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Novelis exploring hydrogen fuels for US aluminum operations

Novelis has partnered with Southern Company's Alabama subsidiary to decarbonize its operations, starting with the aluminum maker's new Bay Minette, Alabama, plant, which aims to be carbon neutral for scope 1 and 2 greenhouse gas emissions.

Novelis Inc., an aluminum solutions provider, and Southern Company have announced plans to partner on decarbonization efforts.

Their initial focus is on Novelis’ new Bay Minette, Alabama, plant, which aims to be carbon neutral for scope 1 and 2 greenhouse gas emissions. The recycling and rolling plant is currently under construction to help meet the growing demand for more sustainable beverage packaging and will support the automotive industry in North America, including the increase in electric vehicle production.

Novelis will work with Southern Company subsidiary Alabama Power to provide the Bay Minette project with renewable energy to reduce its scope 2 greenhouse gas emissions. By participating in Alabama Power’s Renewable Subscription Program, Novelis will directly support the creation of two, new 80-megawatt solar power generation plants in Alabama that will cover over half of the Bay Minette facility’s renewable energy needs while avoiding 192 kilotons of CO2 emissions per year.

Novelis and Southern Company will also collaborate to advance new technologies to reduce Novelis’ Scope 1 carbon emissions, including hydrogen fuels, carbon capture, energy storage and electrification of thermal processes. Through their corporate venture and R&D teams, Novelis and Southern Company are exploring projects for the Bay Minette facility, as well as other Novelis sites in North America.

“At Novelis, we believe that strong partnerships like this are critical to advancing our commitment to the environment, the economy and the communities in which we operate,” said Suzanne Lindsay-Walker, Novelis’ Vice President of Sustainability. “Partnering with Southern Company and Alabama Power on renewable energy solutions, such as solar power, and exploring new technologies for carbon reduction will help us as we seek to meet our goals to reduce carbon emissions by 30% by 2026 and be carbon neutral by 2050 or sooner.”

“The future of clean energy depends on unlocking these types of partnerships,” said Chris Cummiskey, Executive Vice President and Chief Commercial and Customer Solutions Officer for Southern Company Services. “Whether it’s with new or existing companies, finding ways for Novelis and Southern Company to mutually identify and test innovative technologies will be key to advancing the availability of renewable power and reaching our respective decarbonization goals.”

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Capital Power appoints new CEO

The Canadian-based power producer has appointed Avik Dey as its next CEO.

Capital Power Corporation’s board of directors has unanimously selected Avik Dey to be its next President and CEO and become a member of the board of directors, effective May 8, 2023.

The appointment follows the planned retirement of Brian Vaasjo who will support Dey to ensure a seamless transition, according to a news release.

The selection follows a rigorous North American search process conducted by a special committee of the Board, with the support of a leading executive recruiting firm. The board met with a wide range of high-quality internal and external candidates.

“Avik is a highly capable leader with deep experience in the energy and power sectors and has built a number of successful companies and teams,” said Board Chair, Jill Gardiner. “I am confident that through his knowledge, passion, and creativity he will inspire the Capital Power team to accelerate the company’s current strategic drive towards net zero. The Board looks forward to working with Avik as we continue to engage with our stakeholders and grow shareholder value. Avik will champion the team, driving the vision with our people who will own the outcomes well into the future.”

Dey spent more than two decades in executive, operational, investing and strategic advisory roles. He has invested over $12bn in growing long term value for energy and energy transition companies. Most recently Mr. Dey held key executive leadership roles with The Carlyle Group, NOVA Chemicals, and Canada Pension Plan Investment Board. Prior to these roles, he was President & CEO of Remvest Energy Partners in Houston, Texas and a Founder serving as Chief Financial Officer of Remora Energy.

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Exclusive: CCUS developer advancing $600m Louisiana sequestration hub

Mercuria Energy-backed CapturePoint this week announced its first 45Q tax credit direct transfer deal for CO2 captured from an ethanol facility. We spoke to CEO Tracy Evans about the deal and what’s next for the CCUS developer, including potentially raising $600m in project finance for a Louisiana carbon capture hub.

CapturePoint LLC recently closed on its first 45Q tax credit direct transfer deal for CO2 captured from an ethanol facility in Kansas, a mechanism that will be a major component of the company’s earnings amid growth in CO2 capture and sequestration.

Meanwhile, the Allen, Texas-based CCUS developer could seek to raise approximately $600m as soon as next year for a sequestration hub in Louisiana, for which it has applied for two Class VI sequestration wells from the EPA, CEO Tracy Evans said in an interview.

Under the direct transfer deal deal, CapturePoint will transfer 45Q tax credits generated at the Arkalon ethanol facility in Liberal, Kansas to an unnamed buyer for 12 years. Since CapturePoint transports the CO2 to injection wells used for enhanced oil recovery, the company receives the 45Q benefit of $60 per ton for EOR activities.

