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Twelve granted $29m tax credit for CO2 electrolyzer development

Twelve will design, construct, and commission a pilot manufacturing facility for its Opus CO2 electrolyzer in Alameda, CA.

Twelve has been granted up to $28.5m in tax credits through the Qualifying Advanced Energy Project (48C) Investment Tax Credit (ITC) from the U.S. Department of Treasury Internal Revenue Service and the U.S. Department of Energy.

These funds will scale manufacturing of the Opus CO2 electrolyzer, according to a news release.

Through this project, Twelve will design, construct, and commission a pilot manufacturing facility for its Opus electrolyzer in Alameda, CA, establishing itself as the world’s largest manufacturer of PEM CO2 electrolyzers.

Twelve will manufacture these Opus units for deployment at its AirPlant™ facilities, which produce Power-to-Liquid (PtL) sustainable aviation fuel (SAF) and other CO2Made® chemicals, supporting the Administration’s ambitious decarbonization goals and enabling the scale needed to compete with petrochemical products. Twelve’s PtL E-Jet® fuel offers significant advantages over other SAF, including up to 90% lower emissions, nearly unlimited feedstock supply, up to 1000x less land use, and up to 30% less water use.

Beyond SAF, Twelve’s technology can transform CO2 emissions into a suite of valuable, carbon-based chemicals and materials. In order to deploy these AirPlant facilities nationwide, Twelve must rapidly expand internal CO2 electrolyzer manufacturing capabilities. The 48C allocation kickstarts this initiative. It provides dedicated investment towards Twelve’s first electrolyzer manufacturing facility and enables continued growth in expertise and manufacturing capabilities for this critical decarbonization technology.

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Braya issues green hydrogen provision RFP

The Canadian company has plans to use green hydrogen as a feedstock and to export green ammonia to domestic and international offtakers.

Braya Renewable Fuels has issued an RFP for the provision of green hydrogen as a feedstock for its refinery operations in Come By Chance, Newfoundland and Labrador, according to a press release.

Proposals are to be submitted by 19 December of this year.

Braya could also export green ammonia to local, regional, and international markets. The company is now repositioning the facility to produce renewable diesel and sustainable aviation fuel (SAF).

“Our production of renewable diesel requires substantial amounts of hydrogen feedstock every year,” the release states. “Braya has existing access to grey hydrogen; however, to produce the lowest carbon intensity rating possible, Braya is interested in acquiring green hydrogen to support its operations.”

At approximately 35,000 metric tons, the project would be the largest domestic green hydrogen project in Canada to date.

The operational footprint of the refinery, ample access to water, and existing infrastructure mean that production could be scale beyond Braya’s operational needs.

“Braya is open to capitalizing on potential opportunities with the successful proponent to scale green hydrogen and green ammonia production, storage, and handling to serve a larger market audience,” the release states. “… we have issued this RFP to solicit parties to support us with developing and exploring this opportunity.”

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US fuel cell developer garners tax equity investments

Connecticut-based fuel cell developer FuelCell Energy has closed on tax equity financings supporting at least three fuel cell projects in the US.

Connecticut-based fuel cell developer FuelCell Energy has closed on tax equity financings supporting at least three fuel cell projects in the US.

The company closed on a tax equity financing transaction with East West Bank for the 7.4 MW fuel cell project located on the US Navy Submarine Base in Groton, CT, also known as the Submarine Force. East West Bank’s tax equity commitment, closed in August 2021, totals $15m.

FuelCell Energy installed 7.4 MW of SureSource™ power platforms at the U.S. Navy Submarine Base in Groton, CT to provide a long-term supply of power to an existing electrical substation, according to a news release. The fuel cell plant is part of a multifaceted plan by the Connecticut Municipal Electric Energy Cooperative to provide new power resources and support the desire of the Department of Defense to add resiliency and grid independence to key military installations. The highly efficient fuel cell power generation project minimizes carbon output while providing continuous power to the strategic military base. The U.S. Navy continues to purchase power from CMEEC and Groton Utilities, who in turn purchase the power from FuelCell Energy under a 20-year power purchase agreement.

