Resource logo with tagline

Nikola, KeyState working on Pennsylvania hydrogen supply deal

The companies are working to create Pennsylvania's first low-carbon hydrogen production value chain.

Nikola Corporation and KeyState Natural Gas Synthesis are working towards a definitive agreement to expand the hydrogen supply for Nikola’s zero-emissions heavy-duty fuel cell electric vehicles (FCEVs), according to a press release.

Nikola, a leader in zero-emissions transportation and energy supply and infrastructure solutions, and KeyState, a clean hydrogen and chemicals production facility under development, are working together to create Pennsylvania’s first low-carbon hydrogen production value chain, which includes full integration of commercial carbon capture and storage. The project is intended to represent the transition to lower emissions transportation, chemicals and manufacturing. The parties are working towards a definitive agreement to expand the hydrogen supply for Nikola’s zero-emissions heavy-duty fuel cell electric vehicles (FCEVs).

“Nikola’s participation in the project will allow us to secure sufficient volumes of hydrogen to underpin and accelerate the adoption of zero-emission trucks by unlocking new customer demand and enabling key investments in downstream hydrogen refueling infrastructure in the Mid-Atlantic region,” said Nikola President, Energy, Carey Mendes. “This will be key to our supply strategy and will help develop our refueling network at scale. Additionally, the low carbon, clean hydrogen will allow us to maximize value under the Inflation Reduction Act and future downstream fuel and dispensing incentive programs.”

KeyState plans to supply Nikola with up to 100 tones per day of low carbon hydrogen, which can supply fuel for up to 2,500 Nikola Tre FCEVs and will displace over 51,000,000 gallons of fossil diesel fuel per annum consumed. Once operational in 2026, the 7,000 plus-acre KeyState site is expected to have the capacity to store the CO2 associated with the hydrogen production and will provide strategic reach and access to premium Mid-Atlantic FCEV markets. KeyState will also produce ammonia and urea for industrial and transportation markets, in addition to Nikola’s hydrogen mobility demand.

The KeyState project is expected to integrate carbon capture from high-efficiency autothermal reforming with onsite geological carbon sequestration and onsite close-system sourced natural gas feedstock, all while generating zero-carbon electricity. A true carbon circle will be completed, with the separation of 99% of carbon from the hydrogen in methane and returning this CO2 to deep underground onsite geological storage.

“KeyState has developed a replicable model for low carbon, low-cost hydrogen at large scale production,” said Perry Babb, CEO of project developer KeyState Energy. “This project will have multi-county, multi-generation, economic impact and job creation in a formerly booming Pennsylvania coal and rail region, demonstrating that unprecedented emissions reduction and great long-term job creation are both possible.”

In addition to working toward the hydrogen supply agreement, the parties are working together to develop a liquefaction solution to support the economic and efficient distribution of hydrogen from the project to Nikola’s planned refueling network under development. The parties also plan to support an application as a principal project of the DOE Hydrogen Hub Program representing the full-use hydrogen ecosystem from production through demand.

Unlock this article

The content you are trying to view is exclusive to our subscribers.
To unlock this article:

You might also like...

Imperial to invest CAD 720m to build largest renewable diesel facility in Canada

The project, at Imperial’s Strathcona refinery near Edmonton, is expected to produce more than one billion liters of renewable diesel annually.

Imperial will invest about CAD 720m (USD 560m) to move forward with construction of the largest renewable diesel facility in Canada.

The project at Imperial’s Strathcona refinery near Edmonton is expected to produce more than one billion liters of renewable diesel annually primarily from locally sourced feedstocks and could help reduce greenhouse gas emissions in the Canadian transportation sector by about 3 million metric tons per year, as determined in accordance with Canada’s Clean Fuel Regulation.

Regulatory approval for the project is expected in the near term.

“Imperial supports Canada’s vision for a lower-emission future, and we are making strategic investments to reduce greenhouse gas emissions from our own operations and to help customers in vital sectors of the economy reduce their emissions,” said Brad Corson, Imperial chairman, president and chief executive officer. “The investment at our Strathcona refinery will deliver immediate benefits to the local economy creating jobs and contributing to a lower-emission energy future for our employees, neighbors and communities.”

The renewable diesel project was first announced in August 2021, with the Province of British Columbia supporting this project through a Part 3 Agreement under the BC low carbon fuel standard. A significant portion of the renewable diesel from Strathcona will be supplied to British Columbia in support of the province’s plan to lower carbon emissions. Imperial also intends to use renewable diesel in operations as part of the company’s emission reduction plans.

Imperial’s renewable diesel facility will use low-carbon hydrogen produced with carbon capture and storage technology to help Canada meet low emission fuel standards. Imperial has entered into an agreement with Air Products for low-carbon hydrogen supply and is developing agreements with other third parties for biofeedstock supply. The low-carbon hydrogen and biofeedstock will be combined with a proprietary catalyst to produce premium lower-emission diesel fuel and will reduce greenhouse gas emissions relative to conventional fuels.

