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UK power company to build US bioenergy plants with CCS

UK-based power firm Drax Group is advancing two $2bn bionergy plants with CCS in the US South, with an additional nine sites under evaluation in North America.

UK-based power company Drax Group said yesterday it is seeking to build two bionergy plants with carbon capture and sequestration in the US, with an additional nine sites under evaluation in North America.

Drax is developing plans for a new-build BECCS power unit capable of producing 2 TWh of renewable electricity from sustainable biomass and capturing 3 Mt of carbon per year.

According to a stock exchange filing, two initial sites in the US South have been selected and are progressing to option, although the precise details remain commercially sensitive. The two sites combined could enable the capture of 6 Mt of carbon per year by 2030.

Total investment would be in the region of $2bn per plant with a target FID in 2026 and commercial operation by 2030. The capital cost reflects the construction of new-build power generation as well as carbon capture and storage (CCS) systems.

The design of new-build BECCS enables a wider choice of biomass materials, including non-pelletized material, such as woodchips. Drax aims to locate new plants in regions which are closer to sources of sustainable biomass and T&S systems to permanently store CO2. This is expected to significantly reduce the operating cost of new-build BECCS compared to retrofit, as well as carbon emissions in the supply chain.

The group is continuing to evaluate nine further sites in North America, creating a pipeline of development opportunities into the 2030s.

The commercial model for US BECCS includes Power Purchase Agreements, long-term CDR offtake agreements and a direct pay tax incentive under the Inflation Reduction Act of $85/tonne, according to the filing.

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Glenfarne’s Texas LNG moving to project finance execution phase

Glenfarne has appointed lawyers and is moving into the execution phase for financing its Texas LNG project.

Texas LNG, a four million tonnes per annum liquefied natural gas export terminal to be constructed in the Port of Brownsville, and a subsidiary of Glenfarne Energy Transition, LLC, a global energy transition leader providing critical solutions to lower the world’s carbon footprint, has received sufficient expressions of interest from leading project finance banks to move to the execution phase of project financing.

Glenfarne has also appointed Latham & Watkins as Borrower’s counsel and Milbank as Lenders’ counsel for the issuance.

These lenders have been key supporters of Glenfarne, having led over $4 billion of financing to Glenfarne’s businesses over the last 10 years, supporting the acquisition and/or construction of various energy transition focused assets, the company said in a news release. Furthermore, these banks are active in LNG, having participated in approximately $44 billion of project finance debt to the U.S. LNG sector alone over the last 24 months.

“Texas LNG’s financing consortium will be comprised of the world’s leading institutions that recognize the attributes of the project and Glenfarne’s excellent history of building energy transition infrastructure,” said Brendan Duval, CEO and Founder of Glenfarne Energy Transition.

ReSource recently interviewed Glenfarne Senior Vice President Adam Prestidge about Texas LNG as well as the company’s hydrogen plans.

Today’s news follows Texas LNG’s recent announcement that it signed a Heads of Agreement with EQT Corporation for natural gas liquefaction services for 0.5 MTPA of LNG. Texas LNG also recently announced partnerships with Baker Hughes and ABB to help develop the terminal, representing more than half a billion dollars’ worth of equipment selections for Texas LNG to date.

The first LNG exports from Texas LNG are expected to be shipped in 2028.

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GHI assessing ABB technology for Hydrogen City

GHI has signed an MoU to assess ABB’s automation and electrification technology for deployment at the South Texas Hydrogen City green hydrogen project.

ABB is collaborating with Green Hydrogen International (GHI) on a project to develop a major green hydrogen facility in south Texas, United States.

As part of the Memorandum of Understanding ABB’s automation, electrification and digital technology will be assessed for deployment at GHI’s Hydrogen City project, according to a news release.

The Power-to-X facility will use solar and onshore wind energy to power a 2.2 GW electrolyzer plant to produce 280,000 tons of green hydrogen per year, which will be turned into one million tons of green ammonia annually.

ABB has already completed a feasibility study to develop an electrical system architecture that optimizes return on investment for the project and supports compliance with EU legislation governing Renewable Fuels of Non-Biological Origin (RFNBO)2 and the US Inflation Reduction Act (IRA). ABB plans to supply its Integrated Control Safety System with the distributed control system ABB Ability™ System 800xA® to improve efficiency, operator performance and asset utilization.

MoU scope also includes electrical motors and drives, measurement and analytics solutions, and power and process optimization solutions.

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Cleveland-Cliffs CEO: ‘Hydrogen is the future’

The largest producer of flat-rolled steel in North America plans to lean heavily on hydrogen to reduce its carbon footprint.

