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Shell sells interest in SouthCoast Wind

Shell has sold its 50% interest in SouthCoast Wind, a proposed offshore wind farm off the coast of Massachusetts with 2.4 GW of capacity.

Shell New Energies US LLC (Shell), a subsidiary of Shell plc, has sold its 50% equity share in SouthCoast Wind Energy LLC (SouthCoast Wind) to joint venture partner Ocean Winds North America LLC (Ocean Winds), according to a news release.

Terms of the transaction were not disclosed.

SouthCoast Wind is a 50-50 joint venture between Shell and Ocean Winds, established to develop offshore wind projects off the coast of Massachusetts.

“In-line with our Powering Progress strategy, Shell continues to hone our portfolio of renewable generation projects in key markets where we have an advantaged position,” said Glenn Wright, Senior Vice President, Shell Energy Americas. “We are grateful to Ocean Winds for their years of partnership within this venture, and continue to seek opportunities to provide more energy, with fewer emissions.”

This deal was structured to simultaneously sign and close, with an immediate effective date.

SouthCoast Wind is developing a proposed offshore wind farm in US federal waters about 30 miles south of Martha’s Vineyard and 23 miles south of Nantucket, Massachusetts with an approximate capacity of 2,400 MW via Lease OCS-A 0521, which covers 127,388 acres. Formerly named Mayflower Wind Energy LLC, this joint venture was established in 2018.

Ocean Winds is a 50-50 offshore wind joint venture owned by EDP Renewables and ENGIE.

In the U.S., Shell is a 50-50 partner in an additional offshore wind joint venture, Atlantic Shores Offshore Wind LLC (Atlantic Shores), with EDF-RE Offshore Development, LLC. Atlantic Shores is developing a portfolio of wind farms off the coast of New Jersey and New York.

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Ares SPAC in merger with modular reactor developer X-energy

X-energy is cultivating advanced small modular reactor technology and proprietary fuel that can be used in applications that currently rely on fossil fuels to produce steam and heat for processes like manufacturing, petroleum refining and hydrogen production.

X Energy Reactor Company, LLC, a developer of small modular nuclear reactors and fuel technology for clean energy generation, and Ares Acquisition Corporation, a publicly-traded special purpose acquisition company, have entered into a definitive business combination agreement, according to a news release.

The combination will establish X-energy as a publicly-traded, developer of a more advanced small modular reactor (SMR) and proprietary fuel that supports the transition to clean, affordable energy through enhanced safety, lower cost, scalability and broader industrial applications. X-energy’s entry into the public markets is expected to accelerate its growth strategy through additional investment opportunities and financial flexibility as well as differentiated sponsorship by Ares, a leading global alternative investment manager.

The business combination ascribes a pre-money equity value of approximately $2bn to X-energy. Existing X-energy equity holders will roll 100% of their existing equity interests into the combined company. In addition, the combined company will receive approximately $1bn of cash held in AAC’s trust account, assuming no redemptions by AAC shareholders.

Institutional and strategic investors have also invested or committed $120m in financing. This includes an invested private round of financing, which comprises $30m from Ares and $45m from OPG and Segra Capital Management, a leading nuclear energy-focused hedge fund, as well as an additional commitment of $45m from Ares to be invested concurrent with the closing of the transaction. X-energy also received approximately $58m of interim financing throughout 2022 from existing strategic investors, including Dow and Curtiss-Wright Corporation.

X-energy is advancing nuclear energy generation through its latest-generation high-temperature gas-cooled reactor, the Xe-100, and its proprietary tri-structural isotropic (TRISO) encapsulated particle fuel, TRISO-X. Representing the next stage in the evolution of nuclear energy technology, the pioneering design of the Xe-100 couples its scalability, innovative modularity, enhanced safety and higher temperature capabilities with decades of HTGR research and operating experience. The Xe-100 can also uniquely address a broader range of uses and applications compared with conventional nuclear reactors. This specifically includes applications that currently rely on fossil fuels to produce steam and heat for processes like manufacturing, petroleum refining and hydrogen production.

