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OCOChem raises $5m seed round

The Washington-based startup has partnered with investor INPEX to evaluate collaboration opportunities on the transportation of CO2 and clean hydrogen.

Carbon conversion startup OCOchem has raised $5m in Seed funding from lead investor TO VC, according to a news release.

Japan’s INPEX Corp., the LCY Lee Family Office, and MIH Capital Management also participated in the round. They join Halliburton Labs, Halliburton Company’s energy and climate tech accelerator, which has been supporting OCOChem since 2021.

The Richland, Wash.-based company is commercializing a way to make highly versatile carbon-neutral platform molecules by electrochemically converting recycled CO2, water and clean electricity into formic acid and formate chemicals, for use in agricultural and industrial applications.

“Using renewable energy, OCOChem’s technology enables the conversion of water and carbon dioxide into formic acid, which is stable under ambient conditions.” The release states. “The formic acid can also be converted to useful carbon and hydrogen components with minimal energy input.”

In addition to investing in the company, INPEX, Japan’s largest oil and gas production company, has partnered with OCOchem to evaluate collaboration opportunities leveraging the company’s technology to transport CO2 and clean hydrogen.

OCOchem will use the new funds to scale its modular carbon conversion technology to industrial proportions and build a pilot plant for commercial demonstration operations.

“Using OCOchem technology and clean electricity, we can now do what plants and trees have been able to do for billions of years — convert CO2 and water into useful organic molecules using clean energy. But unlike photosynthesis, we can do it faster and more efficiently at a lower cost, using much less land,” said Todd Brix, co-founder and CEO of OCOchem, in the news release.

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Electrolyzer startup EVOLOH raises $20m Series A

The raise for California-based EVOLOH was led by Engine Ventures with participation from NextEra Energy Resources and 3M Ventures.

EVOLOH, Inc., a cleantech company that manufactures electrolyzer stacks for hydrogen production, today announced it has raised an oversubscribed $20 million Series A round led by Engine Ventures. Additional participating investors include a subsidiary of NextEra Energy Resources and 3M Ventures.

The capital will be used to expand the company’s scalable, high-throughput manufacturing technology and introduce additional capabilities for its NautilusTM platform of advanced liquid alkaline electrolyzers, according to a news release.

EVOLOH is making low-carbon hydrogen globally accessible by revolutionizing the manufacturing of electrolyzers. While incumbent electrolyzers are notoriously expensive and difficult to produce, transport and install, and rely on politically and environmentally challenging supply chains, EVOLOH’s manufacturing facility will offer an 80% reduction in capital investment and footprint.

“This round of funding positions EVOLOH to lead the electrolyzer manufacturing market by transforming electrolyzer stacks into affordable, efficient hardware commodities made with 100% local supply chains,” said Dr. Jimmy Rojas, founder and CEO of EVOLOH.

Electrolyzer stacks, the core component of electrolyzers, are offered via EVOLOH’s NautilusTM platform and made from abundant materials like steel, plastic and aluminum and do not require precious metals or rare earth materials. To reduce the CAPEX and OPEX of hydrogen plants using EVOLOH’s Advanced Liquid Alkaline technology, the NautilusTM stacks use low-cost power electronics and do not require corrosive electrolytes. EVOLOH’s NautilusTM stacks are very compact, and can be built into modules of 24 megawatts, making them ideal for large industrial applications.

Katie Rae, CEO and Managing Partner at Engine Ventures and EVOLOH Board member, added, “EVOLOH has a timely and massive opportunity to not only commercialize better and more affordable electrolyzers, but also introduce a faster and more sustainable electrolyzer manufacturing platform. With an impressive founding team and early partnership activity, EVOLOH is a strong addition to Engine Ventures’ portfolio of cleantech and advanced manufacturing companies.”

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Strategic RNG ventures ramping up

A pair of joint ventures to develop RNG projects in the US – between Clean Energy Fuels Corp. and bp and TotalEnergies, respectively — are expected to make first profits in the second half of this year, as projects come online and begin to generate environmental credits.