At full capacity, the ethanol plant produces 250,000 metric tons of CO2 annually, but usually undergoes two turnaround processes per year, which reduces output. 

The Arkalon facility had a previously installed carbon capture unit that was re-built by CapturePoint, a project that was funded from the company’s existing cash flows from its EOR business as well as draws on its $100m borrowing line, Evans said. Under 45Q, existing carbon capture facilities of which 80% or more are rebuilt can qualify for the tax credits.

The direct transfer of the 45Q tax credits was done at a discount, though Evans declined to disclose the amount.

Additionally, CapturePoint is capturing and removing CO2 from CVR’s Coffeyville fertilizer plant, also in Kansas, for which it completed a tax equity deal last year that opened up a stream of revenues.

Class VI wells

Both the Coffeyville and Arkalon plant operations are owned by the CapturePoint oil company, acquired along with oil and gas operations in 2017.

But CapturePoint has launched a carbon management subsidiary, CapturePoint Solutions, which will focus on industrial emissions to Class VI sequestration wells.

The subsidiary could seek to raise around $600m as soon as next year to build out a planned hub, the Central Louisiana Regional Carbon Storage Hub (CENLA), Evans said. The capital expenditure for the project includes a pipeline, five to seven capture facilities, and the sequestration site.

“We would love to do project finance, but we’d like to potentially start spending money now” versus waiting for a permit to construct, he said. “That seems to be the gating item for a lot of the project finance guys.”

He expects the project will take around two years to construct, thus to keep it moving, the company could spend money now on things like right-of-way and equipment using its own cash flow, he added, along with equity commitments from existing investors.

“The CapturePoint Solutions model is essentially based on only 45Q revenues,” Evans said. “Whether we’re taking them or whether somebody is paying us the transportation and sequestration fee, it’s still coming from the 45Q credits.”

CapturePoint Solutions has applied for three Class VI wells, two in Louisiana associated with the CENLA hub, and another in Oklahoma. Evans expects to have drafts of the Class VI wells from the EPA by late this year at the earliest, but Louisiana’s recently established primacy over the Class VI process could speed things up.

Evans said the company has already signed up 1.5 million tons of CO2 emissions at the CENLA hub, where the proposed sites each have 7.5 million tons of sequestration capacity annually.

“We’re still in a process of signing up emitters,” he said. “There’s additional capacity in the area, so we could easily expand to a third site.”

CapturePoint Solutions has also signed an agreement with Azure for a greenfield SAF plant in Kansas, where CapturePoint Solutions will tie in and take away CO2 to its planned Oklahoma site.

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Air Products gets board approval for expanded LA blue hydrogen complex

The company has expanded the scope and expected cost of the project, which now stands at $7bn. It is considering a project finance model to build the facility.

Air Products has received final investment approval for an expanded scope and cost of its planned blue hydrogen energy complex in Louisiana, with the cost growing to $7bn from $4.5bn previously, CEO Seifi Ghasemi said today. 

Pennsylvania-based Air Products unveiled the project in October 2021. At an expected cost of $4.5bn, the complex as announced would have produced more than 750 million standard cubic feet per day of blue hydrogen for Air Products’ pipeline customers in the US Gulf Coast and for global hydrogen markets.

The Inflation Reduction Act was passed while planning for the facility was underway. Meanwhile, additional support for hydrogen in Europe and Japan led the company to consider future expansion at the Louisiana project.

“It is important that we pre-invest in the infrastructure needs for future expansion now, so that when the demand increases rapidly, as we expect it to, we will be able to bring the next phase of this project on stream as fast as possible,” Ghasemi said.

Beyond the increased scope of the project, costs have gone up due to inflation over the last three years as well as future inflation. The company is also including funds to cover the interest on capital used to build the plant.

The largest bucket of the $2.5bn increase is inflation, at about $1bn, Ghasemi said in response to a question.

Project finance

As the company signs long-term contracts to sell the resulting products from the Louisiana facility, the company will consider – as it did with the precedent-setting NEOM green hydrogen facility – levering the project, leading to cash outflows for the project of between $2bn – $3bn to fund the company’s equity portion.

“We have the capacity to spend our own cash, but we would rather project finance these projects so that we have more cash for future projects,” Ghasemi said.

“We see significant demand for the product that this plant will produce,” he said.

Ghasemi expects to garner a premium for the clean products that will allow for a double-digit return, with a presentation noting a greater than 10% IRR on the project.

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Exclusive: Northeastern offshore wind sale kicks off

A major European energy firm has retained a banker and launched a process to sell a large portfolio of offshore wind developments in the northeastern US.

Ocean Wind I & II, Orsted’s offshore wind developments in New Jersey amounting to 2.5 GW of capacity, are for sale via an auction, according to two sources familiar with the matter.

Jefferies is the exclusive financial advisor on the sale, which is codenamed Project Hummer, the sources said. The process launched this month.

