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Plug Power nixes Australia electrolyzer gigafactory with FFI

New York-based Plug Power has backed away from its intention to build a 2 GW electrolyzer factory in Australia in a partnership with Fortescue Future Industries.

New York-based Plug Power has backed away from its intention to build a 2 GW electrolyzer factory in Australia in a partnership with Fortescue Future Industries.

The companies had signed a letter of intent in 2021 for a JV to produce large-scale PEM electrolyzers in Queensland, with the ability to expand into fuel cell systems and other hydrogen refueling and storage equipment.

Plug has decided not to pursue the factory after an evaluation of the project’s economics, CEO Andy Marsh said on a call with investors yesterday. But the company still plans to sell around 250 MW of electrolyzers for FFI’s Australian projects, made at Plug’s factory in Rochester, N.Y.

“We decided that we didn’t want to build a factory with them because we saw the economics – we could do better,” he said. “We really didn’t think that was worthwhile to move ahead, though we’re still working with them on electrolyzers.”

At a symposium in October, Plug executives detailed delays in getting a substation permit for its 45-ton hydrogen production plant in New York, setting the project back by about 12 months. Plug also said at the time it would not pursue two 30-ton-per-day hydrogen projects it had explored, one in Canada and one in Pennsylvania.

Plug has five hydrogen plants in development or under construction in the US, and is exploring additional projects that are anticipated to start construction early this year.

Marsh also said that Plug is involved or engaged in all 33 of the hydrogen hubs that were encouraged by the US Department of Energy to submit full applications for an $8bn funding program.

Growth outlook

Plug’s top revenue lines are sales of fuel cell systems, hydrogen infrastructure, and engineered equipment, followed by sales of cryogenic equipment and fuel, according to filings.

The company had expected to grow revenues by 80% in 2022, but currently estimates revenue growth will be between 45% and 50%. The revenue underperformance reflects some larger projects being completed in 2023 instead of 2022 due to customer timing and supply chain issues, with 4Q22 revenues impacted by delays in new product launches, according to a presentation.

“We didn’t lose any backlog, we didn’t lose any deals. The business keeps on growing,” Marsh said.

For electrolyzers, Plug has a near-term pipeline of 2 GW, with a “sales funnel” of over $30bn. The company has orders to deliver 34 of its self-contained 5 MW electrolyzer systems in 2023, with half of those orders received in the last 60 days, Marsh said.

“I think you’re beginning to see some of the power of the [Inflation Reduction Act],” he said. “Our goal there is: How to fabricate faster.”

Marsh touted the business opportunity stemming from Plug’s stationary fuel cell power generator, which last year was demonstrated in partnership with Microsoft. Between back-up power, green EV charging, and prime power, Plug estimates the total addressable market to be over $2 trillion.

The stationary generator uses 1.4 tons of hydrogen per day. “I think folks can do the math,” March said. “That’s a huge, huge revenue stream. And when I look at this product, [the hydrogen use] is as important if not more important than the margin we make on the product.”

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Cleveland-Cliffs CEO: ‘Hydrogen is the future’

The largest producer of flat-rolled steel in North America plans to lean heavily on hydrogen to reduce its carbon footprint.

Cleveland Cliffs CEO Lourenco Goncalves is staking his company’s ability to decarbonize on large-scale use of hydrogen as a reductant in its blast furnaces.

The steelmaker is building a $9m pipeline that will feed hydrogen from the edge of its Indiana Harbor 7 plant into the blast furnace, what Goncalves called the company’s “high water mark” for hydrogen since it is the biggest plant of its kind in the Western Hemisphere.

“It’s the biggest blast furnace, the one that we use the most in terms of hydrogen because of its size,” Goncalves said on the company’s earnings call. “And it’s also because it’s our flagship, for instance, our biggest, the biggest in the Western Hemisphere and we are going to use as a demonstration plant for how to use hydrogen” in steelmaking.

Cleveland Cliffs in May completed a hydrogen injection trial at its Middletown Works blast furnace on a smaller scale.

Goncalves said previously that the company committed to offtake 200 tons per day of the 1000-ton-per-day project being developed by bp and Constellation as part of the Midwest Hydrogen Hub located in Indiana, Illinois, and Michigan.

The hub was recently awarded up to $1bn in funding from the US Department of Energy hydrogen hubs program.

“Cliffs’ commitment to buy a large portion of the output from the Midwest hub helped get this location selected by the Department of Energy,” Goncalves said.

“Hydrogen is the future,” he said. “Effectively, all of the current carbon emissions in our footprint are a result of the use of fossil fuel-based reductants or energy sources, where there is no economically feasible alternative,” he added. “Hydrogen can and ultimately will change that.”

He added that the use of hydrogen is very minimally capital intensive if you already have blast furnaces, with only minor plant additions needed, such as the Indiana Harbor pipeline.