Site preparation and initial construction are underway. Renewable diesel production is expected to start in 2025. The project is expected to create about 600 direct construction jobs, along with hundreds more through investments by business partners.

Read More »

Cummins buys remaining 19% of Hydrogenics Corp.

Cummins is now the sole owner of the Ontario-based fuel cell and electrolyzer technologies company.

Cummins Inc. has bought out Air Liquide’s 19% interest in Hydrogenics Corporation, according to a news release.

Cummins acquired the Ontario-based Hydrogenics in 2019, adding key fuel cell and electrolyzer technologies to its portfolio. That acquisition was completed for $15 per share, representing an enterprise value of approximately $290m.

“The buyout reinforces [Cummins’] commitment to these technologies and the increasing importance they will play in creating value for all stakeholders and decarbonizing our world,” the release states. “This move enables continued investment and growth in hydrogen technologies to meet rapidly growing demand.”

Read More »

Verde Clean Fuels to develop lower carbon gas refinery in West Texas

The project would consume natural gas in the pipeline-constrained Permian Basin as feedstock, potentially mitigating the flaring of up to 34 million cubic feet of natural gas per day.

Verde Clean Fuels, Inc. and Cottonmouth Ventures LLC, a subsidiary of Diamondback Energy, have executed a Joint Development Agreement for the proposed development, construction, and operation of a facility to produce commodity-grade gasoline utilizing associated natural gas feedstock supplied from Diamondback’s operations in the Permian Basin.

The JDA provides a pathway forward for the parties to reach final definitive documents and Final Investment Decision for the proposed project, according to a news release. The JDA frames the contracts contemplated to be entered into between the parties, including an operating agreement, ground lease agreement, construction agreement, license agreement and financing agreements as well as conditions precedent to close, such as FID.

The expectation for the project is to produce approximately 3,000 barrels per day of fully-refined gasoline utilizing Verde’s patented STG+® process. By consuming natural gas in the pipeline-constrained Permian Basin as feedstock, the proposed project could demonstrate the ability to mitigate the flaring of up to 34 million cubic feet of natural gas per day, while also producing a high-value, salable product.

“The Verde Clean Fuels team is incredibly excited to finalize this JDA with Diamondback Energy with the goal to produce gasoline from natural gas in the Permian Basin,” said Ernie Miller, CEO of Verde. “This arrangement brings compounding economic and environmental benefits to West Texas. We believe that the ability to de-bottleneck midstream constraints along with the potential to reduce flaring of natural gas, while creating less carbon intensive gasoline, is of paramount interest to natural gas producers.”

“This agreement, with the first planned project in Martin County, fits perfectly with Diamondback’s strategy to decarbonize the oil field while ensuring a return for our investors,” said Kaes Van’t Hof, President of Diamondback. “Additionally, the scalability of the project is incredibly exciting, with similar natural gas-to-gasoline facilities possible across Diamondback’s locations in West Texas. We are proud to partner with Verde to bring this technology to the market.”

The proposed facility, which is to be located in Martin County, Texas in the heart of the Permian Basin, could serve as a template for additional natural gas-to-gasoline projects throughout the Permian Basin and other pipeline-constrained basins in the U.S., as well as address flared or stranded natural gas opportunities internationally.

Read More »
exclusive

California renewables developer taps advisor for capital raise

Utility-scale solar and storage developer RAI Energy has tapped an advisor for a capital raise. The company is evaluating co-development conversion for green ammonia production at projects in Arizona and California.

RAI Energy, the utility-scale solar and storage developer, has hired an advisor as it pursues a capital raise.

The company is working with Keybanc Capital Markets in a process to raise up to $25m, according to two sources familiar with the matter.

In an interview, RAI Energy CEO and owner Mohammed S. Alrai said the company “is excited about having [Keybanc] act as our financial advisors on this fundraising round.” He noted that RAI is first a solar-plus-storage developer and is approaching investors as such.

However, RAI is evaluating co-development conversion for green ammonia production at two of its project sites in Arizona and California, he said.

“Hydrogen is a natural next step,” Alrai said of his company, adding that the end-product would be green ammonia for use in fertilizer production and industrial sectors. Pure hydrogen could also be kept for use in transportation.

A variety of partnerships would be required to develop hydrogen at RAI’s solar sites, Alrai said. The company could need advisory services to structure those partnerships.

RAI is working with engineers on the hydrogen question now and is open to additional technology and finance advisory relationships, he said. The company is also evaluating several electrolyzer manufacturers.

“It’s an open book for us right now,” Alrai said of hydrogen production. “We’re always open to talking to people who can help us.”

For hydrogen project development, RAI would seek project level debt and equity similar to its solar developments, Alrai said. Early-stage project sites in Colorado and New Mexico could also be candidates for hydrogen co-development.

Keybanc delined to comment for this story.