The Xe-100 is engineered to operate as a single 80-megawatt (MWe) unit and is optimized as a four-unit plant delivering 320 MWe. With load-following capabilities, the Xe-100 can support intermittent renewable (solar and wind) and other clean energy options with reliable baseload generation.

Guggenheim Securities, LLC is acting as financial advisor and Latham & Watkins LLP is acting as legal advisor to X-energy.

Moelis & Company LLC is acting as financial advisor and Kirkland & Ellis LLP is acting as legal advisor to AAC.

Ocean Tomo, a part of J.S. Held, acted as financial advisor to the Special Committee of the Board of Directors of AAC.

UBS Securities LLC and Citigroup Global Markets Inc. are serving as capital markets advisors to AAC and Ropes & Gray LLP is acting as legal advisor to the capital markets advisors.

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FirstElement receives grant to expand manufacturing capacity

A $7.7m grant from the California Energy Commission is meant to help increase the output of the Santa Ana components manufacturing facility tenfold.

FirstElement Fuel has received a $7.7m grant from the California Energy Commission to increase the Company’s Santa Ana, CA manufacturing facility output by more than 10 times, according to a news release.

The California-based company is currently operating the world’s largest network of hydrogen refueling stations comprised of 85 dispensers across 40 station locations and serving hydrogen-powered vehicles across California.

The facility in Santa Ana produces components and systems for hydrogen refueling stations, including liquid hydrogen cryopump systems. FistElement will also contribute at least $14m to the project.

The manufacturing expansion project will extend through March 2026. FistElement will also increase its pump testing capability at its hydrogen logistics hub and field-testing facility  in Livermore, California as part of the project.

Quantron US and FirstElement recently announced that Quantron will be one of the first to take advantage of FirstElement’s network of hydrogen stations designed for hydrogen fuel-cell electric trucks.

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Ameresco begins construction on Sacramento biogas co-generation project

The firm has entered a nearly $140m contract to develop and construct an advanced technology biogas cogeneration facility for the Sacramento Area Sewer District.

Ameresco, Inc., a cleantech integrator specializing in energy efficiency and renewable energy, has entered a nearly $140m contract to develop and construct an advanced technology biogas cogeneration facility for the Sacramento Area Sewer District located at the EchoWater Resource Recovery Facility (EchoWater Facility) near Elk Grove, California, according to a news release.

This on-site renewable energy facility will beneficially utilize biogas (methane), a byproduct of the EchoWater Facility’s solids treatment process, to produce renewable electricity and heat for the EchoWater Facility through an integrated 13.4 MW cogeneration plant that will utilize fuel cell and engine technology.

Construction of the new facility is expected to be completed by July 2026.

By incorporating the fuel cell system, the project will have exceptional efficiency and reduced pollutant emissions, making it a clean, reliable baseload dispatchable resource. Additionally, the system will allow for the expandability to produce hydrogen in the future.

“SacSewer is committed to being a leader in environmental stewardship. Through our sustainable efforts in resource recovery, we maximize the reuse of treatment process by-products such as biogas,” shared Christoph Dobson, SacSewer’s General Manager. “This project is yet another example of how we’re working every day to fulfill our mission of protecting public health and the environment by collecting, treating, and recovering resources from sewage.”

“We are thrilled to partner with SacSewer, supporting their efforts to optimize the use of the biogas that is generated as a byproduct of the sewage treatment process,” said Michael Bakas, Executive Vice President of Ameresco. “Capturing and repurposing biogenic methane, that is already in our environment and produced by society, to displace fossil fuel is a powerful example of the circular economy in action, where waste is not discarded, but turned into a valuable asset. This voluntary act by SacSewer, backed by a material investment into this advanced renewable energy center, speaks volumes to their commitment to our environment and their surrounding community.”

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Exclusive: Former green hydrogen executive raising capital for fusion startup

A former executive that developed large hydrogen and ammonia projects in Texas is raising money in a new role with a fusion energy firm with ambitions to co-locate generation with heavy industry and fuels production.

Tokamak Energy, the UK-based fusion energy startup, is seeking to raise about $80m in a self-conducted Series C capital raise, President Michael Ginsberg told ReSource.