Cleveland Cliffs CEO Lourenco Goncalves is staking his company’s ability to decarbonize on large-scale use of hydrogen as a reductant in its blast furnaces.

The steelmaker is building a $9m pipeline that will feed hydrogen from the edge of its Indiana Harbor 7 plant into the blast furnace, what Goncalves called the company’s “high water mark” for hydrogen since it is the biggest plant of its kind in the Western Hemisphere.

“It’s the biggest blast furnace, the one that we use the most in terms of hydrogen because of its size,” Goncalves said on the company’s earnings call. “And it’s also because it’s our flagship, for instance, our biggest, the biggest in the Western Hemisphere and we are going to use as a demonstration plant for how to use hydrogen” in steelmaking.

Cleveland Cliffs in May completed a hydrogen injection trial at its Middletown Works blast furnace on a smaller scale.

Goncalves said previously that the company committed to offtake 200 tons per day of the 1000-ton-per-day project being developed by bp and Constellation as part of the Midwest Hydrogen Hub located in Indiana, Illinois, and Michigan.

The hub was recently awarded up to $1bn in funding from the US Department of Energy hydrogen hubs program.

“Cliffs’ commitment to buy a large portion of the output from the Midwest hub helped get this location selected by the Department of Energy,” Goncalves said.

“Hydrogen is the future,” he said. “Effectively, all of the current carbon emissions in our footprint are a result of the use of fossil fuel-based reductants or energy sources, where there is no economically feasible alternative,” he added. “Hydrogen can and ultimately will change that.”

He added that the use of hydrogen is very minimally capital intensive if you already have blast furnaces, with only minor plant additions needed, such as the Indiana Harbor pipeline.

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Exclusive: OCI Global exploring ammonia and methanol asset sales

Global ammonia and methanol producer OCI Global is working with an investment bank to explore a sale of ammonia and methanol assets as part of the re-opening of its strategic business review.

OCI Global is evaluating a sale of several ammonia and methanol assets as part of the re-opening of its strategic business review.

The global producer and distributor of methanol and ammonia is working with Morgan Stanley to explore a sale of its ammonia production facility in Beaumont, Texas, as well as the co-located blue ammonia project under development, according to sources familiar with the matter.

The evaluation also includes OCI’s methanol business, one of the sources said.

Representatives of OCI and Morgan Stanley did not respond to requests for comment.

As part of the earlier strategic review announced last year, OCI in December announced the divestiture of its 50% stake in Fertiglobe to ADNOC, and the sale of its Iowa Fertilizer Company to Koch Industries, bringing in $6.2bn in total net proceeds.

However, OCI has received additional inbound inquiries from potential acquirers for the remaining business, leading it to re-open the review, CEO Ahmed El-Hoshy said last month on OCI’s 4Q23 earnings call.

“As such, OCI is exploring further value creative strategic actions across the portfolio, including the previously announced equity participation in its Texas blue clean ammonia project,” he said, adding: “All options are on the table.”

The comments echoed the remarks of Nassef Sawiris, a 40% shareholder of OCI, who recently told the Financial Times that OCI could sell off most of its assets and become a shell for acquisitions.

In the earnings presentation, El-Hoshy took time to lay out the remaining pieces of the business: in particular, OCI’s 350 ktpa ammonia facility in Beaumont; OCI Methanol Group, encompassing 2 million tons of production capacity in the US and a shuttered Dutch methanol plant; and its European ammonia/nitrogen assets.

Texas blue

The Texas blue ammonia project is a 1.1 million-tons-per-year facility that OCI touts as the only greenfield blue ammonia project to reach FID to date. The company has invested $500m in the project as of February 24, out of a total $1bn expected investment, according to a presentation.

“Commercial discussions for long-term product offtake and equity investments in the project are at advanced stages with multiple parties,” El-Hoshy said. “This reflects the very strong commercial interest and increasing appetite from the strategics to pay a price premium to secure long-term low-carbon ammonia.”

El-Hoshy’s comments highlight the fact that, unlike most projects in development, OCI took FID on the Texas blue facility without an offtake agreement in place. The executive did, however, highlight the first-mover cost advantages from breaking ground on the project early and avoiding construction cost inflation.

Additionally, the project was designed to accommodate a second 1.1 mtpa blue ammonia production line, which would be easier to build given existing utilities and infrastructure, El-Hoshy said, allowing for an opportunity to capitalize on additional clean ammonia demand at low development costs.

“Line 2 probably has the biggest advantage, we think, in North America in terms of building a plant where a lot of the existing outside the battery limits items and utilities are already in place,” he said, emphasizing that by moving early on the first phase, they avoided some of the inflationary EPC pressures of recent years. 