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Australia’s Frontier Energy appoints MD with hydrogen background

Sam Lee Mohan will help Frontier as it transitions into the next phase of a project in Western Australia.

Australia-based Frontier Energy Limited has appointed Sam Lee Mohan as managing director.

According to a company press release, Lee Mohan has been appointed at a critical stage in Frontier’s evolution, as it transitions through the next stage of development at its 100% owned Bristol Springs Green Hydrogen Project.

During the next 12 months this includes the next level of study work, offtake, project financing and the commencement of construction.

Lee Mohan has over 20 years’ experience in the energy and utilities industry. His previous senior management positions include Global Head of Hydrogen of Xodus Group, a subsidiary of Subsea 7, where he developed and led the company’s overall hydrogen strategy. In this role, he also conceptualized the company’s largest hydrogen project, Project MercurHy.

Prior to Xodus Group, Lee Mohan spent six years at ATCO, where he was instrumental in developing the company’s hydrogen strategy, including the conceptualization, design and construction of Australia’s first, green hydrogen Microgrid, the Clean Energy Innovation Hub.

The Bristol Springs Green Hydrogen Project is located 120km from Perth in Western Australia. The company recently completed a pre-feasibility study that outlined the Project’s potential to be both an earlier mover and one of the lowest cost  green hydrogen assets in Australia, according to the company.

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bp buys US travel center operator for $1.3bn

The purchase of TravelCenters of America will allow bp to expand new mobility offers including EV charging, biofuels, RNG and later hydrogen.

BP Products North America Inc., a wholly-owned indirect subsidiary of BP p.l.c. has reached an agreement to purchase TravelCenters of America, one of the country’s leading full-service travel center operators, for $1.3bn in cash.

TA’s strategically-located network of highway sites complements bp’s existing predominantly off-highway convenience and mobility business, enabling TA and bp to offer fleets a seamless nationwide service. In addition, bp’s global scale and reach will, over time, bring advantages in fuel and biofuel supply as well as convenience offers for consumers. It will provide options to expand and develop new mobility offers including electric vehicle (EV) charging, biofuels, renewable natural gas (RNG) and later hydrogen, both for passenger vehicles and fleets.

Goldman Sachs & Co. LLC is acting as lead financial adviser to bp, Robey Warshaw LLP is acting as financial adviser to bp, and Sullivan & Cromwell LLP is acting as lead legal adviser to bp.

Convenience is one of bp’s five strategic transition growth engines in which it aims to significantly grow investment through this decade. By 2030, bp aims for around half its annual investment to go into these transition growth engines. Over 2023-2030 it aims that around half of its cumulative $55-65bn transition growth engine investment will go into convenience, bioenergy and EV charging.

Bernard Looney, CEO bp, said: “This is bp’s strategy in action. We are doing exactly what we said we would, leaning into our transition growth engines. This deal will grow our convenience and mobility footprint across the US and grow earnings with attractive returns. Over time, it will allow us to advance four of our five strategic transition growth engines. By enabling growth in EV charging, biofuels and RNG and later hydrogen, we can help our customers decarbonize their fleets. It’s a compelling combination.”

The acquisition is expected to bring around 280 TravelCenters of America sites, spanning 44 US states nationwide, into the bp portfolio. These travel centers, which average around 25 acres, offer a full range of facilities for vehicles and fleet trucks, including more than 600 full-service and quick service restaurants, as well as truck maintenance and repair services. Around 70% of TA’s total gross margin is generated by its convenience services business, almost double bp’s global convenience gross margin.

Dave Lawler, chairman and president of bp America: “Subject to approvals, we look forward to welcoming the TA team to bp. TA’s amazing nationwide network of on-highway locations combined with bp’s more than 8,000 off-highway locations have the potential to offer travelers and professional drivers a seamless experience for decades to come.”

bp yesterday announced plans to invest $1bn in EV charging across the US by 2030.

As part of the transaction, TA will enter into amended lease agreements with Service Properties Trust, establishing long-term real estate access. bp looks forward to continuing TA’s existing strong relationship with SVC.

The acquisition price of $1.3bn, or $86 per share, represents a multiple of around 6 times based on last twelve months’ TA EBITDA (4Q21 to 3Q22).  It is expected to add EBITDA for bp immediately, growing to around $800m in 2025.

It supports delivery of bp’s convenience and EV charging growth engine target of more than $1.5bn EBITDA in 2025 and aim for more than $4bn in 2030. bp expects the acquisition to be accretive to free cash flow per share from 2024 and to deliver a return of over 15%.

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Exclusive: Morgan Stanley mandated for green ammonia facility

Morgan Stanley is the mandated investment banker for a green ammonia developer that’s raising debt and equity for its first facility in Texas.

First Ammonia is working with Morgan Stanley as its investment banker as it seeks to raise debt and equity for a flagship green ammonia project in Texas.

The New York City-based developer is moving toward financial close this year on the first 100 MW train of a 300 MW project at the Port of Victoria, Texas. Morgan Stanley has held the mandate since last year, but it has not been previously reported.

