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NextEra executives outline green hydrogen plans

NextEra Energy Resources signed a term sheet for 800 MW of solar capacity for a green hydrogen project in the central US. It is also participating in two hydrogen hub projects that were encouraged to submit full applications to the DOE.

NextEra Energy Resources last week signed a term sheet for approximately 800 MW of new solar capacity that will support a green hydrogen facility in the central US.

The project, anticipated to reach COD in 2026, is an example of the type of clean energy initiative that NextEra expects to pursue amid surging customer demand for large-scale renewables projects, including for green hydrogen, NextEra Energy CEO John Ketchum said on today’s earnings call.

“We are building the algorithms and tools to identify and optimize the best green hydrogen sites around the country and leverage our significant interconnection and land inventory position,” Ketchum said. The company plans to use its position as an incumbent to participate in the emerging clean hydrogen market “in a big way,” he added.

NextEra Energy Resources is also participating in hydrogen hubs in the Southeast and Southwest, both of which were encouraged by the Department of Energy to submit full applications to an $8bn federal funding program.

In the Southeast, the company is working to build a 140-tons-per-day clean hydrogen facility at its Gulf Clean Energy, in Escambia County, Florida, Ketchum said. The project would be powered by Florida Power & Light solar projects.

For the Southwest hub, the company has partnered with Linde to build a 120-tons-per-day green hydrogen facility in Arizona, which would support decarbonization of the West coast mobility and industrial end markets.

“These are just a few examples of the clean hydrogen opportunities our team is actively pursuing,” Ketchum said. “We continue to work with various partners on hydrogen solutions and we are excited by both the number and scale of the opportunities in front of us.”

Hy expectations

NextEra Energy Resources expects to build between 32.7 GW – 41.8 GW of renewables and storage projects between 2023 and 2026 amid enormous demand for renewables, with a boost from the expected benefits of the Inflation Reduction Act, Ketchum said.

“To put these numbers into context, just executing at the low end of our new development expectations through 2026 would more than double the size of our current renewables and storage operating portfolio, which took us more than 20 years to complete,” he said.

The 800 MW term sheet signed for solar at the hydrogen project in the central US was not counted as part of this total. But it shows how green hydrogen is starting to impact the company’s outlook for its renewables build-out in the second half of the decade.

Rebecca Kujawa, president and CEO of NextEra Energy Resources, said the company is working to put the right development opportunities together and forge partnerships in “a very active market.”

“I think [2026] is probably on the earlier side of what we ultimately see as a significant ramp-up going into the end of the decade,” she said, when there’s more clarity on customers for green hydrogen and more opportunity for supply of electrolyzers and other key equipment.

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NextEra leads Series A round for DAC start-up

NextEra has led a $36m Series A funding round for a start-up that’s developing hybrid direct air capture technology.

Avnos, Inc. (Avnos), the Los Angeles-based company developing novel Hybrid Direct Air Capture (HDAC) technology for carbon dioxide removal, has closed $36 million in Series A funding, according to a news release.

Avnos will use the new funds to grow its world-class team, deploy additional HDAC assets across North America and Europe, and open a new, state-of-the-art research and development facility located just outside New York City.

NextEra Energy, one of America’s largest utilities and investors in clean energy infrastructure, led the round. Other investors include Safran Corporate Ventures, Shell Ventures, Envisioning Partners, and Rusheen Capital Management. The funding supplements Avnos’ previously announced capital raises and strategic commercial agreements with Shell Ventures, ConocoPhilips, JetBlue Ventures and the Grantham Foundation, as well as pilot projects with the U.S. Department of Energy and the U.S. Office of Naval Research.

Avnos has pioneered HDAC using proprietary materials and processes to capture both carbon dioxide and water simultaneously from the atmosphere, according to a news release. The process eliminates the need for external heat input and produces approximately 5 tons of water for every 1 ton of carbon dioxide captured. Avnos’ resource-intelligent technology means lower impact on and expanded employment opportunities for the communities surrounding HDAC facilities.

