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Stonepeak commits $400m to RNG developer

Stonepeak will provide a loan bearing 9.5% interest for new RNG production facilities as well as the expansion of the company’s fueling infrastructure.

Clean Energy Fuels Corp. has entered into a six-year $300m senior secured term loan with Stonepeak, an alternative investment firm specializing in infrastructure and real assets, according to a news release.

The credit agreement also provides for a two-year delayed draw term loan commitment of an additional $100m.

In addition to repaying existing loans, the financing from Stonepeak will provide Clean Energy with capital for new renewable natural gas (RNG) production facilities, as well as the expansion of the company’s fueling infrastructure targeting the heavy-duty truck market.

The term loan bears interest at 9.5% per annum. During the first two years, Clean Energy may elect to pay up to 75% of the interest in kind. The term loan matures on December 12, 2029 and may be repaid by Clean Energy at any time in an amount that results in Stonepeak achieving the greater of (i) 11.5% internal rate of return and (ii) 1.4x multiple on invested capital, subject to certain exceptions. In connection with this transaction, Clean Energy issued warrants to Stonepeak for the purchase of 10 million shares of common stock with an exercise price of $5.50 per share and 10 million shares of common stock with an exercise price of $6.50 per share. The warrants expire on June 15, 2032 and are exercisable at any time after December 12, 2025.

Clean Energy currently provides RNG to hundreds of fleets every day in the form of compressed natural gas (CNG) and liquified natural gas (LNG), which enables them to decarbonize their large vehicles easily and affordably.

“Stonepeak is one of the most well-respected infrastructure investment firms operating in the energy transition space and we’re excited to partner with them as we grow our RNG business,” said Clay Corbus, senior vice president for strategic development and head of Renewable Fuels at Clean Energy. “This financing agreement is very timely as we continue to see more RNG development opportunities come our way, and as we anticipate building additional stations to accommodate increased demand due to the arrival of Cummins 15-liter natural gas engine.”

“We see RNG as a practical and affordable energy solution for the transportation sector, with tailwinds supporting increasing adoptability. This, combined with its ability to curb fugitive methane emissions, makes it a critical part of decarbonization infrastructure, in our view,” said Michael Bricker, Senior Managing Director at Stonepeak. “With its proven asset base and operating history, we believe that Clean Energy has differentiated itself both within this space and relative to earlier stage verticals and other platforms pursuing the energy transition. We look forward to partnering with the Clean Energy team in supporting the company’s next phase of growth.”

Clean Energy is currently developing a portfolio of RNG production facilities at dairies across the country. The first project is producing RNG in Texas and supplying it to the transportation market in Oregon through the state’s low carbon fuels program. Multiple other facilities are in the final stages of completion.

The company is also expanding its RNG fueling infrastructure, which currently includes over 600 stations across North America. This comes at a time when Cummins Inc. is testing a new larger natural gas engine for heavy-duty trucks with companies like Walmart, Werner, Knight Swift, and UPS. These fleets are experiencing an improved fuel economy with more torque and power than previous models, while at the same time dramatically reducing greenhouse gas (GHG) and NOx emissions compared to diesel. The 2024 commercial launch of the Cummins X15N engine is much anticipated by the industry.

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ZeroAvia closes latest funding round

The investment, comprising inputs from some of the largest aerospace and financial players, will enable the company to accelerate certification of its first engine.

Airbus, Barclays Sustainable Impact Capital and NEOM have co-led ZeroAvia’s latest fundraising round, according to a news release.

Breakthrough Energy Ventures, Horizons Ventures, Alaska Airlines, Ecosystem Integrity Fund, Summa Equity, AP Ventures and Amazon Climate Pledge Fund have also participated in the investment.

ZeroAvia is developing hydrogen-electric aircraft engines for commercial aviation. The investment will enable the company to accelerate certification of its first engine.

In conjunction with the investment, Airbus and ZeroAvia have agreed to collaborate on certification approaches for hydrogen power systems. The companies intend to work together on critical technical areas, including liquid hydrogen fuel storage, flight and ground testing of fuel cell propulsion systems, and development of hydrogen refueling infrastructure and operations.