First Ammonia did not respond to requests for comment. Morgan Stanley declined to comment.

In an interview last year, First Ammonia CEO said the 100 MW train of the Port of Victoria project is estimated to cost $300m, while the full 300 MW will cost between $900m – $1bn. Each 100 MW module will produce up to 100,000 MTPA of green ammonia.

The project is expected to be the first in First Ammonia’s global pipeline of green ammonia facilities that will eventually add up to 5 million MTPA of production within 10 years.

The firm has contracted with Haldor Topsoe for 5 GW of solid-oxide electrolysis for its project portfolio. It is seeking a partner to provide 45V-compliant renewable energy to power electrolysis at Port of Victoria, as reported exclusively by ReSource.

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Exclusive: Inside Strata’s P2X strategy

Strata Clean Energy is seeking to engage with global chemical, energy, and shipping companies as a potential partner for a pipeline of green hydrogen projects that will have FIDs in 2025 and CODs later this decade.

Strata Clean Energy is developing a pipeline of green hydrogen projects that will produce large amounts of green ammonia and other hydrogen derivatives later this decade.

Mike Grunow, executive vice president and general manager of Strata’s Power-to-X platform, said in an interview that the company is investing in the development of proprietary modeling and optimization software that forms part of its strategy to de-risk Power-to-X projects for compliance with strict 45V tax credit standards.

“We’re anticipating having the ability to produce substantial amounts of low-carbon ammonia in the back half of this decade from a maturing pipeline of projects that we’ve been developing, and we’re looking to collaborate with global chemical, energy, and shipping companies on the next steps for these projects,” he said.

Strata’s approach to potential strategic offtakers could also include the partner taking an equity stake in projects, “with the right partner,” Grunow said. The projects are expected to reach FID in 2025.

Grunow declined to comment on the specific size or regional focus of the projects.

“We aspire for the projects to be as large as possible,” he said. “All of the projects are in deep discussions with the regional transmission providers to determine the schedule at which more and more transmission capacity can be made available.”

Strata will apply its expertise in renewable energy to the green hydrogen industry, he said, which involves the deployment of unique combinations of renewable energy, energy storage, and energy trading to deliver structured products to large industrial clients, municipal utilities and regulated utilities.

The company “commits to providing 100% hourly matched renewable energy over a guaranteed set of hours over the course of an entire year for 10 – 20 years,” Grunow said.

“It’s our expectation that the European regulations and more of the global regulations, and the guidance from the US Treasury will require that the clean energy supply projects are additional, deliverable within the same ISO/RTO, and that, eventually, the load of the electrolyzer will need to follow the production of the generation,” he said.

Strata’s strategy for de-risking compliance with the Inflation Reduction Act’s 45V revenue stream for green hydrogen will give asset-level lenders certainty on the delivery of a project’s IRA incentives.

“Right now, if I’m looking at a project with an hourly matched 45V revenue stream, I have substantial doubt about that project’s ability to actually staple the hourly matched RECs to the amount of hydrogen produced in an hour, to the ton of hydrogen derivative,” he said.

During the design phase, developers evaluate multiple electrolyzer technologies, hourly matching of variable generation, price uncertainty and carbon intensity of the grid, plant availability and maintenance costs along with evolving 45V compliance requirements.

Meanwhile, during the operational phase, complex revenue streams need to be optimized. In certain markets with massive electrical loads, an operator has the opportunity to earn demand response and ancillary service revenues, Grunow said.

Optimal operations

“The key to maximizing the value of these assets is optimal operations,” he said, noting project optionality between buying and selling energy, making and storing hydrogen, and using hydrogen to make a derivative such as ammonia or methanol.

Using its software, Strata can make a complete digital twin of a proposed plant in the design phase, which accounts for the specifications of the commercially available electrolyzer families.

Strata analyzes an hourly energy supply schedule for every project it evaluates, across 8,760 hours a year and 20 years of expected operating life. It can then cue up that digital project twin – with everything known about the technology options, their ability to ramp and turn down, and the drivers of degradation – and analyze optimization for different electrolyzer operating formats. 

“It’s fascinating right now because the technology development cycle is happening in less than 12 months, so every year you need to check back in with all the vendors,” he said. “This software tool allows us to do that in a hyper-efficient way.”

A major hurdle the green hydrogen industry still needs to overcome, according to Grunow, is aligning the commercial aspects of electrolysis with its advances in technological innovation.

“The lender at the project level needs the technology vendor to take technology and operational risk for 10 years,” he said. “So you need a long-term service agreement, an availability guarantee, key performance metric guarantees on conversion efficiency,” he said, “and those guarantees must have liquidated damages for underperformance, and those liquidated damages must be backstopped by a limitation of liability and a domestic entity with substantial credit. Otherwise these projects won’t get financed.”

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exclusive

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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