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Stonepeak acquires 50% stake in Virginia offshore wind farm

The infrastructure fund will acquire a 50% stake in Dominion's Coastal Virginia Offshore Wind project for $3bn.

Stonepeak, a leading alternative investment firm specializing in infrastructure and real assets, today announced that it has reached an agreement with Dominion Energy to acquire a 50% interest in its Coastal Virginia Offshore Wind project through the formation of an offshore wind partnership.

The project is expected to be the largest offshore wind farm in the U.S. and one of the largest offshore wind farms globally upon completion.

CVOW is a 2.6 GW offshore wind project 27 miles off the coast of Virginia Beach, Virginia capable of serving the power needs of 660,000 homes.

Dominion Energy began developing CVOW in 2013 and is scheduled to begin offshore construction this spring. Construction is expected to be completed by year-end 2026. When fully constructed, each year CVOW will avoid carbon emissions equivalent to removing 1 million cars from the road, and will play an important role in supporting energy security and reliability, and lowering fuel costs by diversifying Dominion Energy customers’ energy supply.

Under the terms of the agreement, at closing Dominion Energy expects to receive proceeds of approximately $3bn, representing 50% of the CVOW construction costs incurred through closing less $145m (the initial withholding), Dominion said in a separate press release.

If the final construction costs of CVOW are $9.8bn or less, excluding financing costs, Dominion Energy will receive $100 million of the initial withholding. Such amount is subject to downward adjustment with Dominion Energy receiving no withheld amounts if the total costs, excluding financing costs, of CVOW exceed $11.3 billion. The transaction is expected to improve the company’s estimated 2024 consolidated FFO-to-debt by approximately 1.0% and reduce the company’s overall financing needs during construction.

Following closing, Dominion Energy and Stonepeak will each contribute 50% of the remaining capital necessary to fund construction of CVOW, provided the total project cost, excluding financing costs, is less than $11.3 billion (mandatory capital contributions). This represents 50/50 cost-sharing up to 15%, or nearly $1.5 billion, higher than the project’s current project budget ($9.8 billion) and up to 20%, or nearly $2.0 billion, higher than the project’s current pre-contingency budget ($9.45 billion).

“Having previously partnered with Dominion Energy, we look forward to extending our relationship through CVOW, which is a fitting addition to our global renewables strategy given its potential to provide meaningful renewable capacity to the U.S., advanced stage of development, and downside-protected fundamentals,” said Rob Kupchak, Senior Managing Director at Stonepeak. “Dominion Energy’s impressive track record building and operating large-scale infrastructure projects paired with Stonepeak’s experience successfully constructing offshore wind assets gives us confidence in CVOW’s path forward, and we are excited to partner with Dominion in delivering this critical renewable energy generation resource to its customers.”

Dominion Energy will continue to oversee CVOW’s day-to-day operations and construction at close, supported by Stonepeak’s expertise in investing in and delivering large and complex renewables and energy infrastructure projects including offshore wind. The transaction is subject to customary and regulatory approvals and is expected to be completed by the end of 2024.

Vinson & Elkins LLP served as legal advisor to Stonepeak. Mizuho Securities USA, through its affiliate Greenhill & Co., and Santander US Capital Markets LLC served as co-financial advisors.

McGuireWoods LLP and Morgan Lewis served as legal advisors to Dominion. Citi and Goldman Sachs & Co. LLC acted as sellside co-financial advisors for the transaction.

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700 MW electrolysis capacity for H2 Green Steel plant

thyssenkrupp nucera will provide electrolysis capacity for H2 Green Steel’s plant in Sweden.

The agreement between the Germany-based specialist for high-efficient water electrolysis, thyssenkrupp nucera, and the Swedish industrial start-up H2 Green Steel, secures capacity of more than 700MW for H2 Green Steel’s electrolysis plant in Boden – making it one of the world’s largest electrolysis plants announced to date.

According to a news release, the agreement with thyssenkrupp nucera will cover alkaline water electrolysis technology (AWE) and large-scale electrolysis plant engineering. thyssenkrupp nucera has a proven track record with more than 600 installed projects and over 10 GW capacity in the chlor-alkali technology, which is the DNA for ‘scalum’, its large-scale 20 MW standard AWE module.

“This electrolyzer agreement indicates a change in market dynamics and is also a proof of our new business model for reservation of production capacity. For customers where time-to-market is critical, ensuring access to production capacity of leading electrolyzer technology becomes essential. With this bold investment, H2 Green Steel has shown a strong commitment to their timeline to decarbonize the steel industry and we look forward to working with them,” says Dr. Werner Ponikwar, CEO of thyssenkrupp nucera AG & Co. KGaA.

Through this collaboration, thyssenkrupp nucera will deliver capacity of more than 700MW to the electrolysis plant, likely making the H2 Green Steel plant one of the world’s largest AWE installation by the time its commissioned.

