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Riverstone-backed IMTT amends revolver with link to handling energy transition fuels

The storage and terminals operator amended its credit facility to include incentives for storing and handling clean fuels.

International-Matex Tank Terminals, a provider of handling and storage of bulk liquid products, has successfully amended its existing revolving credit facility to include incentive pricing terms related to achieving various Sustainability Performance Targets.

The company said today that the facility represents its inaugural sustainability-linked loan and is issued under IMTT’s recently developed Sustainability Linked Issuance Framework.

The Framework outlines key performance indicators related to environmental and social factors. The outlined key performance indicators include: i) the percentage of new capital expenditures related to increasing IMTT’s ability to store and handle renewable and low-carbon products including but not limited to renewable diesel, biodiesel, hydrogen, blue and green ammonia, sustainable aviation fuels, and the feedstocks used to produce these products; and ii) supplier diversity. These key performance indicators further reinforce the Company’s commitment to sustainability in line with its Greener and Cleaner strategy.

“We are reshaping our portfolio so that over half of IMTT’s revenue in 2023 will be generated from the handling of non-petroleum products, such as renewable diesel feedstocks, renewable diesel, vegetable and tropical oils, and chemicals. Our Greener and Cleaner strategy is working, and we anticipate continuing to grow our non-petroleum share of revenue over the next several years through deployment of capital for new projects supporting the energy transition. The continued support from our lenders will allow us to continue to develop and execute the projects that support these ambitions,” said Carlin Conner, Chairman and CEO of IMTT. “Additionally, we are committed to creating opportunities for vendors and suppliers that are capable, experienced and share our ESG goals.”

Sustainable Fitch has provided a Second Party Opinion which verifies that the Framework is aligned with the Loan Syndications and Trading Association Sustainability-Linked Loan Principles (2023).

CIBC Capital Markets acted as sole Sustainability Structuring Agent for the Framework.

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Tidewater receives additional funding to complete renewable diesel and hydrogen complex

The Canadian fuels producer had experienced cost overruns in the final stages of the project.

Tidewater Renewables Ltd. initial unit commissioning at its Renewable Diesel (HDRD) Complex and its financing solution to support the completion and start-up of the HDRD facility, according to a news release.

Following the previously announced capital cost increase, the corporation has significantly enhanced its funding capacity.  Tidewater Renewables is in discussion with its lenders to seek consents for increases to its lending facilities.  It has also received additional government support, in the form of an issuance of credits that will result in cash proceeds of $43m.

Tidewater executives had previously blamed the cost overruns on the lack of exotic components needed to complete the project, adding on the company’s most recent earnings call that more up-front engineering should have been done to avoid cost increases.

The HDRD Complex continues to progress on schedule and with no change to the previously announced gross capital cost estimate of $342m. Construction is currently estimated to be 93% complete with the last major piece of equipment now on site.  Construction operations commissioning has begun on several units with final completion and start-up expected to begin within two months. The HDRD project continues to be a leader in safety performance with zero loss time injuries throughout the life of the project to date.

To support the HDRD project, Tidewater Renewables has recently entered into firm credit sales agreements that will result in $43m of proceeds net to the corporation.  Proceeds from the credit sales and the anticipated expansion of its lending facilities will primarily be employed to offset the previously disclosed capital cost increases at the Corporation’s HDRD Complex. Tidewater Renewables believes its enhanced liquidity will sufficiently fund the HDRD project through start-up while providing significant additional flexibility.

“The support from government and our current capital providers has been fundamental to the ongoing advancement and success of our HDRD Complex, which will become Canada’s first Renewable Diesel facility. This project will provide significant value to our stakeholders while reducing the carbon intensity of fuels used in British Columbia and Canada” said Rob Colcleugh, Chairman and Interim CEO.

HDRD Complex Update

  • HDRD Complex construction is progressing as forecast and is 93% complete.
  • All major equipment for the HDRD Complex is now on site and set.
  • The majority of the dry commissioning of the utility packages is complete.
  • The tank farm and rail systems are now ready for operation.
  • Target start-up is expected within two months.
  • Operating at its design capacity, the HDRD Complex is expected to generate annualized run rate EBITDA of between $90 – 115m.
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Glenfarne’s Texas LNG moving to project finance execution phase

Glenfarne has appointed lawyers and is moving into the execution phase for financing its Texas LNG project.