“At Avnos, we believe our novel HDAC technology is the world’s best shot at reaching the much-needed gigaton scale of carbon dioxide removal,” said Will Kain, CEO of Avnos. “We feel the urgency to roll out HDAC more broadly so as to deliver on the enormous, positive climate and economic opportunities in front of us. With this substantial funding, Avnos continues to expand its unparalleled roster of partners supporting our rapid acceleration.”

The new, multi-million-dollar research and development facility, equipped with best-in-class equipment and infrastructure, will enable Avnos to accelerate the pace of scaling the company’s HDAC technology while ensuring its systems continue to operate at peak performance. The 20,000 square foot facility will be fully operational in February 2024 and will employ an estimated 20 new employees.

“Our state-of-the-art lab underscores our mission to push the frontiers of innovation and deliver scalable and efficient carbon removal solutions,” said Ben McCool, Senior VP of Technology at Avnos. “As we expand our dynamic technical team, I’m proud to cultivate a collaborative environment that brings together top-notch talent, actively shaping and advancing the cutting-edge technologies driving Avnos towards impactful solutions.”

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ENEOS to develop commercial scale LOHC project

ENEOS will use technology from Honeywell to develop a commercial scale liquid organic hydrogen carrier project.

Honeywell today announced that ENEOS, a leading energy company in Japan, will develop the world’s first commercial scale Liquid Organic Hydrogen Carrier (LOHC) project using Honeywell’s solution at multiple sites.

The LOHC solution enables the long-distance transportation of clean hydrogen and can help meet the growing requirements for hydrogen use across various industries by leveraging existing refining assets and infrastructure.

“With more cost-effective long-distance transport, our Liquid Organic Hydrogen Carrier provides a method of more closely matching international supply and demand for hydrogen which enables hydrogen to play a critical role in the energy mix as we move toward lower-carbon economies,” said Ken West, president and CEO of Honeywell Energy and Sustainability Solutions, in a news release. “By providing solutions to help overcome the challenges of hydrogen transportation, Honeywell is supporting ENEOS in transitioning to a hydrogen-powered future.”

This is one of multiple hydrogen transportation projects on which Honeywell and ENEOS are collaborating. In the Honeywell LOHC solution, hydrogen gas is combined chemically through the Honeywell Toluene Hydrogenation process into methylcyclohexane (MCH) – a convenient liquid carrier – compatible with existing infrastructure. The hydrogen at these sites will be exported – in the same way as petrochemical products – to ENEOS in Japan in the form of MCH. Once at its destination, the hydrogen will be recovered using the Honeywell MCH Dehydrogenation process and released for use, while the toluene can be sent back for additional cycles.

Hydrogen is expected to play a critical role in reducing greenhouse gas emissions. At standard conditions, hydrogen is a flammable gas with low density and cannot be efficiently or easily transported. Current solutions available for transporting hydrogen include liquifying the hydrogen and using chemical carriers such as ammonia, each of which requires additional infrastructure to produce and transport hydrogen.

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Plug Power finalizing $1.6bn DOE loan facility

Executives from liquidity-strapped Plug Power said this morning that they are in the term sheet phase for a $1.6bn loan facility from the Department of Energy. The company burned through another roughly $360m of unrestricted cash in 4Q23, and is implementing a cash management program to avoid another ‘going concern’ warning by the time it files its 10-K.

Plug Power is finalizing a $1.6bn loan facility with the Department of Energy’s Loan Programs Office, CEO Andy Marsh said on an investor update call today.

The New York-based company, which is facing a cash crunch, is in the term sheet phase for the loan facility, Marsh noted, which would help shore up its liquidity in the near term.

Marsh also announced that Plug’s Georgia facility is now operational, making it the largest PEM-based green hydrogen facility in operations in North America.

Last year Plug was on the hunt for a loan facility with Goldman Sachs as advisor, as reported by ReSource.