This pay-as-you-go structure enables CMEEC and the Navy to avoid a direct investment in owning the power plant which will be operated and maintained by the company.

The company also closed on a tax equity sale-leaseback financing transaction for the 1.4 MW SureSource 1500™ biofuels fuel cell project with the City of San Bernardino Municipal Water Department in California with Crestmark Equipment Finance, a division of MetaBank®. Crestmark’s commitment totals $10.2m through a ten-year sale-leaseback structure and further demonstrates the market’s interest in FuelCell Energy’s differentiated ability to use on-site biofuels, to eliminate flaring and deliver carbon neutral decarbonization energy platforms.

A third tax equity investment in 2021 came from Franklin Park for the 7.4  MW fuel cell project located in Yaphank, Long Island, in New York. Franklin Park’s tax equity commitment totals $12.7m following the declaration of mechanical completion of the project.

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French e-fuels developer takes investment from private equity pair

A French developer of low-carbon molecules has taken a convertible bond investment for its most advanced e-methanol and SAF projects in France and Spain.

Hy24 and Mirova are co-investing in Elyse Energy’s most advanced e-methanol projects in France and Spain, with industrial commissioning scheduled for 2027 and 2028.

Nomura Greentech acted as exclusive financial advisor to Elyse Energy. Legal advisors included CLP – Cliperton Avocats for Elyse Energy and Gide for Hy24 and Mirova, the companies said in a news release.

Hy24 is the hydrogen-focused wing of French private equity firm Ardian and Mirova is an affiliate of Natixis Investment Managers. The firms have undertaken the equity investment through their respective funds – the Hy24 Clean Infrastructure Fund and the Mirova Energy Transition 5 fund.

The transaction was carried out through convertible bonds, and Mirova and Hy24 are not shareholders of Elyse Energy, a spokesperson said in response to follow-up questions.

Additional terms of the transaction were not disclosed.

The money will allow Elyse Energy to recruit new employees and to continue development through feasibility studies, the industrialisation phase, and beyond. 

Elyse’s eM-Rhône project, awarded by the European Innovation Fund, is targeting production of 150,000 mtpy of green e-methanol annually for the maritime sector and industry. The BioTJet project in Pyrénées Atlantiques, France is in advanced stages with annual production set at 75,000 mtpy of e-biokerosene and 3,000 mtpy of naphtha..  

The company will deploy some 2.5 GW of installed capacity (1m mtpy) of e-methanol and 200,000 mtpy of SAF. The fuels will go to offtakers in aviation, maritime transport, and industrial processes in sectors such as chemicals.

Hy24 recently closed on a €1.5bn equity private placement in North America’s H2 Green Steel, together with existing investors Altor, GIC and Just Climate.
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Turnt up about turndown ratios

Optimizing electrolysis for renewables depends not just on how far you can turn the machine up, but how far you can turn it down. We asked electrolyzer makers: how low can you go?

Optimizing electrolysis for renewables depends not just on how far you can turn the machine up, but how far you can turn it down.

A consensus is growing around the importance of turndown ratios for electrolyzers, with a variety of use cases for green hydrogen requiring the machines to be run at low levels during periods of high power pricing.

Proton exchange membrane (PEM) electrolyzers are known for their ability to quickly ramp production up and down, but manufacturers of all stripes have begun to tout their technologies’ turndown ratios, with implications for capital costs and the levelized cost of producing hydrogen from renewable power.

Simply put, some electrolyzer plant operators will likely seek to lower hydrogen production during periods of high power pricing, since the cost of electricity is the largest operating expense. But cycling the electrolyzers completely off and on can lead to added system degradation, giving importance to the ability of the machines to run at low levels.

A study from the National Renewable Energy Laboratory (NREL) analyzes a US grid buildout through 2050, noting favorable locations and seasonality for power pricing as something of a guideline for green hydrogen development. The study notes that the lowest achievable turndown ratio is a main factor in minimizing hydrogen levelized cost along with the number of hours a system can operate at that minimum level – something that applies to all types of electrolyzers.