The investment will support ZeroAvia’s first product – ZA600 – through to certification. The company recently completed the first stage of flight testing of the prototype ZA600 and is moving to complete design work ahead of certification, targeting 2025 entry-in-service to support up to 20 seat aircraft.

The larger engine program, the ZA2000, is for a 2-5.4 MW modular powertrain designed to support larger commercial aircraft applications. The company is working on retrofitting a Dash 8 400 76-seat testbed demonstrator provided by Alaska Airlines, with a view to first flight testing with a full size engine in 2024.

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Capstone Green Energy CEO resigns

The resignation is effective August 22 and the board is initiating a search process to fill the position.

Darren Jamison has resigned as President and CEO of the publicly traded Capstone Green Energy Corporation, according to a news release.

The resignation is effective August 22 and the board is initiating a search process to fill the position.

Robert C. Flexon, Capstone Board Chair, was appointed as Executive Chairman of the board effective August 9, and was also appointed to serve as Interim President and CEO, from the effective date of Mr. Jamison’s resignation until a successor is named.

In connection with Mr. Flexon’s transition to Executive Chairman, Denise M. Wilson was appointed Lead Independent Director of the board. John J. Juric, who joined Capstone as Chief Financial Officer in March 2023, will continue to provide financial leadership for the company.

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Calumet receiving interest from strategics for SAF business

The specialty products maker is working with a banker as it fields interest from strategics for its sustainable aviation fuel business.

Specialty products maker Calumet is working with Lazard as it evaluates investment inquiries from strategics that are interested in the company’s sustainable aviation fuel (SAF) business.

Calumet has already contracted for 2,000 barrels per day of SAF with a blue-chip offtaker through its subsidiary Montana Renewables, based in Great Falls, Montana. That amount would make Calumet the largest SAF producer in North America once engineering modifications are complete in early 2023, said Louis Borgmann, CFO and EVP at Calumet.

Meanwhile, preliminary engineering work has been done to expand SAF production to as much as 15,000 barrels per day, a “world-class position [that] has generated considerable interest from strategic investors,” Borgmann added on the company’s 3Q22 earnings call.

Calumet had engaged Lazard to conduct a process that culminated in a $250m investment in Montana Renewables from Warburg Pincus in August, 2022. The investment, in the form of a participating preferred equity security, valued Montana Renewables at a pre-commissioning enterprise value of $2.25bn.

“Lazard remains retained. They’re out there. They’re very opportunistic,” Borgmann said. “And inbound honestly picked up with SAF. So, we don’t feel a rush, but there could be an opportunistic deal here that we could consider.”

Borgmann added that Montana Renewables’ SAF capacity was quickly contracted at a premium to renewable diesel prices.

The company is positioned to be a first mover in the high-growth West Coast and Canadian markets for SAF, Borgmann said, noting Montana Renewables’ proximity to western airports.

“Montana Renewables’ proximity to end product markets is exceptional,” he said. “We serve renewable markets on the West Coast with direct BNSF Rail access. And we’re perfectly positioned to support the continuously growing low-carbon markets in Canada.”

The company and other renewable diesel producers “that have invested in the ability to produce SAF could expect a lasting advantage” compared to new, more expensive technologies for producing SAF, he said. “And Montana Renewables is expected to have an additional transportation cost advantage relative to its Gulf Coast competition.”

Montana Renewables reached a supply and offtake agreement with Macquarie, announced last week.

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Waste-to-hydrogen developer hires advisor for equity raise

A California developer of waste-to-hydrogen projects has mandated a boutique advisor to raise equity for early-stage project development and is planning a larger funding round in early 2024.

Clean Energy Enterprises, the holding company of awaste-to-hydrogen project developer based in Long beach, California, hasmandated a financial advisor to raise equity for early-stage development, CEO Jean-LouisKindler said in an interview.

Costigan Capital Partners, of Vancouver, Canada, has beenretained to raise an early round of $5m, Kindler said. That liquidity, split evenlybetween a demonstration project in California and operations, will last aboutone year.

Clean Energy is the holding company of WaysH2, which is thecompany developing the projects.

Next year Clean Energy will conduct a raise of equity anddebt between $30m and $50m, Kindler said.

Clean Energy, which is owned by five founding partners and earlyfriends-and-family backers, is also narrowing options for the first WaysH2 commercialproject in the US, Kindler said. The company has a client that will use hydrogenfor municipal transportation in the southwest.