Read More »
exclusive

EnCap’s Shawn Cumberland on the fund’s approach to clean fuels

Cumberland, a managing partner with EnCap Energy Transition, discusses how the clean fuels sector compares to the emergence of other new energy technologies, and outlines the firm’s wait-and-see approach to investment in hydrogen and other clean fuels.

EnCap Energy Transition, the energy transition-focused arm of EnCap Investments, is evaluating scores of opportunities in the hydrogen and clean fuels space but doesn’t feel the need to be an early mover if the risk economics don’t work, Managing Partner Shawn Cumberland said in an interview.

Houston-based EnCap prefers to invest in early stages and grow companies deploying proven technologies to the point that they’re ready to be passed onto another investor with much deeper pockets. There are hundreds of early-stage clean fuels companies looking for growth equity in the space, he said, but the firm believes it’s not necessary to deploy before the technology or market is ready.

Given the fund’s strategy of investing in the growth-equity stage, EnCap gains exposure to a niche set of businesses that are not yet subjected to the broader financial markets.

For example, when EnCap stood up Energy Transition Fund I, a $1.2bn growth capital vehicle, the manager piled heavily into storage, dedicating some $600m, more than half of the fund, to the sector.

“That was at a time when all we saw were some people putting some really dinky 10 MW and 20 MW projects online,” he said. “We absolutely wanted to be a first and fast mover and saw a compelling opportunity.”

The reasons for that were two converging macro factors. One was that the battery costs had come down 90% because of EV development. Meanwhile, the demand for batteries required storage to be built out rapidly at scale. So, that inflection point – in addition to the apparent dearth of investor interest in the space at the time – called for early action.

“We were sanctioning the build of these things with no IRA,” Cumberland said.

‘If it works’

To be sure, EnCap is not a technology venture capital firm and waits for technologies to be proven.

As such, the clean fuels sector could end up being a longer play for EnCap, Cumberland noted, but the fund continues to weigh whether there will be a penalty for waiting. In the meantime, regulatory issues like IRS guidance on “additionality” for green hydrogen and the impact of the EU’s rules for renewable fuels of non-biological origin should get resolved.

Still, market timing plays a role, and the EnCap portfolio includes a 2021 investment into Arbor Renewable Gas, which develops and owns facilities that convert woody biomass into low-carbon renewable gasoline and green hydrogen.

Cumberland also pointed to EnCap’s investment in wind developer Triple Oak Power, which is currently for sale via Marathon Capital. That investment was made when many industry players were moving toward solar and dropping attention to wind.

Now, clean fuels are trading at a premium because of investor interest and generous government incentives for the sector, he noted.

“Hydrogen, if it works, may be more like solar,” Cumberland said, describing the hockey-stick growth trajectory of the solar industry over 15 years. If the industry is cost-competitive without subsidies, there will be a flood of project development that requires massive funding and talented management teams

“We won’t be late to the party,” he said.

Read More »

Exclusive: Plug Power enlists bank to evaluate financing options

The cash-burning company is working with a bulge-bracket American bank to evaluate debt financing options to help stave off a liquidity crisis.

Plug Power is working with Goldman Sachs to evaluate a capital raise in the form of debt financing to shore up its balance sheet, sources said.

The New York-based company recently said it was at risk of a liquidity crisis in the next 12 months if it is not able to raise additional capital, noting it was exploring various options for bringing in financing.

Its total cash and cash equivalents as of September 30 stood at $567m, representing a decline of $580m for the quarter, according to SEC filings. The company also has nearly $1bn of restricted cash balances stemming from sale-leaseback transactions, of which $50m becomes available per quarter.

In a shareholder letter and on its 3Q23 earnings call, executives outlined the financing options that are on the table for the company, including a debt raise, funding from the Department of Energy’s Loan Programs Office, and bringing in project equity partners for its facilities.

The company is “evaluating varied debt financing solutions to support [its] growth,” according to the shareholder letter. CFO Paul Middleton added on the call that they’ve had “some expressions of offers for ABL-like facilities” as well as restricted cash advance facilities. 

CEO Andy Marsh said the company would need to raise between $500m – $600m, according to a news report from Barron’s.

Representatives of Plug Power and Goldman Sachs declined to comment.

Plug is also working towards a conditional commitment from the DOE Loan Program Office to finance plants in its green hydrogen network. 

“The framework that we’re working on with them is a $1.5bn platform that would fund our green plants and would fund from construction phase onwards,” CFO Middleton said, adding that the funding could amount to as much as 80% of the projects. 

Middleton said he expected the DOE loan, if granted, would start funding in early 2Q24, and could even be used to back lever some of its existing plants in Texas and New York.

The company’s stock traded today with a $2.34bn market cap, while its outstanding debt consists of a $200m convertible note issued in 2020.

The notes traded around 130 cents of par before Plug’s going concern announcement, and subsequently dropped to trade in the high-70s, with quotes this week in the 80s.

Read More »

Welcome Back

Get Started

Sign up for a free 15-day trial and get the latest clean fuels news in your inbox.