital raise

A modular green ammonia firm has hired a boutique investment bank and has launched a roughly $150m capital raise.

Talus Renewables, a developer of modular green ammonia projects, has hired a boutique investment bank and has launched a capital raise.

The company has hired GLC Advisors as sellside advisor, according to sources familiar with the matter, and launched the capital raise this month, which seeks to raise $50m of equity and an additional $100m of financing.

CEO Hiro Iwanaga told ReSource last year that the company was gearing up for a Series B capital raise, including initiating talks with potential advisors.

Talus offers containerized systems that produce green ammonia from power, water, and air, in the form of the TalusOne (up to 1.4 tonnes of green ammonia daily) and talusTen (up to 20 tonnes per day).

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Reaching bankability: The developing financial landscape around green hydrogen

Panelists at the S&P Platts Global Power Markets conference discussed existing and future opportunities to finance hydrogen production, storage and transport.

Decarbonizing is no longer an option: almost every company in every industry understands that’s the direction in which they need to be moving – now.

And for some companies, hydrogen is the only solution, Fanny Charrier, hydrogen Americas coordinator at Crédit Agricole CIB, said during the Fueling Tomorrow with Hydrogen panel at the S&P Platts Global Power Markets conference this week.

Even so, the project menu is limited.

“We haven’t seen many projects to finance,” Charrier said. “Everybody’s waiting.”

ACES Delta in Utah is thus far the only producing green hydrogen project in the US to raise financing, Charrier said. Credit Agricole is thus focused on M&A debt and equity advisory.

“What we’re looking at is mostly pure green hydrogen projects,” she said. Green ammonia shipping to Europe is a main end-use and market. Project sizes range from a few million up to USD 5bn. “We’re also supporting some electrolyzer manufacturing plants.”

Mobility, heavy trucks and shippers looking for hydrogen is a potentially huge market, but hasn’t materialized yet, she said.

Demand signals

In Europe, commitments to close traditional power generation assets hold promise for clean fuels, António Fayad, manager of hydrogen strategy at EDP Renewables, said during the panel. In the US, EDP is mainly looking to industry to buy hydrogen at or adjacent to factories and other relevant facilities.

There has been a strong, customer-led demand signal from the US, said Sam Bartholomaeus, vice president of power and renewables at Woodside Energy. Woodside was already considering a hydrogen project in Oklahoma when the IRA was passed.

“The signal was already there in terms of seeing demand sectors that need to be decarbonized and seeing that we had a competitive proposition,” he said of the hydrogen portfolio Woodside is developing in the US.

Woodside recently signed a contract for Air Liquide to provide liquefaction equipment for a hydrogen project in Ardmore, Oklahoma. First production at that project will begin in 2026 and Woodside is targeting FID this year.

Government support and finding offtake  

Last year, the USD 504m loan guarantee for the US Department of Energy was a huge boost for the ACES Delta in Utah, Susan Fernandez, senior director of strategy at ACES-Delta, said.

That kind of support from governments and legislatively mandated decarbonization quickens the proliferation of new hydrogen technologies and projects.

“Others will also have the ability to receive more loan guarantee dollars,” Fernandez said of the post-IRA landscape. “We’ll see more projects come to the space.”

Still, offtake is key to reaching bankability, Charrier said.

“The key is always the offtake,” she said. Rather than a chicken-and-egg metaphor, she said she likes to mention a domino effect. “Yes, at the beginning we’ll have to pay a premium, but if it’s driven by a net-zero commitment everything will fall into place.”

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DTE Vantage, a developer of renewable energy projects with a national footprint in the US, is in the first round of a process to sell its RNG business, according to two sources familiar with the matter.

Lazard is running the process, the sources said. First round bids were recently received.

The company’s RNG portfolio includes 13 projects, four of which are landfill-to-gas while the remainder are on dairy farms, with more under construction, according to company materials. One of the largest RNG producers in the Midwest, the company also has projects in North Carolina, California, New York, and Wisconsin.

Of note, the Riverview Energy landfill gas asset in Riverview, Michigan produces 8.6 mmcfd of pipeline natural gas and includes 6.6 MW of solar. Pinnacle Gas in Moraine, Ohio, produces 4.5 mmcfd, while Seabreeze Energy in Angleton, Texas produces 5.8 mmcfd.

DTE Vantage is a non-utility subsidiary of DTE Energy. Founded in the 1990s, it has about 600 employees and operates 64 projects in 16 US states, with one asset in Canada. The company serves industrial, agricultural, and institutional clients across three core groups: Renewable Energy, Custom Energy Solutions, and Emerging Ventures.

DTE declined to comment. Lazard did not respond to a request for comment.

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