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Pennsylvania RNG firm outlines strategic outlook

A growing RNG developer, owner and operator based in Pennsylvania is anticipating a liquidity event on the part of its private equity owner -- once it has locked down a "critical mass" of projects.

Vision RNG, a developer of US RNG projects, could see its next project reach commercial operations in Tennessee in a line of projects in southeastern and mid-western states, CEO Bill Johnson said in an interview.

Vision Ridge Partners, a private equity firm, is the majority owner of the company. Management owns the remaining minority stake.

The company is still in early stages and would likely need to get something like six projects to COD before a liquidity event.

“Locking down projects creates a lot of value,” Johnson said, noting that Vision Ridge will likely follow a typical private equity monetization pattern.

The company’s project at Meridian Waste’s Eagle Ridge Landfill in Bowling Green, Missouri is fully operational. It uses 1,500 scfm of landfill gas (LFG) and produces 375,000 MMBtu of RNG annually.

That mid-sized project is similar in scale to what is being developed in Tennessee, which will likely be the next project to reach COD, Johnson said, declining to provide details on exact location.

“We’re working on developing other opportunities with some of the largest publicly owned landfill companies in the country,” Johnson said.

Projects require between $20m and $60m in capex, ranging from small to large, Johnson said. Vision Ridge takes care of the company’s equity requirements.

Debt options are being considered on a project-by-project basis, he said. Debt tends to range from 50% to 70% of total spend.
“We’ll look to put reasonable project debt on these,” he said.

Vision has not to date retained the services of an investment bank, Johnson said.

Vision is pursuing opportunities in Kentucky, Alabama, South Carolina and Oklahoma, and will evaluate suppliers of services and equipment for each. The location-agnostic company is also open to new relationships with potential future financial and strategic acquirers.

“If you are a private equity group, you’re a potential buyer of the company at some point, so we would be happy to know them and keep their interest in us up,” Johnson said. An acquirer would not necessarily need to have expertise in RNG.

M&A potential

M&A of projects is an option on the table, Johnson said. But returns are better if Vision develops its own projects; and a more challenging macroeconomic environment makes acquisitions somewhat unlikely.

“With the market premiums being paid, I see us continuing to keep our head down and focusing on organic growth,” Johnson said.

Johnson said he expects to see continued consolidation in the greater market. Many large strategic and midstream companies have yet to make significant buys in RNG.

He pointed to bp’s acquisition of Archaea Energy as a significant milestone in the RNG market.

“There’s quite a number of potential acquirers,” Johnson said. “The market is kind of fundamentally and always will be under-supplied and over-demanded.”

Vision would potentially be open to a merger with a portfolio company of a strategic or PE investor, Johnson said.

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Verdagy partners with Doral on electrolyzer supply

Verdagy has entered a strategic agreement to supply electrolyzers to global green hydrogen projects developed by Doral.

Verdagy, an electrolyzer startup, has reached a strategic agreement with Doral, a renewable energy developer, in which Verdagy will supply green hydrogen electrolysis systems to Doral through 2030.

The agreement is global with a focus on green hydrogen projects Doral is developing in EuropeUnited StatesAustralia and the Middle East, according to a news release.

“Doral has a proven track record of developing infrastructure-scale renewable energy projects for over 15 years and Verdagy is excited to work together with Doral to drive the transition to green hydrogen,” said Verdagy CEO Marty Neese.

“Verdagy has developed green hydrogen electrolyzers that seamlessly pair in real-time with renewable energy sources, have the highest efficiencies and are cost-effective. With Verdagy’s electrolyzers already operating for several years, we are excited to now use these in our infrastructure scale, green hydrogen projects,” said Doral Hydrogen Managing Director Yam Efrati-Bekerman.

Doral Energy currently has a 16 GW pipeline of renewable projects under development and 14MWh of battery storage in the US and Europe. Since June 2020, Doral Energy is traded on the Tel Aviv Stock Exchange under the ticker symbol: DORL. Doral Hydrogen is the Hydrogen subsidiary of Doral Group to develop, build, and operate green hydrogen and green ammonia projects in the USAAustraliaEurope, and MENA.

The company already operates an HRS in the Netherlands and is developing more than 1GW projects for green hydrogen and ammonia production. Some of the projects will be executed in 2025 and already secured the offtake, the news release states.

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Mitsubishi Hydrogen Infrastructure appoints president and CEO

Michael Ducker has been appointed president and CEO of Mitsubishi Hydrogen Infrastructure.

Michael Ducker has been appointed president and CEO of Mitsubishi Hydrogen Infrastructure.

Ducker was previously senior vice president and head of hydrogen infrastructure at the firm, a post he held since 2022. He has also been chief operating officer of the ACES Delta hydrogen project in Utah since 2020, according to his LinkedIn profile. He joined Mitsubishi in 2012.

Mitsubishi Hydrogen Infrastructure is a wholly owned subsidiary of Mitsubishi Power Americas and a Group Company of Mitsubishi Heavy Industries (MHI), with the aim of providing high-quality solutions and projects to customers and partners as an established business in the clean hydrogen market while simultaneously enabling greater agility to keep pace with a rapidly evolving and dynamic hydrogen market.

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Iwatani acquires Aspen Air

The acquisition marks Japany-based Iwatani’s entrance into US industrial gases.