“When you start to look at hourly costs from the data in different locations, you see that all of this renewable buildout is going to create opportunities in given locations where you going to have a lot of renewable generation and not a lot of load on the system and that’s going to drive the cost for that energy down,” said Alex Badgett, an author of the study at NREL.

To be sure, the fast-moving technological environment for electrolysis leaves open the possibility for efficiency gains and disruptive innovation. And a variety of factors – balance of plant, energy efficiency, system degradation – also influence plant economics. But the lowest possible turndown ratios will drive opportunities for green hydrogen developers, Badgett said.

ReSource reviewed available spec sheets for electrolyzer providers and asked every maker of PEM and SOEC systems to detail the turndown capabilities of their machines. Alkaline electrolyzers were left out of the analysis given their more limited load flexibility, as their separators are less effective at preventing potentially dangerous cross-diffusion of gasses. Some manufacturers are fully transparent regarding turndown ranges while others declined to comment or did not reply to inquiries.

‘Not trivial’

In designing projects, developers are analyzing hourly energy supply schedules and pairing the outlook with what is known about available technology options.

“Some electrolyzers like to operate at half power, and others like to operate at full power, and in any given system, you can have between 10 and 50 electrolyzers wired and plumbed in parallel,” said Mike Grunow, who leads the Power-to-X platform at Strata Clean Energy.

“Our thought process even goes down to: let’s say you have to operate the H2 plant at 25% throughput. Do you operate all of the electrolyzers at 25%, or do you turn 75% of the electrolyzers off and only operate 25% at full power?”

The difference in the schemes, he added, is “not trivial as each technology has different efficiency curves and drivers of degradation.”

Different use cases for the hydrogen derivative, meanwhile, lead to different natural selection of technologies, Grunow said, adding that the innovation cycle is now happening every 12 months, requiring a close eye on advances in technology. 

Electrolyzer start-up Electric Hydrogen, a maker of PEM electrolyzers, is commercializing a 100 MW system that can turn down to 10%, according to Jason Mortimer, SVP of global sales at the company.

HyAxium, another start-up, can turn its system down to 10%, according to its materials. Norway-based Hystar, which recently announced plans to build a plant in the US, also promotes a 10% turndown ratio.

A more established PEM electrolyzer provider, Cummins, advertises turndown ratios of 5% for its machines. Sungrow Power, a China-based manufacturer, similarly advertises 5% for PEM electrolyzers.

Siemens Energy has a minimum turndown ratio per stack of 40%, but for a single system it can be less in exceptional cases, according to Claudia Nehring, a company spokesperson.

“We focus on large systems” – greater than 100 MW – “and currently consider this value to be appropriate, taking into account the optimization between efficiency, degradation and dynamics, but are working on an improvement,” she said via email.

ITM Power declined to provide details but said its turndown capabilities are “to be expected” for a market leader in this technology. Materials from German-based H-Tec Systems note a modulation rate down to 10%.

Additional PEM makers Nel, Ohmium, Elogen, H2B2, Hoeller Electrolyzer, Plug Power, Shanghai Electric, and Teledyne Energy Systems did not respond to requests for information.

PEM alternatives

Other forms of electrolysis can also ramp dynamically. And some project developers point to PEM’s use of iridium, part of the platinum metals family, as a drawback due to potential scarcity issues.

Verdagy, for example, has developed an advanced alkaline water electrolysis (AWE) system called eDynamic that it says takes the best of PEM and alkaline technologies while designing out the downsides.

The company’s technology “addresses the barriers that limited traditional AWE adoption by using single-element cells that can operate efficiently at high current densities,” executives said in response to emailed questions. 

“The ability to operate at very high current densities, coupled with a balance of stack and balance of plant optimized for dynamic operation, allow Verdagy’s electrolyzers to operate across a very broad range spanning 0.1-2.0 A/cm2,” they said.

In other words, the machine can turn down to 5%, part of the design that enables operators “to modulate production to take advantage of time-of-day pricing and/or fluctuations in energy production.”

Meanwhile, German-based Thysenkrupp Nucera, another maker of advanced water electrolyzers, advertises a 10% turndown ratio.