CFO Paul Middleton said the company has received offers for debt but not on terms that are acceptable to the company. For comparison, under the DOE loan structure, the interest rate on the loan facility will not go higher than 6.5%, the executives said.

Its cash management strategy, Middleton added, will focus on utilizing at-the-market (ATM) share offerings, reducing capex and increasing margins, including through raising product prices, and securing the DOE facility. 

In particular, Plug is focused on solving the ‘going concern’ issue with auditors by the time it files its year-end 10K filing with the Securities and Exchange Commission, including through the use of a $1bn share offering program. An ATM program allows the issuing company to raise capital through share offerings as needed.

The company has also slowed investments into projects in Texas and New York until it finds a better financing solution, the CFO said. And the achievement of operations at the Georgia facility and the expected 2024 commercial operations date for the Tennessee facility will improve efficiencies.

Overall, Plug is seeking to reduce its cash burn by 70% in 2024 compared to 2023, and is targeting positive free cash flow in the next 12 months, according to Middleton.

The company’s equity has taken a beating in recent months, but is trading up by over 20% in pre-market trading to $3.44 per share.

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Avangrid touting green hydrogen opportunity in onshore renewables sale

Advisors selling up to 50% of the company’s US onshore renewables platform are pitching the value-enhancing potential of green hydrogen development in the process.

Avangrid is touting the opportunity to develop a major pipeline of green hydrogen projects as it prepares to collect initial bids for a stake in its US onshore renewables platform, according to two sources familiar with the matter.

The Portland, Oregon-based clean energy firm, which is owned by Spain-based Iberdrola, is running a process to sell up to a 50% stake in roughly 9.6 GW of operational projects and an 18 GW development pipeline, the sources said. The process launched in March with Lazard and Rothschild on the sellside.

As part of the platform’s opportunities for value enhancement, the company is promoting the potential for green hydrogen, with a sale teaser noting that parent Iberdrola is a global leader in green hydrogen development with two operational projects and 60 in development.

“[Avangrid] Onshore Renewables intends to leverage this experience to become an early leader in hydrogen project development in the US,” the teaser reads, stating a goal of building out some 900 MW of green hydrogen projects by 2035.

The company is also involved in seven “hydrogen hub” regions in the US: regions participating in the Department of Energy’s grant process for funding under the Bipartisan Infrastructure Act.

Avangrid last year signed an MoU with Sempra Infrastructure to develop large-scale green hydrogen and ammonia projects powered by renewable sources. The teaser notes that the company is advancing a flagship joint development project and initiating conversations with offtakers.

The operating renewables portfolio for sale includes 8.7 GW of wind power and some 300 MW of solar in Pennsylvania, Colorado, California, New York, Iowa, and North Carolina, along with the 536 MW Klamath cogeneration plant in Oregon. The development pipeline has roughly 14.2 GW of solar and solar-plus-storage capacity and 3.8 GW of wind.

Avangrid declined to comment. Rothschild and Lazard did not respond to requests for comment.

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Mitsubishi laying groundwork for additional equity raise

Mitsubishi Power Americas and its JV partners are preparing to raise additional equity for the ACES Delta project in Utah, as well as for other hydrogen developments in the Americas.

Mitsubishi Power Americas is conferring with its financial partners to raise equity from existing investors in the Advanced Clean Energy Storage (ACES) Delta green hydrogen project in Utah, Senior Vice President, Investment and Business Development Ricky Sakai said in an interview.

Haddington Ventures formed Haddington ESP I and raised $650m in June 2022 from institutional investors to fund projects developed by ACES Delta, which is a joint venture between Mitsubishi Power Americas and Haddington portfolio company Magnum Development.

The investors — AIMCo, GIC, Manulife Financial Corporation, and Ontario Teachers’ Pension Plan Board — have additional rights to increase their collective investment to $1.5bn, according to a press release announcing the deal.

The first phase of the project in Utah will be to produce 100 tons of hydrogen per day. Once that is complete, existing investors can scale up their investment, Sakai said.