The company previously hired Bank of America to run a $1bn raise but pulled back on the process in favor of more incremental growth, Ginsberg said. The company has already raised $40m of the $120m Series C and is aiming for a close by mid-summer.

With US operations in West Virginia (where co-founder Mark Koepke is a professor of physics at WVU) and headquarters in Oxford, England, Tokamak was recently included in the US Department of Energy’s multimillion-dollar Fusion Development Program and partnered with General Atomics on advanced magnet technology.

Ginsberg previously worked as vice president of technology and project execution at Avina Clean Hydrogen, where he was instrumental in developing the Nueces Clean Ammonia project in Texas. He said Tokamak is planning to build fusion generation in the United States, but has a magnets business with a near-term return profile.

Magnets business

Tokamak is a developer of high-temperature superconducting (HTS) magnets.

They are developed for fusion to contain plasma energy, but like the semi-conductor business, they’ve had applications in other industries, such as defense, offshore wind turbines, and mineral separation.

First revenue from those magnets, from another fusion company, came in last year, he said. There are ongoing contract negotiations with the US Department of Defense and an imaging device maker that uses magnets.

Rail companies interested in maglev (from magnetic levitation) technology are also in discussions with Tokamak, he said.

Turnaround for that business for investors is expected to be three to five years, Ginsberg said.

Fusion-to-X

Tokamak is planning to develop its first commercial scale plant (COD after 2030) in the US.

Requirements for site selection are dependent on nearby capabilities; if deuterium and tritium are to be used as fuels, there needs to be a nearby facility that can handle those hydrogen-isotope fuels. For example, Oak Ride National Labs in Tennessee can handle tritium.

The other siting concern is use case.

“It could be, certainly, pumping electrons onto the grid, in which case your limited by transmission lines,” Ginsberg said. “But also, we could create industrial thermal energy, thermal heat, and co-locate with decarbonized heavy industry.”

Co-location with data centers is another option, he said. Tokamak is also exploring hydrogen production.

“Obviously you could do the traditional electrolysis process, and we’re talking to some companies that just need electrons to convert the H2O into hydrogen and oxygen, and they want baseload power to do that as opposed to intermittent power,” he said. “Also, there’s thermal energy and thermal processes to produce hydrogen that we could use from the fusion reaction.”

Ginsberg, who oversees US operations at Tokamak, was hired following the DOE award.

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Analysis: Premium for clean hydrogen unlikely

A group of hydrogen offtakers say they have every intention of decarbonizing their fuel intake, but barring the implementation of a carbon-pricing mechanism, paying a premium for it is unrealistic.

Passage of the Inflation Reduction Act ignited investor interest in the global market for clean hydrogen and derivatives like ammonia and methanol, but offtake demand would be better characterized as a flicker.

And while many questions about the nascent market for green hydrogen remain unanswered, one thing is clear: offtakers seem uninterested in paying a “green premium” for clean fuels.

That doesn’t mean offtakers aren’t interested in using clean fuels – quite the opposite. As many large industrial players worldwide consider decarbonization strategies, hydrogen and its derivatives must play a significant role.

Carbon pricing tools such as the Carbon Border Adjustment Mechanism in Europe could introduce a structural pricing premium for clean products. And industry participants have called for carbon levies to boost clean fuels, most recently Trafigura, which released a white paper today advocating for a carbon tax on fossil-based shipping fuels.

But the business case for clean fuels by itself presents an element of sales risk for potential offtakers, who would have to try to pass on higher costs to customers. Even so, there is an opportunity for offtakers to make additional sales and gain market share using decarbonization as a competitive advantage while seeking to share costs and risks along the value chain.

“It’s a very difficult sell internally to say we’re going to stop using natural gas and pay more for a different fuel,” said Jared Elvin, renewable energy lead at consumer goods company Kimberly-Clark. “That is a pickle.”

Needing clean fuels to reach net zero

Heavy-duty and long-haul transportation is viewed as a clear use case for clean fuels, but customers for those fuels are highly sensitive to price.