Over the next 12 to 24 months, investments made by Clean Energy Fuels and its global JV partners TotalEnergies and bp will start realizing earnings for the company, president and CEO Andrew Littlefair said in an earnings call today.

When these projects come online they have a period of nine to 12 months where the project is producing gas but not monetizing state and federal credits.

“This ramp-up period will have a negative drag on our financials in 2024, until we can monetize the RNG produced with environmental credits,” Littlefair said, adding that the company plans to store RNG until the credits can be claimed.

To date Clean Energy Fuels has invested $238m in the joint ventures established three years ago, Littlefair said. Another $35m is to be deployed into additional dairy RNG projects.

Clean Energy Fuels put $68m into its dairy RNG venture with bp late last year, Robert Vreeland, Clean Energy’s CFO, said in the call; $198m of cash infused into that JV is now all earmarked for dairy RNG development.

M&A can play a factor in Clean Energy Fuels’ RNG growth, Vreeland said. The company is open to acquiring projects to accelerate production volumes.

The RNG ventures will start producing revenues in the second half of this year, Vreeland said; 100% of net losses will occur in the first half of the year.

“You see the effects of the dairy-RNG joint ventures being in ramp-up mode,” Vreeland said. “We’ll start to see the effects of monetizing the RNG projects in the second half of the year.

A large project in Idaho with 37,000 cows will be complete in late 2024 or early 2025, Vreeland said. That project alone will be responsible for more than half of the earnings drag in 2024.

Six greenfield projects have completed construction and are in final commissioning, Littlefair said. Two projects are in or near construction and the company continues to evaluate new projects.

Clean Energy has the largest number of RNG fueling stations in the US, serving customers like Amazon. Some of the stations are customer owned and operated by Clean Energy, namely in Texas, Ohio and California.

Cummins new X15N engine will allow new fleets to adopt RNG, providing a catalyst for Clean Energy’s growth in commercial trucking and OEMs, he said.

Littlefare called the recent passage of a clean fuels standard in New Mexico a major win for RNG adoption, and noted positive signs that midwestern and northeastern states could pass their own standards soon.

Stonepeak committed $400m to Clean Energy Fuels in DecemberThe company recently made a $10m commitment to climate solutions start-up Rimere.

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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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Ambient Fuels evaluating hydrogen project acquisitions

The company is well capitalized following a $250m equity investment from Generate Capital and is now opportunistically reviewing an initial slate of project M&A offerings.

Following an equity investment from Generate Capital, Ambient Fuels has begun to evaluate potential acquisitions of hydrogen projects that are under development, CEO Jacob Susman said in an interview.

“We’ve seen our first project M&A opportunities come through in the last 10 days or so,” Susman said.

Three projects for sale involve land positions, he said. Those that appear most attractive have a clear line of site to offtake or a strong approach to renewable power supply. Two out of three are not on the Gulf Coast.

“In no instance are these brokered deals,” Susman said.

Following the $250m equity investment from Generate Capital, Ambient is capitalized for several years and has no immediate plans to seek debt or tax equity, Susman said. The transaction was done without the help of a financial advisor.

Moving forward Ambient is open to JV formation with a partner that can help access offtake and renewable power, Susman said. Those points will drive future capital investment in the company and were resources that Generate brought to the table besides money.

According to ReSource‘s project tracker, Ambient is involved in at least two of the hubs that were encouraged by the DOE to submit a final application: California’s Alliance for Renewable Clean Hydrogen Energy Systems (ARCHES), and the Port of Corpus Christi Green Hydrogen Hub.

In 2021 Ambient completed a funding round led by SJF Ventures. Several other VC funds and angel investors also participated.

In January The Hydrogen Source reported that Ambient was in exclusivity with an equity provider.

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Carbon capture OEM eyeing US for manufacturing plant

A Vancouver-based maker of carbon capture equipment is considering building a manufacturing plant in the US. Its number one target market: gray hydrogen producers.