ACES Delta rendering

Mitsubishi is involved in several regional hydrogen hubs applying for funding from the US Department of Energy.

Hydrogen capable

Depending on how that $7bn is ultimately allocated, Mitsubishi is interested in replicating the Utah project in other regions, a source familiar with the company said.

MPA and Magnum recently closed on a $504.4m loan guarantee from the DOE for ACES Delta, electrolyzers for which will be supplied by Norway-based HydrogenPro.

ACES Delta will support the Intermountain Power Agency’s IPP Renewed Project — upgrading to an 840 MW hydrogen-capable gas turbine combined cycle power plant using Mitsubishi’s M501JAC gas turbines. The plant will initially run on a blend of 30% green hydrogen and 70% natural gas starting in 2025 and incrementally expand to 100% green hydrogen by 2045.

Mitsubishi is also supplying the hydrogen-capable gas turbines to Entergy’s Orange County Advanced Power Station; to an Alberta coal plant owned by Capital Power; and to J-Power’s Jackson Generation Project in Illinois, which reached commercial operations last year.

Mitsubishi Power

Investing in startups

Mitsubishi is doubling down on a strategy of investing in startup producers and technology in renewable fuels, Sakai said.

Recent investments in the space include: C-Zero, a drop-in decarbonization tech startup in California; Cemvita Factory, a Houston-based synthetic biology firm focused on the decarbonization of heavy industries; Infinium, an electrofuels company innovator in California forming decarbonization solutions for industries in Japan; and Starfire Energy, a modular green ammonia solution provider in Denver.

Series A and Series B valuations for US companies are much higher now than they were a few years ago, Sakai said. Still, the US is the leading climate tech startup ecosystem in the world and provides rich opportunity for capital deployment, Sakai said. Biofuels, SAF and waste-to-energy are leading sectors for MHI investment moving forward.

“We have several hundred of these in the pipeline that we are looking at right now,” he said. “In the next few years, we will increase the number of these portfolio companies.”

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US gas compression firm raising $432m

A Houston-based CNG company is raising money to develop a virtual marine pipeline between the US Gulf Coast and the Caribbean.

Andalusian Energy, a natural gas compression, export and transportation company, is undergoing a $432m capital raise to develop and build a compression and filling station in Plaquemines Parish, Louisiana and export line to Honduras, according to two sources familiar with the matter.

Whitehall & Co. is advising on the transaction, the sources said. Capital allocation will also support the purchase of CNG containers and destination port improvements in Puerto Cortes, Honduras.

Targeted initial equity is $168m, or 40%, according to a teaser seen by The Hydrogen Source. Targeted COD of the project is 2H25.

Gross-cumulative investment could exceed $2bn. The phase I estimated project cost of approximately $421m is expected to be split 40% to permanent equity capital ($168m) and 60% to structured debt ($253m).

Andalusian uses lightweight composite cylinders to ship compressed natural gas (CNG) at ambient temperature to the Caribbean, Central America and eastern Mexico. Marketing materials state the process is lower cost than shipping liquefied natural gas (LNG).

The company has installed a demonstration facility in Choloma, Honduras to import natural gas from CNG.

The Louisiana compression facility will be constructed with two adjacent docks and a site with utility connections. Natural gas will be supplied using a combination of regional pipeline networks including Southern Natural Gas pipeline and High Point Gas Transmission Pipeline. An agreement has been reached to provide interconnection and construction of a 1.5 mile lateral.

Andalusian completed its development capital raise with a strategic investment by MAN Energy Solutions USA, a division of Volkswagen AG, and equity investments by HBG, Progressive Energy and Grupo IDC.

Additional marine engineering, consulting, and ship classification services are being provided by DNV GL and confirmed by the Norwegian Maritime Authority.

Additionally, to monetize spare ship capacity and based on a contract to deliver CNG to an IPP in Honduras, Andalusian has reached an agreement with a global shipping company to transport commercial container cargo between Louisiana and Honduras, the teaser states.

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