SOEC

A relatively new electrolysis technology, the solid oxide electrolyzer cell has also proven to be capable of low turndown ratios. Solid oxide electrolysis is particularly attractive when paired with high-temperature industrial processes, where heat can be captured and fed back into the high-temperature SOEC process, making it more efficient.

Joel Moser, the CEO of First Ammonia, said he chose SOEC from Denmark-based Haldor Topsoe in part because the machines can be turned completely off with no degradation, as long as you keep them warm.

“Generally speaking we expect to ramp up and ramp down between 100% and 10%,” he said. “We can turn them off as long as we keep them warm, and then we can turn them right back on.”

Still, SOEC systems are not without challenges.

“Low stack power and high operating temperature, which in turn requires more ancillary equipment to operate the electrolyzer, are widely viewed as the main drawbacks of SOEC technology,” according to a report from the Clean Air Task Force, which explores SOEC technology and its commercial prospects. “SOEC systems are also considered to have a shorter operating life due to thermal stress.”

Additional makers of SOEC machines Bloom Energy, Ceres, Elcogen, Genvia, SolydERA, and Toshiba did not respond to inquiries.

At NREL, researchers are watching for more automation and scale in the electrolyzer production process to bring costs down. Increasing efficiency through balance-of-plant improvements is another opportunity to reduce system costs.

In addition, more analysis of how large electrolyzer projects will impact the future electrical grid is required, according to Badgett.

The NREL team modeled the hourly marginal cost at any given time in any location in the US, but the model assumes that the electrolyzer takes energy without impacting the cost of energy.

“When we start to get to gigawatt-scale electrolysis,” he said, “that’s going to significantly impact prices, as well as how the grid is going to build out.”

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California biomass-to-hydrogen firm in Series A

A woody biomass-to-hydrogen firm in California is conducting an in-house Series A for engineering and design on its first project, one that will need more than $800m of debt and equity in the future.

Mote Inc. is aiming to finish a Series A round, raising between $12m and $15m, by the end of the year, CEO Joshuah Stolaroff said in an interview.

The company does not have a relationship with a financial advisor and has been conducting the raise in-house, he said. Moving forward the company will need a financial advisor.

The Series A will provide some 18 months of technology development runway, plus engineering and design on the first project in Bakersfield, Kern County. That will require some $800m in debt and project equity to start in the next year.

A second project in Sacramento is in the pre-Feed stage. That development is the subject of a recently secured grant from the Sacramento Municipal Utility District.

“We need big partners to do it on any meaningful scale,” Stolaroff said of biomass-to-hydrogen. Investors tend to be technology VCs with little or no knowledge of project finance, and infra funds looking for no-risk projects. “We fall somewhere in between.”

Part of the Arches H2 hub in California, Mote has ambitions to expand to other areas of the US with good biomass supply and CO2 storage, like the southeast and Gulf Coast, Stolaroff said. The company would also like to expand internationally.

“We are a great deal right now,” he said of the Series A,” adding that a Series B or project equity round will follow shortly.

Majority equity is held by the company’s six employees, Stolaroff said. There are also seed investors that hold equity.

Abundant feedstock and a growing offtake market

Mote’s three primary feedstocks are agricultural and forestry reside and urban green waste. California produces some 45m tons of it per year and the number nationwide is about half-a-billion, Stolaroff said.

Mote is confident for demand from hydrogen customers, Stoaroff said. Transportation is expected to be a strong demand source by the time Mote is operational. The Arches hub also has connections with municipal users, filling stations and the ports of LA and Long Beach.

“We are all planning for growth,” he said.

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Waste-to-energy company interviewing advisors for strategic capital raise

Vancouver-based Klean Industries plans to run a process to raise between $250m – $500m of capital to deploy into projects, some of which would use green hydrogen to upgrade recovered fuel and pyrolysis oils.

Waste-to-energy specialist Klean Industries is interviewing financial advisors and planning to run a process to find investors for a strategic capital raise.

The Vancouver-based company is seeking to raise between $250m – $500m in a minority stake sale that would value the company around $1bn, Klean CEO Jesse Klinkhamer said in an interview.

Klean had previously intended to list on the NASDAQ exchange but those plans were nixed due to the COVID-19 pandemic, he said. The company still plans to list publicly in 2024 or 2025.

