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NextEra advancing international offtake for green hydrogen

The US renewable energy giant is having “extensive" discussions with potential international offtakers, CEO Rebecca Kujawa said today during a fireside chat with Ivana Jemelkova of FTI Consulting at the Reuters North America Hydrogen conference Houston.

NextEra Energy Resources is moving forward with opportunities for international offtake of green hydrogen, CEO Rebecca Kujawa said today.

The renewable energy giant has a potential $20bn pipeline of hydrogen projects in various stages of development in the US, facilities that would require roughly 15 GW of renewables to run, the executive said at the Reuters Hydrogen North America Conference in Houston.

Given the time required to garner interconnection approvals for renewables in the US, the company is primarily relying on its existing portfolio of 250 GW of renewable generation to advance its green hydrogen projects.

Kujawa said NextEra is focused on finding domestic offtake for green hydrogen, mentioning the company’s agreement to provide the molecule to an existing CF Industries ammonia plant. But it is also having “extensive” discussions with potential international offtakers.

New rules for hydrogen imports in the EU as wall as Korea and Japan are particularly attractive, she said during a fireside chat with Ivana Jemelkova of FTI Consulting.

“Clearly the EU rules that are in finalization form for RED III in Europe as well as the new requirements in South Korea and potentially Japan are incredibly exciting to be able to bring additional customer discussions to closure,” she said.

“We need to see customers who actually want to buy these molecules, and particularly buy these molecules at a price at which we can actually produce them,” she added.

NextEra is within a couple months of reaching COD on its Cavendish pilot plant, Kujawa said, where green hydrogen will be blended with gas for use in an existing combustion turbine at the co-located FPL Okeechobee Clean Energy Center. Cummins was slated to supply a 25 MW electrolyzer system for the facility.

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Gulf Coast Ammonia hydrogen plant comes onstream

The Air Products plant providing hydrogen to the Gulf Coast Ammonia facility has come onstream.

Air Products executives today said the plant providing hydrogen to Gulf Coast Ammonia has come onstream and is generating revenues.

Pennsylvania-based Air Products invested $500m into the steam methane reformer and hydrogen pipeline capacity, as well as an air separation unit for nitrogen and a steam turbine unit for the GCA world-scale ammonia plant.

Lotus Infrastructure and Mabanaft GmbH own the GCA facility and provided equity for the project. The project financing closed on December 30, 2019.

Jefferies last year was leading a sale of the plant, which was paused until it reached commercial operations. An official at Lotus did not immediately respond to a request for comment.

The approximately 175 million standard cubic feet per day (mmscfd) SMR built by Air Products will include the addition of over 30 miles of hydrogen pipeline from Texas City to Baytown, to be connected to its Gulf Coast Pipeline system, the company announced previously. The GCA project will use approximately 270 mmscfd of hydrogen from the SMR and Gulf Coast Pipeline. 

GCA’s ammonia facility, which will produce approximately 3,600 metric tons per day of ammonia, will also receive Air Products’ supply of approximately 90 mmscfd of nitrogen from a new ASU to be built and operated at the Texas City site.

While the hydrogen plant is onstream, Air Products CEO Seifi Ghasemi today declined to comment on the ammonia portion of the project, saying he’s like the owners of that facility to make a statement if necessary.

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PE-backed biomass-to-energy operator on the block

A biomass-to-energy firm with four operational assets in the US and Canada has launched a sale process. The company is also developing 110 MW of co-located BESS projects, with additional revenue streams expected from organic waste diversion, gasification and carbon capture, and heavy-duty vehicle charging stations, according to a sale teaser.

Biomass-to-energy firm Greenleaf Power is for sale.

Denham Capital, the company’s private equity owner, has mandated BNP Paribas to run the process, which launched last week, according to two sources familiar with the process.

California-based Greenleaf is a biomass generation platform with 135.5 MW of fully-contracted renewable generation capacity and remaining weighted-average PPA term length of 9.5 years, according to a sale teaser.

The company’s four operational assets are the 45 MW Desert View Power, in Mecca, California; the 30 MW Honey Lake Power in Wendel, CA; the 23 MW St Felicien Cogeneration facility in Quebec; and the 37.5 MW Plainfield plant in Connecticut.

Greenleaf expects to generate $106m of biomass revenues in 2024, resulting in $24m in expected EBITDA.

According to the teaser, co-located battery energy storage projects amounting to 110 MW are also under development, with CODs expected for 2025 – 2026.

There is potential for additional revenue streams from existing infrastructure and land, including organic waste diversion, gasification and carbon capture, co-location of renewables, and heavy-duty electric vehicle charging stations, the teaser states.

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Calumet receiving interest from strategics for SAF business

The specialty products maker is working with a banker as it fields interest from strategics for its sustainable aviation fuel business.