Iwatani Corporation of America, a subsidiary of Japan’s Iwatani Corporation, has acquired Aspen Air, based in Billings, Montana, according to a press release.

Aspen Air is a manufacturer and distributor of bulk liquid industrial gases in Montana and surrounding states. It supports industrial and medical customers including those in the energy and chemicals sectors, hospitals, and packaged gases and independent distributor networks.

This acquisition marks Iwatani’s entrance into US industrial gasses.

Tom Harrison, Iwatani Corporation of America’s Vice President of Industrial Gases, will lead the Aspen Air Team. He has been leading Iwatani Corporation of America’s Specialty Gases business and Hydrogen Sourcing activities for the past 2 years and prior to that spent 32 years with Linde.

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Exclusive: OCI Global exploring ammonia and methanol asset sales

Global ammonia and methanol producer OCI Global is working with an investment bank to explore a sale of ammonia and methanol assets as part of the re-opening of its strategic business review.

OCI Global is evaluating a sale of several ammonia and methanol assets as part of the re-opening of its strategic business review.

The global producer and distributor of methanol and ammonia is working with Morgan Stanley to explore a sale of its ammonia production facility in Beaumont, Texas, as well as the co-located blue ammonia project under development, according to sources familiar with the matter.

The evaluation also includes OCI’s methanol business, one of the sources said.

Representatives of OCI and Morgan Stanley did not respond to requests for comment.

As part of the earlier strategic review announced last year, OCI in December announced the divestiture of its 50% stake in Fertiglobe to ADNOC, and the sale of its Iowa Fertilizer Company to Koch Industries, bringing in $6.2bn in total net proceeds.

However, OCI has received additional inbound inquiries from potential acquirers for the remaining business, leading it to re-open the review, CEO Ahmed El-Hoshy said last month on OCI’s 4Q23 earnings call.

“As such, OCI is exploring further value creative strategic actions across the portfolio, including the previously announced equity participation in its Texas blue clean ammonia project,” he said, adding: “All options are on the table.”

The comments echoed the remarks of Nassef Sawiris, a 40% shareholder of OCI, who recently told the Financial Times that OCI could sell off most of its assets and become a shell for acquisitions.

In the earnings presentation, El-Hoshy took time to lay out the remaining pieces of the business: in particular, OCI’s 350 ktpa ammonia facility in Beaumont; OCI Methanol Group, encompassing 2 million tons of production capacity in the US and a shuttered Dutch methanol plant; and its European ammonia/nitrogen assets.

Texas blue

The Texas blue ammonia project is a 1.1 million-tons-per-year facility that OCI touts as the only greenfield blue ammonia project to reach FID to date. The company has invested $500m in the project as of February 24, out of a total $1bn expected investment, according to a presentation.

“Commercial discussions for long-term product offtake and equity investments in the project are at advanced stages with multiple parties,” El-Hoshy said. “This reflects the very strong commercial interest and increasing appetite from the strategics to pay a price premium to secure long-term low-carbon ammonia.”

El-Hoshy’s comments highlight the fact that, unlike most projects in development, OCI took FID on the Texas blue facility without an offtake agreement in place. The executive did, however, highlight the first-mover cost advantages from breaking ground on the project early and avoiding construction cost inflation.

Additionally, the project was designed to accommodate a second 1.1 mtpa blue ammonia production line, which would be easier to build given existing utilities and infrastructure, El-Hoshy said, allowing for an opportunity to capitalize on additional clean ammonia demand at low development costs.

“Line 2 probably has the biggest advantage, we think, in North America in terms of building a plant where a lot of the existing outside the battery limits items and utilities are already in place,” he said, emphasizing that by moving early on the first phase, they avoided some of the inflationary EPC pressures of recent years. 

At the facility OCI will buy clean hydrogen and nitrogen over the fence from Linde, and Linde, in turn, will capture and sequester CO2 via an agreement with ExxonMobil.

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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.

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Exclusive: Residential microgrid developer to seek electrolysis partner, raise capital

A developer of planned microgrid communities will look for an electrolysis partner to provide green hydrogen for use in agricultural applications and is planning to go to market for platform equity and project debt.

Embark Fund and NOVA Constructors, a group of real estate development interests focused on developing three planned residential communities, will look for an electrolysis partner for its community microgrid development efforts, managing partner Craig McBurney said in an interview.

McBurney, who is also solar development manager for the South Carolina-based renewables developer Alder Energy, said the partners are in the process of acquiring land – between 1,500 and 2,000 acres per parcel – in Virginia, Maryland and Illinois. The latter project is the most advanced.

Each is for a planned residential community including microgrid development, he said. The communities will include renewables, which could be used to power electrolysis during times of low demand. He gave the example of a 30 MW solar ground array.  

“We are preparing to announce a [$60m to $80m] equity raise,” McBurney said, adding that between $240m and $300m of debt will also be required. The money will be used for site acquisition, development and EPC. “The whole capital stack is an opportunity.”  

The group has not formally engaged with an investment bank or financial advisor, he said. They will be targeting private equity, sovereign wealth funds, and family offices.

McBurney pointed to communities like Whisper Valley in Texas and Babcock Ranch in Florida as examples of his group’s efforts to develop sustainable off-grid communities.

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