Svante, a carbon capture original equipment manufacturer based in Vancouver, is eyeing the US as it seeks to expand its market presence across North America.

The company has raised sufficient capital to construct its first plant in Vancouver, where it will make specialized filters and contactor machines used in the carbon capture and removal processes, Svante CEO Claude Letourneau said in an interview.

Within several years, Svante is planning to build a second manufacturing facility in the United States, closer to where its customers are located and where CO2 can be monetized, Letourneau said.

Svante raised $318m last year in a series E fundraising round led by Chevron New Energies. It will spend approximately $100m to build the Vancouver facility.

Letourneau says the company’s principal target market in North America is existing gray hydrogen facilities that use steam methane reforming, of which there are around 1,000. The cost of adding carbon capture to existing SMR plants brings the cost of blue hydrogen from $1.50 per kilogram to around $2 per kilogram, according to Letourneau, compared to green hydrogen that will cost between $3 – $6 per kilogram with a similar carbon footprint.

“It’s a good solution,” he said.

Optimizing costs

As an original equipment manufacturer, Svante has partnerships with some of the largest EPC companies in the world for carbon capture projects: Kiewit in North America, Technip in Europe, and Samsung in Asia.

“When you have a technology that you want to take to market, you need to get the benefit of a close relationship with these EPC contractors if you want to deploy quickly and reduce costs,” he said.

He noted that the filters and contactors typically make up between 10% – 15% of the cost of a carbon capture plant, while the rest is in the balance of plant. Filters typically have a lifespan of three to five years, he said, allowing for additional recurring revenues for Svante after the initial installation.

Svante is working on five to six projects with Kiewit in North America that are in the pre-FEED and FEED stages, with FIDs expected by the end of next year. It is also working with Linde on a Department of Energy-sponsored pre-FEED carbon capture project for Linde’s Port Arthur gray hydrogen facility.

Additionally, Svante has a partnership with Swiss-based Climeworks for direct air carbon capture technologies.

“We want to be for carbon capture what GE Aerospace is for the jet engine industry,” he said, using an analogy to a market in which there are only several OEMs in a large, consolidated industry.

Target market

There are around 10,000 emitting plants globally that need carbon capture in order to decarbonize; meanwhile there are only 40 carbon capture facilities in operation, according to Letourneau. Svante’s Vancouver plant will be able to make equipment for around 10 plants per year, but eventually the company would like to scale up to between 50 – 100 plants per year with additional manufacturing capacity.

“This is a big problem we’re trying to solve here,” he said.

To build the second plant in the US, the company will explore using project finance debt and seek to take advantage of US government incentives for clean energy manufacturing. The recently enhanced carbon capture tax incentives – of $85 per ton of CO2 captured versus $50 previously – will also benefit Svante’s carbon-emitting customers.

In addition to gray hydrogen, the company is targeting carbon emissions from oil and gas refining as well as pulp and paper mills.

Use cases

Svante’s modular solid sorbent technology can be inserted to capture flue gas at the end of the refining process instead of inside the plant, offering fewer disruptions to existing systems. Svante then concentrates the CO2 into a pipeline grade for storage or industrial use.

“Nobody makes these filters in the world,” Letourneau continued, “so if I want to convince somebody to give Kiewit and ourselves a purchase order for $300m to build a 1 million-ton-per-year plant, they need to see that we have a manufacturing plant to make the filters, they need to see that we have the size of the contactor done at commercial size, and they need to see that we’ve done all the engineering studies to justify that this project can be monetized, economical, and the like.”

The company is sufficiently capitalized to advance the projects in its pipeline, and is focused on completing the Vancouver plant and garnering purchase orders in order to become profitable. A potential future exit could come in the form of an IPO or sale to a larger player, Letourneau said.

“We understand the market is quite buoyant and probably a few large companies are going to try to dominate, and they may decide they want to acquire a company like us, so an M&A is a possible exit in the next five years, depending on the conditions,” he said.