At the facility OCI will buy clean hydrogen and nitrogen over the fence from Linde, and Linde, in turn, will capture and sequester CO2 via an agreement with ExxonMobil.

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Exclusive: Mississippi green hydrogen developer assembling banks for debt raise

The developer of a potentially massive network of green hydrogen production, transport and salt cavern storage — estimated to cost billions — is seeking banks to support a project debt raise.

Hy Stor, the developer of hydrogen generation and salt cavern storage, is currently raising “billions” in project finance for the first phase of its home state hub in Mississippi, Chief Commercial Officer Claire Behar said in an interview.

The first phase is expected to enter commercial service in 2026, guided by customers, Behar said.

Connor Clark & Lunn are equity partners in the Mississippi hub and is helping Hy Stor with its debt raise. Hy Stor is working with King & Spalding as legal advisor.

“We are already seeking banks and lining up our needed debt,” Behar said. She declined to say a precise amount the company will raise but said it will be in the billions.

Hy Stor plans to soon announce their renewable development partner to build dedicated off grid renewables, Behar said. The same is true for offtake in non-intermittent 24-hour industries like steel, plastic and fertilizer manufacturing.

“The customers are willing to pay that twenty-to-thirty percent premium that the market would need,” Behar said. “The business case is there.”

When asked if traditionally carbon intensive industrial manufacturing interests were actively seeking to co-locate with Hy Stor in Mississippi, Behar said the company has been advancing those agreements and hopes to have announcements soon. 
There is evidence of this type of activity in the state. Recently American steel manufacturer Steel Dynamics announced Columbus, Mississippi as the location of its upcoming aluminum flat rolled millwith a focus on decarbonization. Job postings for engineering roles at a separate facility detail plans to convert biomass into a direct carbon replacement suitable for steelmaking. 

Hy Stor hopes to have announcements in the coming weeks about a co-location opportunity, she added. Both domestic and international strategics are interested in the geology offering co-located salt cavern storage and geography offering river and deepwater port logistics networks, as well as highway and rail corridors.

Off-grid renewable generation means the company is not at the mercy of transmission interconnection queues. It also offers reliability because the lack of grid adage helps guarantee performance, and affordability because the company doesn’t have to pay utility rates, Behar said. Additionally, the electricity is decoupled from the grid and therefore absolutely decoupled from fossil fuels, which is important to Hy Stor’s prospective offtakers.

“This is what customers are demanding,” Behar said, adding that first movers are highly dedicated to decarbonization, needing quantitative accounting for all scope emissions, driven often by pressure from their customers.

The company has received a permit to take 11,000 gallons per minute of unpotable water from the Leaf River in Mississippi, Behar said, and is also looking at in-house wastewater treatment and water recycling.

Don’t go after gray users

Behar said the concept that users of gray hydrogen are the first targets for green hydrogen developers is misguided.

“The refineries, the petrochemicals, for them hydrogen is an end product already used within their system,” Behar said. “Those are not going to be the first users that are going to pay us a premium for that zero carbon.”

Hy Stor is instead focusing on new greenfield facilities that can co-locate.

“We’ve purposefully outsized our acreage,” she said of the 70,000 acres the company has purchased outside of Jackson, Mississippi, the Mississippi River Corridor, and the state’s southern deepwater ports in Gulfport and Port Bienville. New industrial projects can co-locate and have direct access to the salt cavern storge.

Looking forward the company’s acreage and seven salt domes mean they are not constrained by storage, Behar said. At each location, the company can develop tens and hundreds of caverns.

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exclusive

Renewable hydrogen developer in exclusivity with strategic investor

A renewable hydrogen developer based in the western US is reaching the final stages of a capital raise with an investor in exclusivity.

NovoHydrogen, the Colorado-based renewable hydrogen developer, is in exclusivity with clean energy investment platform Modern Energy, according to two sources familiar with the matter.

ReSource reported in February that GreenFront Energy Partners was advising the company on a Series A.

NovoHydrogen CEO Matt McMonagle said previously that the company has about 30 projects in development in the US, ranging from a few megawatts to hundreds of megawatts. Its most active markets are the West coast, Northeast, Appalachia, Texas and the Rocky Mountains, though the company is not geographically constrained.

The company aims to begin construction on its first projects by the end of this year, the executive had said.

NovoHydrogen declined to comment. GreenFront and Modern Energy did not respond to requests for comment.

Modern Energy, a certified B-Corporation, recently put $90m into net metered solar developer Industrial Sun along with partner EIG. In 2020 EIG committed USD 100m to Modern Energy through a debt facility to fund the development of clean energy assets.

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