The giga-scale electrolysis plant, the first globally, is based on a concept where H2 Green Steel uniquely will use several complementing technologies for green hydrogen production, enabling balancing of the system for cost- optimization and operational flow as each technology’s core benefits can be harvested. To build it, H2 Green steel is teaming up with different world-leading partners and expertise in design, construction, equipment, operations and financing.

“The electrolysis plant in Boden will be many times bigger than most electrolyzer installations that exist today. Combining our own strong technical expertise with that of an experienced electrolysis supplier like thyssenkrupp nucera gives us a solid edge in the growing green hydrogen economy, which we will leverage to transform hard to abate industries. We start with steel in Boden, Sweden, but it’s only the beginning,” says Maria Persson Gulda, Chief Technology Officer H2 Green Steel.

Hydrogen produced in the electrolysis plant in Boden will be consumed on-site in a direct reduction process, reducing iron ore to sponge iron, enabling production of green steel. The electrolyzer units will be crucial to maximize the operational and economic benefits of the hydrogen in the steel mill, which also forms the foundation for new patented intellectual property assets.

The work leading up to the signing of the contract was enabled through support from Sweden’s Industrial Leap programme, led by the Swedish Energy Agency.

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Raven SR brings in Chevron and Hyzon for California waste-to-hydrogen project

Chevron New Energies and Hyzon Motors are strategic investors in Raven SR, and have joined the Richmond, California project as owners and offtakers.

Raven SR, a renewable fuels company, Chevron New Energies, a division of Chevron U.S.A., a subsidiary of Chevron Corporation, and Hyzon Motors Inc. are collaborating to commercialize operations of a green waste-to-hydrogen production facility in Richmond intended to supply hydrogen fuel to transportation markets in Northern California.

The facility will be owned by a newly formed company, Raven SR S1 LLC (Raven SR S1). Raven SR will be the operator of the facility, which is targeted to come online in the first quarter of 2024. Chevron holds a 50% equity stake in Raven SR 1. Raven SR holds a 30% stake and Hyzon owns the remaining 20%.

To produce the hydrogen, the project is expected to divert up to 99 wet tons of green and food waste per day from Republic Services’ West Contra Costa Sanitary Landfill into its non-combustion Steam/CO2 Reforming process, producing up to 2,400 metric-tons per year of renewable hydrogen. Diversion of this organic waste will help fulfill California’s SB 1383 mandates, and will potentially avoid up to 7,200 metric-tons per year of CO2 emissions from the landfill. In addition, Raven’s technology uses no fresh water, an important element given drought risks in California, and uses less electricity to power its units than competing processes. The project is expected to produce at least 60% of its own electricity by upgrading the currently permitted and zoned landfill gas electric generators at the landfill, further reducing both the current air emissions and the need for grid power for its non-combustion process.

Chevron plans to market its share of the hydrogen in Bay Area and Northern California fueling stations, enabling the energy transition to zero emission vehicles. Hyzon, a global supplier of fuel cell electric commercial vehicles, plans to provide refueling for hydrogen fuel cell trucks at a hydrogen hub in Richmond.

“Our strategic partners’ commitment to the first non-combustion Steam/CO2 facility in the world will help drive our commercial operations in Richmond and accelerate similar facilities globally,” said Matt Murdock, CEO of Raven. “This facility will be the first hydrogen production plant in the world to reduce greenhouse gases, including critically important short-lived climate pollutants, through its process and its product. By removing waste from the landfill, it will help reduce methane emissions. Not only will the greater Richmond community benefit from reduced emissions, investments, and jobs, it will also see economic benefits as local gas stations have a consistent supply of clean, zero-carbon hydrogen fuel for fuel cell vehicles. We are grateful to work with partners who share our mission to make cleaner fuel options available as soon as possible.”

Ahead of teaming with Raven SR on the Raven SR S1 facility, Chevron and Hyzon were among Raven SR’s initial strategic investors, along with ITOCHU, Ascent Hydrogen Fund and Samsung Ventures.

“We are excited about this collaboration and our expanded commitment to Raven and its waste-to-hydrogen technology,” said Austin Knight, vice president of Hydrogen for Chevron New Energies. “Not only are we positioned to commercialize a first-of-its-kind lower carbon hydrogen project, we are working to reduce emissions in a community in which we have a long and proud history. With a relatively short lead time, we will be able to further develop the hydrogen ecosystem in the region.”

The Raven SR technology is a non-combustion thermal, chemical reductive process that converts organic waste and landfill gas to hydrogen and Fischer-Tropsch synthetic fuels. Unlike other hydrogen production technologies, its Steam/CO2 Reformation does not require fresh water as a feedstock and uses less than half the energy of electrolysis. The process is more efficient than conventional hydrogen production and can deliver fuel with low to negative carbon intensity. Additionally, Raven SR’s goal is to generate as much of its own power onsite as possible to reduce reliance on, and/or be independent of the grid. Its modular design provides a scalable means to locally produce renewable hydrogen and synthetic liquid fuels from local waste.