Proceeds from a capital raise now would be used to “rapidly deploy” into the projects that Klean is advancing around the globe, Klinkhamer said.

For one of those projects – a flagship tire pyrolysis plant in Boardman, Oregon – Klean is raising non-recourse debt to finance construction, the executive said. Klinkhammer declined to name the advisor for the project financing but said news would be out soon and added that the company has aligned itself with infrastructure funds willing to provide non-recourse debt for the facility.

The Boardman project, which is expected to cost roughly $135m, is an expansion of an existing site where Klean will use its advanced thermal conversion technology to recover fuel oil, steel, and refined carbon black from recycled tires. The end products are comparable to virgin commodities with the exception of being more cost-effective with a lower carbon footprint.

“A lot of what we do is of paramount interest to a lot of the ESG-focused infrastructure investors that are focused on assets that tick all the boxes,” Klinkhamer said, noting the consistent output of the waste-to-energy plants that Klean is building along with predictable prices for energy sourced from renewable power.

Klean has also partnered with H2Core Systems, a maker of containerized green hydrogen production plants, and Enapter, an electrolyzer manufacturer. The company will install a 1 MW electrolyzer unit at the Boardman facility, with the green hydrogen used to upgrade recovered fuel oil and pyrolysis oil into e-fuels that meet California’s Low Carbon Fuels Standards.

“We were exploring how we could improve the quality of the tire pyrolysis oil so that it could enter the LCFS market in California,” he said, “because there are significant carbon credits and tax incentives associated with the improved product.”

The company received proposals from industrial gas companies to bring hydrogen to the Boardman facility that were not feasible, and Klean opted for producing electrolytic hydrogen on site in part due to the abundance of low-cost hydroelectric power and water from the nearby Columbia River.

Addressable market

Discussing Klean’s addressable market for waste-to-energy projects, Klinkhamer points to Japan as an example of a comparable “mature” market.

Japan, an island nation of 126 million people, has built roughly 5,000 resource recovery, waste-to-energy plants of various scopes and designations, he notes. For comparison, the United Kingdom – another island nation of 67 million people – has just 20 waste-to-energy plants.

“The opportunity for waste-to-energy in the UK alone is mind boggling,” he said. “There are a thousand opportunities of scope and scale. Nevermind you’ve got an aging, outdated electrical infrastructure, limited landfills, landfill taxes rising – a tsunami of issues, plus the ESG advent.”

A similar opportunity exists in North America, he noted, where there are around 100 waste-to-energy plants for 580 million people. The company is working on additional tire, plastic, and waste-to-energy projects in North America, and also has projects in Australia and Europe.

Hydrogen could be the key to advancing more projects: waste-to-energy plants have typically been hamstrung by a reliance on large utilities to convert energy generated from waste into electricity, which is in turn dependent on transmission. But the plants could instead produce hydrogen, which can be more easily and cost effectively distributed, Klinkhamer said.

“There is now an opportunity to build these same plants, but rather than rely on the electrical side of things where you’re dealing with a utility, to convert that energy into hydrogen and distribute it to the marketplace,” he added.

Hydrogen infrastructure

Klinkhamer says the company is also examining options for participating in a network of companies that could transform the logistics for bringing feedstock to the Boardman facility and taking away the resulting products.

The company has engaged in talks with long-haul truckers as well as refining companies and industrial gas providers about creating a network of hydrogen hubs – akin to a “Tesla network” – that would support transportation logistics.

“It made sense for us to look at opportunities for moving our feedstock via hydrogen-powered vehicles, and also have refueling stations and hydrogen production plants that we build in North America,” he said.

Klean would need seven to 12 different hubs to supply its transportation network, Klinkhamer estimates, while the $350m price tag for the infrastructure stems from the geographic reach of the hubs as well as the sheer volume of hydrogen required for fueling needs.

“With the Inflation Reduction Act, the U.S. has set itself up to be the lowest-cost producer of hydrogen in the world, which will really spur the development of hydrogen logistics for getting hydrogen out,” he said. “And to get to scale, it’s going to require some big investments.”

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