The group has a relationship with Spanish EPC firm TechnicasReunidas and plans to pursue another demonstration project in either Spain or Portugal.

The technology play is waste-to-hydrogen at landfillprojects to serve end users in local mobility and waste processing energyrequirements.

He pointed to California’s SB 1383 regulations, which mandatesa reduction of organic waste disposal by 75% by 2025.

“It will be used locally,” Kindler said of the hydrogen. Thecompany is also in discussions with foreign ammonia producers. “We want to beclose to our clients.”

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Exclusive: Renewable fuels firm hires advisor for topco raise

A renewable fuels firm with operations in California has hired a bulge bracket bank to raise project and platform capital for new developments in the Gulf Coast.

Oberon Fuels, a California-based renewable fuels developer, has hired Morgan Stanley for a topco and project capital raise to launch soon, CEO Rebecca Bordreaux said in an interview.

The company, backed by Suburban Propane, plans to reach COD on its next facility in the Gulf Coast in 2026, Boudreaux said. Late last year the company hired its first CFO Ann Anthony and COO Derek Winkel.

Oberon produces rDME at its Maverick Innovation Center in Brawley, California and recently established a partnership with DCC Fuels focused on Europe.

The location of the Gulf Coast facility is not public, Bordreaux said, though the company aims to reach FID on it this year. When operational it would produce 45,000 mtpy of methanol, or a comparative amount of rDME. Capex on the facility is in the range of $200m.

The company is shifting toward production of methanol as a shipping fuel, she said. New opportunities also include using DME as a renewable hydrogen carrier, as the fuel is easily transportable and compatible with many existing logistical networks.

Oberon is also preparing to issue $100m of municipal bonds from the state of Texas, Bordreaux said.

More than $50m has been raised by the company to date, with Suburban Propane being the largest investor and customer in California, Bordreaux said. The company has a third project in the pre-FEED phase.

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Hydrogen developer raising equity for US and EU projects

A Washington, DC-based hydrogen developer has hired an advisor to raise equity for three projects in California, and is laying the groundwork for a second capital raise in the EU.

SGH2 Energy, a Washington D.C.-based hydrogen developer, is in the early stages of a process to raise project equity for its three California projects.

Morgan Stanley has been retained to run the process, which could result in taking on two investors, CEO Robert Do said in an interview. The company hopes to have the process wrapped up within three months, he added.

Do declined to disclose the amount he is seeking to raise, but said the company prefers a strategic investor that can co-develop projects outside of California.

Meanwhile, SGH2 has filled out 70% of the senior debt commitments it will need for its Lancaster, California plant, Do said. At the Lancaster plant, SGH2 plans to produce up to 12,000 kilograms (1,380 MMBtu) of clean hydrogen per day, and 4.5 million kilograms per year (517,000 MMBtu) from the conversion of 42,000 tons per year of rejected recycled mixed-paper waste.

An additional set of three projects in Germany, Belgium and Holland will need an equity provider as well, Do said. That process could launch at the end of this year and the company could hire additional financial advisors.

A less expensive proposition

In addition to the Lancaster plant, SGH2 is advancing a Bay Area agricultural waste-to-hydrogen project in Stockton and a Sierra Valley forest residue-to-hydrogen plant.

Lancaster has offtake agreements for 10 years, and the company is in talks with the same offtaker for the other projects.

SGH2’s process requires about five acres of land for a project, as opposed to about 300 acres for solar-powered electrolysis, Do said. The process also requires less water.

“It gives us a cost-competitiveness where we can be two-to-three times cheaper,” Do said.

SGH2 is exporting that process to Europe, Do said. The EU is still going through iterations of new legislation, particularly the Renewable Energy Directive III, that could clarify SGH2’s place in that market.

“Until the legislation is clear it’s hard to really launch the project and know what kind of support you’re getting,” Do said. SGH2 has sites, feedstock and development partners in place for Europe.

SGH2 was spun off from a technology development company that raised about $50m from various VC firms and energy companies, Do said. He is the controlling owner of SGH2.

Do plans to expand across the globe and will be raising money to fund projects in Korea, South Africa and elsewhere.

“There will be indeed opportunities for us to work with additional bankers and funders,” he said.

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