Project news

Trafigura orders ammonia powered vessels from HD Hyundai

Trafigura has signed a contract for four Medium Gas Carriers, capable of using low-carbon ammonia as a propulsion fuel, from the HD Hyundai Mipo Dockyard in South Korea.

May 3, 2024

Trafigura has signed a contract for four Medium Gas Carriers that will be capable of using low-carbon ammonia as a propulsion fuel when delivered, according to a news release.

The vessels will be built at HD Hyundai Mipo Dockyard in Ulsan, South Korea; they will carry LPG or ammonia and the first ship will be delivered in 2027.

Each vessel, when delivered, will be equipped with a dual-fuel low-carbon ammonia engine.

Trafigura is one of the world’s largest charterers of vessels, responsible for more than 5,000 voyages a year with around 400 ships currently under management.

The company is one of the few operators to have tested a full range of alternative shipping fuels including LNG, methanol, LPG and biofuels on its owned and chartered vessels. It has co-sponsored the development of a two-stroke engine by MAN Energy Solutions that can run on green ammonia and is also investing in on-board carbon emission capture technology.

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Innovation, M&A, Raising capital

Brookfield-backed CCS developer raises CAD 200m

BMO Capital Markets advised Canada Growth Fund on a CAD 200m investment in Entropy, which was coupled with a fixed-price carbon credit purchase agreement of up to one million tonnes per annum.

Canada Growth Fund Inc. has entered into a strategic investment agreement with Entropy Inc., a Calgary-based developer of carbon capture and sequestration projects.

CGF has agreed to a CAD 200m investment in Entropy coupled with a fixed-price carbon credit purchase agreement of up to one million tonnes per annum, according to a news release.

Once fully drawn, the investment could result in CGF owning approximately 20% of Entropy. Brookfield will continue to invest the balance of its existing CAD 300m hybrid security into the business, by which point it would be the largest shareholder and control Entropy.

Osler, Hoskin & Harcourt LLP and BMO Capital Markets acted as advisors to Canada Growth Fund Inc.

Burnet, Duckworth & Palmer LLP and TD Securities Inc. acted as advisors to Entropy Inc.

According to the release, the strategic growth partnership represents an important new investment in Canadian carbon markets. The features of the CCO—notably its large scale and its long-term fixed-price—represent a global first in compliance markets. This financeable structure helps to de-risk and accelerate private CCS investment by establishing carbon price certainty for Canadian projects.

One pillar of CGF’s mandate is to invest in projects and technologies, including CCS, that hold significant potential to reduce emissions across the Canadian economy. A second pillar is to scale promising Canadian clean technology champions that can help create value for Canadians.

In March 2022, Entropy announced a strategic CAD 300 million investment agreement with Brookfield, via the Brookfield Global Transition Fund, to scale up the deployment of Entropy’s CCS technology globally. Today’s announcement builds on this strong foundation and provides greater revenue certainty to accelerate Entropy’s major investments in Canada.

Transaction Highlights

Definitive agreements between Entropy and CGF to accelerate the decarbonization of hard-to-abate industries in Canada;
CGF to invest CAD 200m in Entropy for the development of Canadian CCS projects and for corporate purposes which, once fully drawn, could result in CGF owning approximately 20% of Entropy;
Brookfield will continue to invest the balance of its existing CAD 300 million hybrid security into the business, by which point it would be the largest shareholder and control Entropy;
CGF to provide the first ever large-scale, long-term, fixed-price CCO in a compliance carbon market, committing to purchase up to one million tpa of carbon credits for 15 years;
The initial allocation of CCO commitment will allow Entropy to proceed with its Glacier Phase 2 project, targeting the sale of up to 185,000 tpa of Alberta TIER carbon credits at an initial price of $86.50 per tonne for a term of 15 years;
The balance of the remaining CCO will be available for Entropy to underwrite additional third-party projects on similar terms in Canada;
Post-investment, Entropy will have approximately CAD 460 million of capital available which, together with investment tax credits, carbon capture incentives and project financing, establishes a path to execute over CAD 1 billion of CCS projects and abate more than 1 million metric tonnes per annum (“MMTPA”) of emissions, with a focus on the Canadian market.

Deal Structure Overview

CGF’s investment in Entropy is via a hybrid security similar to the prior investment from Brookfield (please see Entropy news release dated March 28, 2022), though at a valuation that reflects the numerous advancements of the business in the last two years. The flexible structure ensures access to capital for Entropy and retains flexible liquidity options for all major investors including Brookfield, CGF and Advantage (the Company’s controlling shareholder). Funding draws from Brookfield and CGF for Canadian projects and corporate purposes will proceed in tandem.

Coupled with the CGF investment, Entropy and CGF have entered into a CCO agreement whereby CGF has committed to purchase up to 9 million tonnes (up to 600,000 tpa over a 15-year term) of TIER or equivalent carbon credits from Entropy projects. The initial project to benefit from the CCO is intended to be Advantage Glacier Phase 2, drawing up to 185,000 tpa at an initial price of $86.50 per tonne, for a total of approximately 2.8 million tonnes over the 15-year term. With this CCO agreement in place, CGF has absorbed the carbon pricing risk for the project. Entropy is therefore pleased to announce provisional final investment decision of Glacier Phase 2.

