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US clean fuels producer prepping equity and debt raises

A Texas-based clean fuels producer is close to mandating an advisor for a platform equity raise. It has already tapped Goldman Sachs to help arrange a cap stack in the billions for a project in Oregon.

NXTClean Fuels, a Houston-based developer of clean fuels projects, is preparing a $50m to $100m platform equity raise in the near term and has large debt and equity needs for a pair of projects in Oregon, CEO Chris Efird said in an interview.

The company is close to engaging a new financial advisor for the raise, which will launch late this year or early next, Efird said.

Port Westward

Meanwhile, Goldman Sachs’ post-carbon group is retained for the capital stack on NXTClean’s flagship project at Port Westward, at the Port of Columbia County, Efird said. The $3bn CapEx (including EPC) project is fully permitted by the State of Oregon and is awaiting one federal Clean Water Act permit. An Environmental Impact Statement is expected this fall.

The project is dedicated to producing a split of renewable diesel and SAF, amounting to roughly 50,000 barrels per day total permitted capacity when fully operational.

FID is expected for roughly August 2024, he said. About 30 months from FID the plant will reach COD.

“What we’re most focused on right now is the true senior debt,” Efird said. On the equity side the company is engaged with strategic partners that have indicated interest in post-FID equity.

NXTClean has conversations ongoing with the Department of Energy’s Loan Programs Office, along with commercial project finance lenders.

Red Rock

In April NXTClean acquired what was the Red Rock Biofuel facility in Lakeview, Oregon. That woody biomass-to-SAF facility foreclosed after $425m in investment, following technical and financial issues brought on by the COVID 19 pandemic. NXTClean purchased the facility for $75m in preferred stock at auction on the courthouse steps.

GLC advisors was retained by lead bondholder Foundation Credit to advise on that process, Efird said.

Red Rock is being repurposed to produce carbon-negative RNG for the adjacent Tallgrass Ruby Pipeline, Efird said. The fully-permitted project has a significant amount of equipment already installed or on skids.

A first phase will require a spend of $100m to $150m. Some $50m of equity will augment a balance of debt, raised in part through USDA programming, Efird said. Cash flow from the first phase will help with the second phase, which will bring the capital needs of the facility up to as much as $400m.

Looking forward

Geographically, NXTClean will expand in the Pacific Northwest and British Columbia, Efird said.

Each of NXTClean’s two projects are held by a separate subsidiary. The company has a third subsidiary called GoLo Biomass that focuses on feedstock aggregation, Efird said. It engages with fish processors in Vietnam and used cooking oil suppliers in South Korea to augment supply from large companies.

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FuelCell Energy secures $20m debt financing for Naval Submarine Base

Lenders on the financing include Liberty Bank and Amalgamated Bank.

FuelCell Energy, Inc. has closed on a project debt financing transaction with Liberty Bank and Amalgamated Bank as senior lenders and the Connecticut Green Bank as subordinated lender for its Connecticut Municipal Electric Energy Cooperative (CMEEC) fuel cell microgrid-ready project at the Naval Submarine Base New London, located in Groton, Connecticut (Groton Project).

Liberty Bank and Amalgamated Bank’s senior commitment totals $12m with a seven-year term and Connecticut Green Bank’s commitment totals $8m with a 20-year term, according to a news release.

According to SEC filings, the portion of the loan provided by Liberty will accrue at 6.75%, while the piece from Amalgamated Lender will accrue interest at 6.07% during all times at which a “Carbon Offset Event” is not continuing and 7.32% at all times at which a “Carbon Offset Event” has occurred and is continuing.

Michael Bishop, EVP and CFO of FuelCell Energy, said, “We are thrilled to enter into this long-term financing solution with this banking group. With its recurring revenue and cash flow profile, this fuel cell project allows for the efficient and cost-effective financing of our Company. In addition, we believe this financing further highlights financial institutions’ confidence in the demonstrated long-term performance of our globally deployed power platforms. Lastly, the long-term nature of the loan commitments allows the Company to confidently redeploy that capital in support of our growth initiatives.”

“The Connecticut Green Bank is proud to be part of the Groton Project. This strategically important project and our continued partnership with FuelCell Energy, Amalgamated Bank, and Liberty Bank exemplify how the green bank model works to leverage public dollars to attract multiples of local- and national-level private investment into clean energy infrastructure,” said Bert Hunter, Executive Vice President and Chief Investment Officer of the Connecticut Green Bank. “This also highlights the environmental, economic, and strategic value of distributed base load fuel cells, capable of operating as a microgrid, as a key to grid resilience, reliability, and energy security, especially for our nation’s military defense.”