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Inside Intersect Power’s green hydrogen plans

California-based renewable energy developer Intersect Power anticipates huge capital needs for a quartet of regional energy complexes co-locating wind and solar with green hydrogen production in the Texas Gulf Coast, California and the American West.

Intersect Power, a solar developer that completed a $750m capital raise last year, is developing four large-scale green hydrogen projects that could eventually be spun off into a separate company, CEO Sheldon Kimber said in an interview.

Four regional complexes of 1 GW or more, co-located with renewables, are in development, he said. The first phases of those, totaling several hundred megawatts, will come online between 2026 and 2028.

Initial offtake markets include transportation, sustainable aviation fuel, and hydrogen for industrial use, Kimber said. Ultimately Intersect is aiming to serve ammonia exporters in the US Gulf Coast, particularly those exporting to Japan, Kimber said, adding that the company could contract with ammonia producers. He recently wrapped up a nine-day, fact-finding trip to Japan to better understand what he believes will be the end market for Intersect’s green ammonia.

“If you don’t know who your customer’s customer is, you’re going to get a bad deal,” Kimber said.

Intersects projects under development involve behind-the-meter electrolysis, co-located with Intersect’s wind and solar generation plants. In 2021 the company signed an MOU with electrolyzer manufacturer Electric Hydrogen. The contract is for 3 GW.

Intersect controls the land and is in the process of permitting the four projects, located in Texas, California and another western US location that Kimber declined to name. The primary focus now is commercial development of the offtake and transportation, he said.

‘Boatload of equity’

Kimber said the company will be ready to announced details of the projects when they are ready to seek financing. He estimates that upwards of $12bn will need to be raised for the package of complexes.

“There’s going to be an enormous need for capital,” Kimber said. Debt will make up between 60% and 90% of the raising, along with “a boatload of equity,” he said. Existing investors will likely participate, but as the numbers get bigger new investors will be brought on board.

Intersect has worked with BofA Securities and Morgan Stanley on past capital raise processes, and also has strong relationships with MUFG and Santander.

Moving forward the company could have a broader need for advisory services and could lend knowledge of the sector in an advisory capacity itself, Kimber said.

“The scope and scale of what we’re doing is big enough and the innovative aspect of what we’re doing is advanced enough that I think we have a lot we can bring to these early-stage financings,” Kimber said. “I think we’re going to be a good partner for advisory shops.”

In the short term Intersect has sufficient equity from its investors and is capitalized for the next 18-to-24 months, Kimber said. Last summer the company announced a $750m raise from TPG Rise Climate, CAI Investments and Trilantic Energy Partners North America.

“People don’t want to pay ahead for the growth in fuels,” Kimber said, adding that reaching commercial milestones will build a compelling valuation.

Intersect could spin off its hydrogen developments to capitalize them apart from renewables, Kimber said.

“Every single company in this space is looking at that,” he said. “Do you independently finance your fuels business?”

Avoiding the hype

Right now the opportunity to participate in hydrogen is blurry because there is so much hype following passage of the IRA, Kimber said. Prospective investors should be focused on picking the right partners.

“What you’re seeing right now is everybody believing the best thing for them,” Kimber said, noting that his company has decided to keep relatively quiet about its activities in the clean fuels space to avoid getting caught up in hype. “The IRA happened, and every electrolyzer company raised their prices by fifty percent.”

Of those companies that have announced hydrogen projects in North America, Kimber said he believes only a handful will be successful. Those companies that have successfully developed renewables projects of more than 500 MW are good candidates, as are companies that have managed to keep a fluid supply chain with equipment secured for the next five years.

“That is a very short list,” he said.

Lenders on the debt side will want to start determining how projects will get financed, and which projects to finance, in the next 18 months, Kimber said.

Finding those who have been innovating on the front-end for years and not just jumped in recently is a good start, Kimber said.

“Hydrogen will happen, make no mistake,” Kimber said. He pointed to the recent European directive that 45% of hydrogen on the continent be green by 2030 and Japan’s upcoming directive to potential similar effect. Once good projects reach critical points in their development they will start to trade, probably in late 2024, he said.

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