Beyond Glacier Phase 2, CGF and Entropy intend to enter into separate CCO agreements for other Canadian projects, on terms that are expected to provide similar investment returns. Upon successful deployment of the initial 600,000 tpa of CCO, CGF may make available a further 400,000 tpa of CCOs for additional Entropy Canadian CCS projects.

CGF will nominate one member to the Entropy Board of Directors and is pleased to participate in the growth and evolution of this Canadian clean technology leader. Advantage and Brookfield will retain their existing Entropy board representation.

December 20, 2023

M&A

Subsurface storage firm makes first acquisitions

Caliche Development Partners has acquired two natural gas storage assets from Southern Company, which could serve as a bridge to storing helium, hydrogen, and CO2 in similar formations.

Caliche Development Partners II, Orion Infrastructure Capital (OIC), and GCM Grosvenor have reached a partnership targeting underground storage and sequestration assets in North America, according to a press release.

The capital commitments represent OIC’s second investment with the Caliche management team, and Caliche’s first with OIC’s frequent investment partner GCM Grosvenor, which invested client capital. Both firms bring extensive experience in infrastructure investing to Caliche’s next iteration, which will target underground assets supporting North America’s transition to lower-carbon forms of energy.

The partnership’s initial acquisition of Golden Triangle Storage, Inc. (GTS), together with the anticipated acquisition of Central Valley Gas Storage (CVGS), from Southern Company affiliates, targets two regions with increasing demand for storage to support variable power loads, natural gas liquefaction, and high penetrations of renewable resources.

Acquisition amounts funded and/or anticipated to be funded by OIC, GCM Grosvenor, and Caliche management collectively total $186m, which represents the aggregate purchase price of both GTS and CVGS, plus working capital and other adjustments. Caliche expects, with support from OIC and GCM Grosvenor, to explore and assess additional growth related to these assets and in these regions. The GTS transaction closed on November 18, 2022, and the CVGS purchase, which requires state regulatory approvals, is expected to close in 2023.

“Natural gas storage will continue to play an important role in our energy mix while providing the assets and knowledge to storing helium, hydrogen and CO2 in similar formations,” said Dave Marchese, CEO of Caliche II. “The support of our repeat and new capital partners combined with the location of these two acquisitions, and their exceptional operational teams, provide Caliche a platform to significantly impact the energy transition on the U.S. Gulf and West Coasts.”

“We are thrilled to partner with the Caliche team again and with GCM Grosvenor to build off the success of Caliche I,” said Ethan Shoemaker, investment partner and head of infra credit at OIC. “GTS and CVGS are both premier storage assets and provide critical infrastructure for reliability in their respective markets. We look forward to supporting Caliche II’s continued growth as we expand the platform for other customers and into new products.”

“We believe the investment opportunity for underground storage is robust in light of market dynamics and ongoing energy transition initiatives across the globe,” said Matthew Rinklin, managing director at GCM Grosvenor. “The Caliche team has a proven track record of developing critical storage infrastructure for a range of customers across fuel types, and we look forward to growing their platform alongside our partners at OIC.”

Caliche welcomes GTS and CVGS employees to its culture of providing safe and environmentally conscious underground storage services. The Caliche team has a proven history of operating on the Spindletop salt dome, where GTS is located, and will leverage its expertise from its prior storage business—Coastal Caverns—for the success of both facilities.

Under the Caliche team’s stewardship, Coastal Caverns operated with a TIRR of zero (0), an industry leading environmental record. The team’s decision-making hierarchy of “Safety, Asset Integrity, Stakeholder Stewardship and On-Demand Deliverability” comes from a combined 65 years of collective underground storage experience, with products including NGLs, oil, helium and natural gas. Underground natural gas storage provides unparalleled flexibility for the entry of renewable generation resources into power grids, support for LNG exports to Europe and Asia, and ultimately provides the asset base and knowledge to move to carbon-neutral forms of generation.

The Caliche team previously developed North America’s first helium storage salt cavern and is committed to now applying the team’s decades of experience working together to the upcoming challenges of storing helium, hydrogen and sequestered CO2.

November 29, 2022

Innovation, Project news

Nel needs more orders to build Michigan electrolyzer plant

Nel Hydrogen executives said today that they will need to win more large-scale orders in order to take a positive final investment decision on a proposed Michigan electrolyzer factory.

Norway-based Nel Hydrogen will need to win more large-scale orders in order to build its proposed electrolyzer gigafactory in Michigan, executives said today.

The company announced last month that it has selected Plymouth Charter Township near Detroit as the location for the plant, with an anticipated annual capacity of 4 GW between PEM and alkaline technology.

Nel has so far secured more than $50 million in financial support for the site. Pending approval of additional state and federal applications, this amount could increase to around $150m.

The company has still not made a final investment decision on the facility, and does not provide a timeline for when it expects to do so.

“For us to do something in Michigan we first need to utilize the capacity that we are building now,” CEO Håkon Volldal said. “It doesn’t make sense to build another factory in Michigan and run our current facilities with utilization rates at sixty to seventy percent.”