Denmark-based Orsted had previously halted development of Ocean Wind I and II as impairments on the projects climbed above $5bn. And the sale process comes amid the firm’s broader pullback from the offshore wind sector.

In an earnings call this month, Orsted CEO Mads Nipper said the company had plans to sell up to DKK 115bn (USD 16.6bn) in assets by 2030 as it accelerates divestments to boost its balance sheet.

Orsted also said it would withdraw from offshore wind markets in Norway, Spain and Portugal and cut its target for 2030 installed renewable capacity from 50 GW to 35 – 38 GW.

The company has a preference for a new owner acquiring 100% of both Ocean Wind leases and all associated development assets, the sources said.

Targeted COD for the two developments is 2029 and 2031, while estimated capex for each is USD 7.1bn (98 turbines) and USD 7.7bn (82 turbines), respectively.

New Jersey has accelerated offshore wind solicitation schedules and has recently awarded two contracts for 2.4 GW at $112.50/MWh and 1.3 GW at $131.00/MWh compared to the $98.10/MWh for Ocean Wind I and $84.03/MWh for Ocean Wind II awarded back in 2019 and 2021.

Orsted and Jefferies did not respond to requests for comment.

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exclusive

Buckeye Partners closes acquisition of Bear Head Energy

Buckeye Partners has closed on the acquisition of Bear Head Energy.

Buckeye Partners has closed on the acquisition of Bear Head Energy, Inc., according to a news release.

Bear Head is developing a large-scale green hydrogen and ammonia production, storage and export project in Point Tupper, Nova Scotia with hydrogen electrolyzer capacity of more than 2 GW.

As part of the project’s phased development, Buckeye plans to partner with on-shore and off-shore renewable energy developers to build out a large-scale green hydrogen hub for Atlantic Canada.

Buckeye established its Alternative Energy operating segment as a clean energy business that focuses on the development, construction, and operation of alternative energy projects, including hydrogen, wind, and solar-powered energy solutions.

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Renewable hydrogen developer to launch series A round next month

A Colorado-based renewable hydrogen developer has hired an advisor and will launch a series A funding round next month.

NovoHydrogen, the Colorado-based renewable hydrogen developer, will launch a series A capital raise in the middle of March to take on a new investor for project development and hiring, CEO Matt McMonagle said in an interview.

The company has hired GreenFront Energy Partners to run the process, McMonagle said.

NovoHydrogen builds its projects onsite with customers, as close to end use as possible, he said. The company serves transportation (heavy road transport, shipping and aviation), industrial (cement, glass, metal, steel, food, etc.) and power (peaking power and diesel generator replacement). Most of Novo’s customers are users of grey hydrogen looking to decarbonize. In the case of cement, they are looking to replace diesel for their trucks and coal and natural gas for their kilns.

“We first look to see if we can put our projects on our customer sites and make it there,” McMonagle said. “If we can’t do that, we’ll do offsite, but we still try to be as close to customers as possible to minimize that midstream component or distribution component.”

About 30 projects are in development in the US, ranging from a few megawatts to hundreds of megawatts, McMonagle said. NovoHydrogen’s most active markets are the West coast, Northeast, Appalachia, Texas and the Rocky Mountains, though the company is not geographically constrained.

The company aims to begin construction on its first projects by the end of this year, possibly early next year, McMonagle said. The first project could reach COD in 2024.

NovoHydrogen recently announced that it has closed its seed funding round and appointed four executives to its board of directors. Each of those executives represent an investor that participated in the seed round, McMonagle said.

The new board appointees are: Jeremy Avenier, an active investor at Ohmium International; Peyton Boswell, managing partner at Woodfield Renewable Partners; Bruno Franco, partner at Pacífico Energia and managing partner at PWR Capital; and Joseph Malchow, a managing partner at Hanover (a Silicon Valley VC), board member and investor in Enphase and board member and investor in Archaea.

More money

“We will certainly need more money as our projects mature,” McMonagle said. “I do not have the hundreds of millions of dollars on my balance sheet to build these projects.”

An ideal investor will bring accretive capabilities in hydrogen, in a field like value chain equipment or delivery, to the table, McMonagle said.

NovoHydrogen plans to be a long-term owner-operator of its projects, McMonagle said. That is an important point for customers: that the company is not going to sell the project and not care how the next owner operates.

“We want to earn future business from these customers,” McMonagle said, adding that most of them are transitioning piecemeal.

NovoHydrogen and TigerGenCo in November said they would advance development of green hydrogen capacity to reduce reliance on natural gas at the Bayonne Energy Center located in New Jersey. NovoHydrogen will develop and operate the hydrogen production facility to reduce Bayonne’s carbon emissions.

TigerGen owns the power plant and is the offtaker in that project. Ohmium International is providing the PEM electrolyzers in that project. McMonagle said the company may use other electrolyzer providers for future projects.

The company is also a partner in the Aliance for Clean Hydrogen Energy Systems (ARCHES) for the California DOE Hydrogen Hub submission.

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