Texas LNG, a four million tonnes per annum liquefied natural gas export terminal to be constructed in the Port of Brownsville, and a subsidiary of Glenfarne Energy Transition, LLC, a global energy transition leader providing critical solutions to lower the world’s carbon footprint, has received sufficient expressions of interest from leading project finance banks to move to the execution phase of project financing.

Glenfarne has also appointed Latham & Watkins as Borrower’s counsel and Milbank as Lenders’ counsel for the issuance.

These lenders have been key supporters of Glenfarne, having led over $4 billion of financing to Glenfarne’s businesses over the last 10 years, supporting the acquisition and/or construction of various energy transition focused assets, the company said in a news release. Furthermore, these banks are active in LNG, having participated in approximately $44 billion of project finance debt to the U.S. LNG sector alone over the last 24 months.

“Texas LNG’s financing consortium will be comprised of the world’s leading institutions that recognize the attributes of the project and Glenfarne’s excellent history of building energy transition infrastructure,” said Brendan Duval, CEO and Founder of Glenfarne Energy Transition.

ReSource recently interviewed Glenfarne Senior Vice President Adam Prestidge about Texas LNG as well as the company’s hydrogen plans.

Today’s news follows Texas LNG’s recent announcement that it signed a Heads of Agreement with EQT Corporation for natural gas liquefaction services for 0.5 MTPA of LNG. Texas LNG also recently announced partnerships with Baker Hughes and ABB to help develop the terminal, representing more than half a billion dollars’ worth of equipment selections for Texas LNG to date.

The first LNG exports from Texas LNG are expected to be shipped in 2028.

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NextEra leads Series A round for DAC start-up

NextEra has led a $36m Series A funding round for a start-up that’s developing hybrid direct air capture technology.

Avnos, Inc. (Avnos), the Los Angeles-based company developing novel Hybrid Direct Air Capture (HDAC) technology for carbon dioxide removal, has closed $36 million in Series A funding, according to a news release.

Avnos will use the new funds to grow its world-class team, deploy additional HDAC assets across North America and Europe, and open a new, state-of-the-art research and development facility located just outside New York City.

NextEra Energy, one of America’s largest utilities and investors in clean energy infrastructure, led the round. Other investors include Safran Corporate Ventures, Shell Ventures, Envisioning Partners, and Rusheen Capital Management. The funding supplements Avnos’ previously announced capital raises and strategic commercial agreements with Shell Ventures, ConocoPhilips, JetBlue Ventures and the Grantham Foundation, as well as pilot projects with the U.S. Department of Energy and the U.S. Office of Naval Research.

Avnos has pioneered HDAC using proprietary materials and processes to capture both carbon dioxide and water simultaneously from the atmosphere, according to a news release. The process eliminates the need for external heat input and produces approximately 5 tons of water for every 1 ton of carbon dioxide captured. Avnos’ resource-intelligent technology means lower impact on and expanded employment opportunities for the communities surrounding HDAC facilities.

“At Avnos, we believe our novel HDAC technology is the world’s best shot at reaching the much-needed gigaton scale of carbon dioxide removal,” said Will Kain, CEO of Avnos. “We feel the urgency to roll out HDAC more broadly so as to deliver on the enormous, positive climate and economic opportunities in front of us. With this substantial funding, Avnos continues to expand its unparalleled roster of partners supporting our rapid acceleration.”

The new, multi-million-dollar research and development facility, equipped with best-in-class equipment and infrastructure, will enable Avnos to accelerate the pace of scaling the company’s HDAC technology while ensuring its systems continue to operate at peak performance. The 20,000 square foot facility will be fully operational in February 2024 and will employ an estimated 20 new employees.

“Our state-of-the-art lab underscores our mission to push the frontiers of innovation and deliver scalable and efficient carbon removal solutions,” said Ben McCool, Senior VP of Technology at Avnos. “As we expand our dynamic technical team, I’m proud to cultivate a collaborative environment that brings together top-notch talent, actively shaping and advancing the cutting-edge technologies driving Avnos towards impactful solutions.”

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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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Green hydrogen developer raising capital for projects

Fusion Fuel, a green hydrogen developer based in Portugal, has engaged an advisor and is in talks with investors to raise capital for projects in North America.

Fusion Fuel, a green hydrogen developer based in Portugal, has engaged an advisor and is in talks with investors to raise capital for projects in North America.

The company is working with RBC Capital Markets as financial advisor, Fusion Fuel Co-Head Zachary Steele said in an interview, and expects to produce infrastructure-type returns on its projects.