“The Richmond hub enables a local, renewable hydrogen ecosystem by aligning hydrogen production, refueling infrastructure and vehicle availability geographically and technologically. This alignment is expected to reduce total costs to fleet operators, accelerating the transition to zero-emissions vehicles and global decarbonization,” said Parker Meeks, Hyzon president and interim CEO.

“This marks a significant step in demonstrating the commercial viability of a localized, low-to-negative carbon intensity hydrogen economy,” he added. “Through Hyzon’s partnership with Raven, hydrogen supply can be synchronized with the demand for hydrogen fuel cell electric vehicles. Raven’s deployment of scalable hydrogen production facilities allows supply and demand to grow together as clean hydrogen for transport continues to gain market and regulatory support.”

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Hydrogen tech start-up commissions onsite H2 production unit

Calgary-based Azolla Hydrogen has commissioned technology that produces fuel-cell spec hydrogen onsite.

Azolla Hydrogen has commissioned technology that produces fuel-cell spec hydrogen onsite.

The AZ225 Biodrome unit will be capable of producing 225kg of hydrogen per day utilizing a footprint of 424sq.ft, according to a news release.

The unit combines Azolla Hydrogen’s Biodrome technology with a 400 Bar Neuman & Esser compressor creating a seamless and efficient system, the release says.

“This is in alignment with our 2023 commercialization plan to offer additional production capacity and pressures to meet customer demand,” said Jared Sayers, CEO of Azolla Hydrogen. “The AZ225 Biodrome unit represents a major step forward in producing and delivering low-carbon hydrogen fuel. We look forward to working with our customers to bring this innovative solution to their businesses.”

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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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Exclusive: Zero-emission locomotive start-up in Series B capital raise

A locomotive start-up focused on the US market for zero-emission freight trains is undergoing a Series B capital raise, with sights on a much larger Series C raise next year.

OptiFuel Systems, a provider of zero-emission line haul locomotives and generation solutions, is conducting a $30m Series B capital raise.

The South Carolina-based firm is seeking to finalize the Series B by the end of this year, and plans to use proceeds to advance production of its zero-emission technologies for the rail industry, which represents a massive decarbonization opportunity, CEO Scott Myers said in an interview.

Meanwhile, the firm will seek to tap the market for around $150m for a Series C next year, Myers added. The company is not working with a financial adviser. 

While the Series B will focus on bringing to production some of OptiFuel’s smaller rail offerings, such as the switcher locomotives, the Series C will be mostly dedicated to progressing testing, manufacturing, and commercialization of its larger line haul locomotive.

The company is also considering making its own investments into digesters for RNG facilities, from which it would source the gas to run its RNG-fueled locomotives. As part of its offering, OptiFuel also provides refueling infrastructure, and envisions this aspect of its business to be just as profitable as selling trains.

“We anticipate that we would be the offtaker” of RNG, “and quite potentially, the producer,” Cynthia Heinz, an OptiFuel board member, said in the interview.

A systems integrator, OptiFuel offers modular locomotives for the freight industry that can run on zero-emission technology such as renewable natural gas, batteries, and hydrogen. The company recently announced that it will begin testing of its RNG line haul locomotive, which is a 1-million-mile test program that will take two years and require 10 RNG line haul locomotives.

Image: OptiFuel

The company’s target market is the 38,000 operating freight trains in the U.S., 25,000 of which are line haul locomotives run by operators like BASF, Union Pacific, and CSX. Fleet owners will be required to phase out diesel-powered trains starting next decade following passage of in-use locomotive requirements in California, which includes financial penalties for pollution and eventual restrictions on polluting locomotives. Other states are evaluating similar measures.

“The question is not will the railroads change over: they have to,” Myers said. “The question is, how fast?”

Following completion of testing, OptiFuel aims to begin full production of the line haul locomotive – which has a price tag of $5.5m per unit – in 2028, and is aiming to produce 2,000 per year as a starting point. The smaller switcher units are priced between $1.5m and $2.5m depending on horsepower.

OptiFuel has held discussions with Cummins, one of its equipment providers, to source at least 2,000 engines per year from Cummins to support its production goal. 

“That’s a $10bn-a-year market for us,” Myers added.

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Exclusive: Appalachian biogas firm seeking project debt

An RNG developer based in Appalachia with projects across the US is seeking project debt financing.

Northern Biogas, the West Virginia-based developer and operator of anaerobic digester and RNG facilities, is independently seeking debt for its project pipeline, according to two sources familiar with the matter.

Backed by HIG Capital, Northern Biogas serves diary, landfill, food waste and municipal projects. The company has raised some $200m in debt with assistance from alternative energy finance provider Pathward National Association, one source said. Project debt has typically been raised in tranches of $20m to $30m for individual projects.

Northern Biogas’ portfolio includes five dairy farm projects under construction in Wisconsin and one in Michigan, according to the company’s website. The company has a presence in Texas and Colorado as well.

Representatives of the company did not respond to requests for comment.
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