To execute on the new plant, it would take large-scale orders that they would ideally like to produce and deliver in the US.

“We will not invest a lot of capital up front and wait for the order,” he said. “We would like to see the orders materialize before we invest, and that’s why we don’t give an exact schedule for when we start the construction.”

Nel’s order intake for 3Q23 came in at 352 NOK ($31m), the lowest of the previous four quarters. Volldal noted that Nel’s win rate for electrolyzer contracts remains around one or two per quarter; however, the 3Q contract wins were smaller compared to previous quarters.

Its total backlog for electrolyzers stands at 2,442bn NOK ($218.5m).

October 25, 2023

Innovation, Project news, Raising capital

Exclusive: Advanced Ionics raising $12.5m, seeking pilot project partners

Advanced Ionics, an electrolyzer developer based in the Midwest, is approaching a close on the second tranche of its Series A and is seeking sponsors for pilot projects in Texas and elsewhere.

The company’s Symbiotic electrolyzers use steam by tapping into excess heat from industrial settings, thereby lowering electricity needs for water splitting to 35 kWh per kg, with 30 kWh per kg possible. That compares to industry averages over 50 kWh per kg.

Advanced Ionics, the Milwaukee-based electrolyzer developer, is about six weeks out from closing a second tranche of its Series A and is seeking new partnerships for pilot projects in the US, Chief Commercial Officer Ignacio Bincaz told ReSource.

Bincaz, based in Houston, is working to close the second $12.5m tranche, which is roughly the same size as the first tranche. The company has technical teams in Wisconsin but could build out those as well as commercial capabilities in Houston.

“We just put together our first stack, Generation One, which are 100 square centimeters,” Bincaz said. Generation Two stacks will come later this year, but to get to Generation Three — commercial size, producing between 7 and 16 tons per day — the company will have to conduct a Series B about one year from now.

“For that, we need to hit certain benchmarks on durability of a stack,” he said. “The money will go toward scaling up and getting the data expected by investors to get us to Series B.”

Aside from equity provisions, Advanced Ionics is looking for sponsors for pilots and related studies, Bincaz said. “There’s different ways that we’re looking for collaboration.”

Between 2027 and 2028 the company expects to have commercial-size Generation Three stacks in the market.

Pilot projects

Advanced Ionics has two pilot projects in development with Repsol Foundation and Arpa-E (US Department of Energy), respectively.

The Repsol project is a Generation One development producing 1 kilogram per day, Bincaz said. The government project will be the first Generation Two project.

Another pilot is in development with a large energy company that Bincaz declined to name. The company is also exploring pilot projects with bp, which is an investor in the company.

After four or so pilot projects of ascending scale, the company will look to do its first industrial-scale project using real process heat or steam, integrated into a hydrogen-use process like ammonia manufacturing or chemical refining.

“We’re talking to companies in Asia, companies in Europe, companies in the US,” he said, specifically naming Japan and Singapore. “I’m in early conversations.”

Advanced Ionics’ first tranche Series A was led by bp ventures, with participation from Clean Energy Ventures, Mitsubishi Heavy Industries, and GVP Climate.

April 5, 2024

Project finance, Raising capital

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.

February 21, 2024

exclusive

M&A, Project finance, Project news, Raising capital

Renewables developer exploring move into green hydrogen

North Carolina-based Strata Clean Energy is engaged with engineers and consultants in preparations for a potential move into the production of green hydrogen.

Strata Clean Energy, the North Carolina-based utility-scale renewables developer, is researching locations in the U.S. where it could potentially build a green hydrogen production plant, executives said in an interview.

“We’ve been doing some hydrogen work for the past few years,” said Tiago Sabino Dias, former CEO of Crossover Energy, which was acquired by Strata in a deal announced this week. That forward momentum on green hydrogen and other areas of the energy transition was part of the reason the deal with Strata was made, he said.

Sabino Dias is now the senior vice president of origination at Strata following the takeover.

“We’ve done a lot of work thinking about where the high-value locations are,” Strata’s Chief Development Officer Josh Rogol said in a separate interview.

Hydrogen is adjacent to Strata’s core competencies in energy storage, Rogol said. The company is confident it could supply the green kilowatt hours for hydrogen production and is researching offtake scenarios in transportation and industrial uses.

Strata has a 13 GW project pipeline of standalone and combined solar and storage, according to its website, with 4 GW under management.

The company’s IPP has about 1 GW with ambitions to grow, Rogol said. It’s go-forward pipeline comprises more than 100 projects across 26 states.

Strata is now engaged with several consultants and engineers to explore green hydrogen opportunities, Rogol said. The company is open to new advisory relationships across verticals.

“We think we are really well positioned to be both the energy supplier, as well as the molecule producer,” Rogol said. The capabilities and intellectual property acquired through Crossover put the firm six to 18 months ahead of other nascent developers.

Early-stage development in green hydrogen can be funded with Strata’s balance sheet, similar to Strata’s bilateral takeover of Crossover, Rogol said. Later stage development and EPC will require “an ecosystem of partners” potentially both financial and strategic, he added.

November 18, 2022