Specialty products maker Calumet is working with Lazard as it evaluates investment inquiries from strategics that are interested in the company’s sustainable aviation fuel (SAF) business.

Calumet has already contracted for 2,000 barrels per day of SAF with a blue-chip offtaker through its subsidiary Montana Renewables, based in Great Falls, Montana. That amount would make Calumet the largest SAF producer in North America once engineering modifications are complete in early 2023, said Louis Borgmann, CFO and EVP at Calumet.

Meanwhile, preliminary engineering work has been done to expand SAF production to as much as 15,000 barrels per day, a “world-class position [that] has generated considerable interest from strategic investors,” Borgmann added on the company’s 3Q22 earnings call.

Calumet had engaged Lazard to conduct a process that culminated in a $250m investment in Montana Renewables from Warburg Pincus in August, 2022. The investment, in the form of a participating preferred equity security, valued Montana Renewables at a pre-commissioning enterprise value of $2.25bn.

“Lazard remains retained. They’re out there. They’re very opportunistic,” Borgmann said. “And inbound honestly picked up with SAF. So, we don’t feel a rush, but there could be an opportunistic deal here that we could consider.”

Borgmann added that Montana Renewables’ SAF capacity was quickly contracted at a premium to renewable diesel prices.

The company is positioned to be a first mover in the high-growth West Coast and Canadian markets for SAF, Borgmann said, noting Montana Renewables’ proximity to western airports.

“Montana Renewables’ proximity to end product markets is exceptional,” he said. “We serve renewable markets on the West Coast with direct BNSF Rail access. And we’re perfectly positioned to support the continuously growing low-carbon markets in Canada.”

The company and other renewable diesel producers “that have invested in the ability to produce SAF could expect a lasting advantage” compared to new, more expensive technologies for producing SAF, he said. “And Montana Renewables is expected to have an additional transportation cost advantage relative to its Gulf Coast competition.”

Montana Renewables reached a supply and offtake agreement with Macquarie, announced last week.

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Exclusive: Zero-emission locomotive start-up in Series B capital raise

A locomotive start-up focused on the US market for zero-emission freight trains is undergoing a Series B capital raise, with sights on a much larger Series C raise next year.

OptiFuel Systems, a provider of zero-emission line haul locomotives and generation solutions, is conducting a $30m Series B capital raise.

The South Carolina-based firm is seeking to finalize the Series B by the end of this year, and plans to use proceeds to advance production of its zero-emission technologies for the rail industry, which represents a massive decarbonization opportunity, CEO Scott Myers said in an interview.

Meanwhile, the firm will seek to tap the market for around $150m for a Series C next year, Myers added. The company is not working with a financial adviser. 

While the Series B will focus on bringing to production some of OptiFuel’s smaller rail offerings, such as the switcher locomotives, the Series C will be mostly dedicated to progressing testing, manufacturing, and commercialization of its larger line haul locomotive.

The company is also considering making its own investments into digesters for RNG facilities, from which it would source the gas to run its RNG-fueled locomotives. As part of its offering, OptiFuel also provides refueling infrastructure, and envisions this aspect of its business to be just as profitable as selling trains.

“We anticipate that we would be the offtaker” of RNG, “and quite potentially, the producer,” Cynthia Heinz, an OptiFuel board member, said in the interview.

A systems integrator, OptiFuel offers modular locomotives for the freight industry that can run on zero-emission technology such as renewable natural gas, batteries, and hydrogen. The company recently announced that it will begin testing of its RNG line haul locomotive, which is a 1-million-mile test program that will take two years and require 10 RNG line haul locomotives.

Image: OptiFuel

The company’s target market is the 38,000 operating freight trains in the U.S., 25,000 of which are line haul locomotives run by operators like BASF, Union Pacific, and CSX. Fleet owners will be required to phase out diesel-powered trains starting next decade following passage of in-use locomotive requirements in California, which includes financial penalties for pollution and eventual restrictions on polluting locomotives. Other states are evaluating similar measures.

“The question is not will the railroads change over: they have to,” Myers said. “The question is, how fast?”

Following completion of testing, OptiFuel aims to begin full production of the line haul locomotive – which has a price tag of $5.5m per unit – in 2028, and is aiming to produce 2,000 per year as a starting point. The smaller switcher units are priced between $1.5m and $2.5m depending on horsepower.

OptiFuel has held discussions with Cummins, one of its equipment providers, to source at least 2,000 engines per year from Cummins to support its production goal. 

“That’s a $10bn-a-year market for us,” Myers added.

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Mobility solutions provider to raise up to EUR 200m

Quantron, the German and US-based mobility solutions provider, is set to launch a capital raise that could entail the sale of up to 20% equity.