For its first project in the U.S., Fusion Fuel has agreed to a JV with Electus Energy to build a 75 MW solar-to-hydrogen facility in Bakersfield, California.

The project will produce up to 9,300 tons of green hydrogen per annum including nighttime operation and require an estimated $180m in capital investment, with a final investment decision expected in early 2024 and commissioning in the first half of 2025.

The combination of green hydrogen and solar production incentives along with California’s low carbon fuel standard make the economics of the project attractive, Steele said.

“Hydrogen is selling for up to $15-$18 per kilogram in California in the mobility market, and we can produce it at around the low $3 per kilogram area, so that leaves a lot of room for us to make a return and reduce costs for customers,” he said.

The company sells electrolyzer technology for projects but also serves as a turnkey developer. The technology consists of Hevo-Solar, which utilizes concentrated solar power to create hydrogen; and Hevo-Chain, a centralized PEM electrolyzer powered by external electricity.

Fusion Fuel’s proposition is that its smaller-scale technology – of 25 kW per unit –  is ready to use now, and can be dropped into places like a gas station in New York City, Steele said.

“This allows customers to scale into hydrogen and makes it available on site, compared with the massive projects going up in Eastern Canada or the Gulf Coast that require customers to commit significant capital to underwrite large scale projects,” he added.

Along with Electus, Fusion Fuel has already entered into a land-lease agreement for 320 acres in Kern County, California for the Bakersfield development. Black & Veatch will perform a concept study while Cornerstone Engineering and Headwaters Solutions are also engaged.

Iberian pipeline

The company targets to have EUR 40m of revenues in 2023, with a third of that coming from tech sales and the balance coming from Fusion Fuel-owned development projects.

Its revenue pipeline for next year is focused on the Iberian peninsula, and has been largely de-risked with the company having secured grants, with land and permitting underway.

In addition to the electrolyzer sales, the company, together with its partners, can provide turnkey projects that include engineering, procurement of the balance of plant equipment, construction of the facility, and operations, Steele said on an investor call this week.

“This allows us to not only make returns on the tech sale but also on the overall project and potentially recurring revenue from operations,” he said.

The company plans to use projects it is building in Portugal to expand into other core markets, beginning with a focus on mobility opportunities and targeted industrial decarbonization projects. Starting in 2024 the company plans to extend its reach further into North America and also Italy.

U.S. focus

Similar to other international hydrogen players, the passage of the Inflation Reduction Act caused a strategic shift of focus to the U.S. and accelerated Fusion Fuel’s plans to grow its business there, company executives said.

Notably, since Fusion Fuel will use its own technology in the projects it is seeking to develop, a required amount of that technology will need to be manufactured in the U.S. in order to qualify for the full benefits provided in the IRA.

As such, Fusion Fuel is scouting for a location to build one, or possibly two, manufacturing facilities in the U.S.

“The size of the Bakersfield project alone justifies building a new manufacturing facility,” Steele said on the investor call.

Steele was previously CEO of Cedar LNG, a floating LNG development in British Columbia, prior to exiting to Pembina. He works alongside Fusion Fuels Co-Head & CFO, Frederico Figueira de Chaves, who is based in Portugal.

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Carbon-negative materials firm in $40m equity raise

A Texas-based manufacturer of renewable plastics is developing its first plant in the Midwest, with a commercialization date set for 2026.

Citroniq Chemicals, a maker of renewable and carbon-negative plastics, is undergoing a $40m equity raise, according to two sources familiar with the matter.

The process has launched and is being led by Young America Capital, the sources said. The company’s projects account for about $1bn in CapEx.

Based in Houston, Citroniq uses bio-based feedstocks to produce plastics at scale. The company recently signed a Letter of Intent with Lummus Technology for the development of Citroniq’s green polypropylene projects in North America.

“With a projected investment of over $5bn and a combined polypropylene annual capacity of over 3.5 billion pounds, Citroniq is prepared to execute a rapid expansion plan of its E2O process, to meet the market’s growing need for sustainable, carbon negative polypropylene at a competitive price,” Mel Badheka, Principal and Co-Founder of Citroniq Chemicals, said in a press release announcing the LOI. “Located in the Midwest, Citroniq’s first plant is scheduled to start production in 2026 and provide identical, drop-in products that can be directly certified as biogenic through physical testing.”

In January Citroniq announced a separate LOI with Mitsui Plastics for a large-scale supply agreement for sustainable polypropylene.

Citronia and Young America Capital did not respond to requests for comment.

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