“We’re very demand focused, very customer focused,” said Ashish Bhakta, zero emission business development manager at Trillium, a company that owns the Love’s Travel Shop brand gas stations. “That leads us to be fuel-agnostic.”

Trillium is essentially an EPC for fueling stations with an O&M staff for maintenance, Bhakta said.

As many customers consider their own transitions to zero-emissions, they are thinking through EV as well as hydrogen, he said. Hydrogen is considered better for range, fueling speed and net-payload for mobility, all of which bodes well for the clean fuels industry.

One sticking point is price, he said. Shippers are highly sensitive to changes in fuel cost – and asking them to pay a premium doesn’t go far.

Alessandra Klockner, manager of decarbonization and energy solutions manager at Brazilian mining giant Vale, said her employer is seeking partnerships with manufacturers, particularly in steel, to decarbonize its component chain.

In May Vale and French direct reduced iron (DRI) producer GravitHy signed an MoU to jointly evaluate the construction of a DRI production plant using hydrogen as a feedstock in Fos-sur-Mer, France. The company also has steel decarbonization agreements in Saudi Arabia, the UAE and Oman.

In the near term, 60% of Vale’s carbon reductions will come from prioritizing natural gas, Klockner said. But to reach net zero, the company will need clean hydrogen.

“There’s not many options for this route, to reach net zero,” she said. “Clean hydrogen is pretty much the only solution that we see.”

Elvin, of Kimberly-Clark, noted that his company is developing its own three green hydrogen projects in the UK, meant to supply for local use at the source.

“We’re currently design-building our third hydrogen fueling facility for public transit,” he said. “We’re basically growing and learning and getting ready for this transition.”

The difficulty of a “green premium

The question of affordability persists in the clean fuels space.

“There are still significant cost barriers,” said Cihang Yuan, a senior program officer for the World Wildlife Fund, an NGO that has taken an active role in promoting clean fuels. “We need more demand-side support to really overcome that barrier and help users to switch to green hydrogen.”

Certain markets will have to act as incubators for the sector, and cross-collaboration from production to offtake can help bring prices down, according to Elvin. Upstream developers should try to collaborate early on with downstream users to “get the best bang for your buck” upstream, as has been happening thus far, he added.

Risk is prevalently implied in the space and must be shared equitably between developers, producers and offtakers, he said.

“We’ve all got to hold hands and move forward in this, because if one party is not willing to budge on any risk and not able to look at the mitigation options then they will fail,” he said. “We all have to share some sort of risk in these negotiations.”

The mining and steel industries have been discussing the concept of a green premium, Klockner said. Green premiums have actually been applied in some instances, but in very niche markets and small volumes.

“Who is going to absorb these extra costs?” she said. “Because we know that to decarbonize, we are going to have an extra cost.”

The final clients are not going to accept a green premium, she said. To overcome this, Vale plans to work alongside developers to move past the traditional buyer-and-seller model and into a co-investment strategy.

“We know those developers have a lot of challenges,” she said. “I think we need to exchange those challenges and build the business case together. That’s the only way that I see for us to overcome this cost issue.”

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Denbury to transport CO2 for Louisiana blue methanol project

A subsidiary of Denbury Inc. will transport and store CO2 for a planned blue methanol plant in Lake Charles, Louisiana.

Denbury Carbon Solutions has executed a 20-year definitive agreement to provide CO2 transportation and storage services to Lake Charles Methanol in association with that company’s planned 3.6 MMPTA blue methanol project, according to a press release.

LCM’s facility will be located along the Calcasieu River near Lake Charles, Louisiana, approximately 10 miles from Denbury’s Green Pipeline.

The facility is designed to utilize Topsoe’s SynCORTM technology to convert natural gas into hydrogen which will be synthesized into methanol while incorporating carbon capture and sequestration.

The process is anticipated to deliver more than 500 million kilograms of hydrogen per year as a feedstock to produce the 3.6 MMTPA of blue methanol.

LCM is finalizing its major permits to begin construction. The project is expected to reach a Final Investment Decision in 2023 with first production anticipated in 2027.

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