Quantron, the German and US-based mobility solutions provider, is set to launch a capital raise that could entail the sale of up to 20% equity, according to three sources familiar with the matter.

The company is seeking between EUR 150m and EUR 200m in the process, the sources said, implying a valuation of up to EUR 1bn.

Quantron, which recently expanded into North America with the opening of an office in Detroit, will also consider debt as a part of the raise, one of the sources said.

At a ceremony at the Delegation of German Industry and Commerce (DGIC) in Washington D.C. on 12 October, Quantron signed a deal to supply TMP Logistics with 500 Class 8 trucks. The trucks will be operated by Quantron’s as-a-service (QaaS) vertical; they are scheduled for delivery in 2024.

Quantron AG CEO Michael Perschke told ReSource at that event that the company is in discussions with US investors about the capital raise, which has not formally launched but is tentatively scheduled to wrap up in 2Q23. Quantron is also in pre-closure discussions with several US law firms.

A fourth source said Quantron has worked with Danish consulting firm Ramboll Group on past deals.

Perschke said his company has relationships with PwC and EY, the latter especially on IPO readiness.

Quantron in September closed on a EUR 50m Series A with NASDAQ-listed Ballard Power Systems and German machinery manufacturer Neuman & Esser as investors.

Looking forward the company would like to work with a US strategic or private equity interest committed to hydrogen.

Utilities or corporates investing in hydrogen production but still building out the offtake structure would be of interest to Quantron, Perschke said. He noted that private equity interest like Ardian’s HY24 and Beam Capital are also active in the space.

Quantron is in the final stages of a deal with an oil company that Perschke declined to name, but said the company has 2,000 fueling stations across Europe that they are considering for conversion to hydrogen.

Perschke said his company plans to build out its presence in California and then could look for expansion in the northeast, Gulf Coast or Canada. The company aims to be an early mover in US hydrogen-fueled long-haul trucking along with peer Nikola Motor.

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It’s an electrolyzer – but for CO2

A New Jersey-based start-up is seeking to commercialize an electrocatalytic technology that transforms CO2 into a monomer for the plastics industry.

RenewCO2 is developing and seeking to commercialize a modular technology that converts waste CO2 into a usable product.

The New Jersey-based company is advancing a pilot project at an Ace Ethanol plant in Wisconsin that will take CO2 and convert it to monoethylene glycol, which can be used by the plastics industry.

The project was recently selected by the US DOE to receive a $500,000 grant. It seeks to demonstrate the technology’s ability to reduce the ethanol plant’s carbon footprint and produce a carbon-negative chemical.

In an interview, RenewCO2 co-founders Anders Laursen and Karin Calvinho said their technology, which was developed at Rutgers University, is geared toward carbon emitters who can not easily pipe away their CO2 and who may have use for the resulting product.

“It’s a matter of economics,” said Calvinho, who serves as the company’s CTO. Using the RenewCO2 technology, the ethanol plant or other user is able to keep 45Q tax incentives for capturing CO2 while also creating a product that generates an additional revenue stream.

Additionally, the modular design of the technology prevents emitters from having to build expensive pipeline infrastructure for CO2, she added. “We want to help to facilitate the use of the CO2 on site,” she said.

One of the goals of the project is to measure the carbon intensity of these technologies in combination, which ultimately depends on the electricity source for the electrochemical process, similar to an electrolyzer, Laursen, who is the CEO, said.

“The main constraint from a location point of view is the availability of reliable and affordable green power,” Laursen added.

Creating a market

The principal target market for RenewCO2’s technology is existing producers of monoethylene glycol (MEG), which is used to make recycled plastics, as well as ethanol producers and other emitters with purified CO2 streams.

Producers of polyethylene terephthalate (PET) – one of the most recycled plastics globally – are also potential customers since they use MEG in their production process and have CO2 sources on site.

“Right now, MEG produced in the US is, for the most part, not polymerized into PET – it’s shipped overseas for making PET plastics used in textiles, and then made into fibers or shipped further,” Laursen said. “So if you can shorten that transport chain, you can reduce the CO2 emissions associated with the final product.”

RenewCO2 is looking for partners to help build the modular units, and is evaluating the purchase of existing PEM electrolyzer units that can be reconfigured, or having the units custom manufactured.

“We’re talking to potential manufacturing partners and evaluating whether we should do the manufacturing ourselves,” Calvinho said. And if they choose the latter route, she added, “we will have to build our own facilities, but it’s early to say.”

The company has raised a total of $10m in venture investment and grant funding, including a pre-seed round of over $2m from Energy Transition Ventures, a Houston-based venture capital fund.

While not currently fundraising, Laursen said they are always taking calls to get to know the investors that are interested in the space. He added that the company may need to raise additional capital in 12 to 18 months.

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