“Liberty Bank is proud to support FuelCell Energy, Inc., a leader in the green energy industry, with project financing for the Groton Project to provide grid resilience for the local community and our nation’s military. Liberty Bank is committed to clean energy solutions partnering with The Connecticut Green Bank, who is a testament to the power of collective action in addressing the urgent challenge of providing sustainable energy sources to Connecticut,” said Daniel Longo, First Vice President of Liberty Bank.

William Peterson, SVP Senior Lending Officer & Director of Climate Lending of Amalgamated Bank, commented, “Our team’s significant experience in sustainable lending uniquely positioned Amalgamated to partner with Liberty Bank and the Connecticut Green Bank to underwrite FuelCell Energy’s project at the Naval Submarine Base as it further develops its power supply through sustainable energy. Sustainable lending is a critical and growing source of financing as the United States strives to achieve net-zero emissions across federal operations by 2050. Amalgamated’s team of recognized thought leaders and sustainable lending experts are excited by the opportunity to help combat climate change as we work to underwrite sustainable solutions and emerging technologies much like FuelCell Energy’s project with the U.S. Navy.”

Bishop concluded, “We believe that the commitment from these respected financial institutions demonstrate the financeability of the solutions FuelCell Energy is offering to customers like CMEEC, that are helping them achieve their decarbonization, resiliency and clean energy goals.”

Proceeds of this financing have been (i) redeployed to FuelCell Energy (ii) used to retire a $3m corporate credit facility with Connecticut Green Bank (iii) used to fund project reserves and (iv) pay transaction fees.

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Raven SR and H3 Dynamics sign MoU for waste-to-hydrogen supply at airports

The companies will jointly develop renewable hydrogen facilities to supply fuel for various ground operations at airports.

Raven SR Inc., a renewable fuels company, and H3 Dynamics, a developer of hydrogen aviation technologies, today announced their memorandum of understanding to globally collaborate on waste-to-hydrogen energy systems to support the decarbonization of airport operations and the adoption of hydrogen at airports.

H3 Dynamics will provide hydrogen power systems to replace conventional fuel and other energy sources at airports, especially in Asia, Europe and the US. Raven SR will provide renewable hydrogen production facilities to supply airports. The use of hydrogen to power various ground operations will help reduce emissions at airports.

“We see tremendous demand to decarbonize the aviation sector with renewable fuels, including on the ground,” said Matt Murdock, CEO of Raven SR. “By collaborating with H3 Dynamics, we can reach a broader network among airports and equipment, including a variety of aircraft operations, to install waste-to-energy hubs where there is an acute need to curb emissions.”

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 such as electrolysis, Raven SR’s Steam/CO2 reformation does not require fresh water as a feedstock. 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 the power grid and even be independent of the grid. Its modular design provides a scalable means to locally produce renewable hydrogen and synthetic liquid fuels from local waste.

“Raven SR provides a way to convert a variety of waste feedstocks into clean hydrogen, with a process that uses less energy than other renewable hydrogen production. Raven SR’s advanced waste-to-hydrogen technology offers a less intensive, more sustainable means of locally producing fuel,” said Taras Wankewycz, CEO of H3 Dynamics.

H3 Dynamics will work with its technology and manufacturing partners to configure hydrogen power systems componentry to meet certification requirements within the airport and aircraft environment.

“H3 Dynamics will deploy decarbonization use cases that have a more immediate impact, so that the infrastructure built today can also welcome hydrogen aircraft in the future,” said Wankewycz.

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Lummus launches ethanol-based SAF technology

The company has made its ethanol to SAF process technology commercially available.

Lummus Technology, a global provider of process technologies and value-driven energy solutions, announced the commercial availability of its ethanol to sustainable aviation fuel (SAF) process technology, according to a news release.

The technology provides operators with a large-scale, commercially demonstrated solution to reduce the aviation industry’s greenhouse gas emissions.
“Lummus’ extensive commercial experience in all steps, including conversion of ethanol feedstock and production of the SAF process, gives us a unique advantage to help our customers produce sustainable fuels,” said Leon de Bruyn, president and Chief Executive Officer of Lummus Technology. “Our process leverages proven, commercial-scale technologies that we integrate to meet the aviation industry’s growing demand for SAF and support its decarbonization efforts.”

Lummus’ ethanol to SAF technology offers a safe and reliable solution by integrating ethanol to ethylene (EtE), olefin oligomerization and hydrogenation technologies in a process configuration that maximizes the final yield to SAF while minimizing CAPEX, OPEX and carbon emissions.
Central to this process is Lummus and Braskem’s technology partnership for producing green ethylene, which accelerates the use of bioethanol and supports the industry’s efforts towards a carbon neutral economy. Since 2010, Braskem has been operating an ethanol dehydration unit in Brazil. Using EtE EverGreen™ technology, the unit provides a proven and reliable foundation for producing 260 kilotons per year of ethylene from ethanol. Lummus has integrated this world-scale dehydration process with its light olefins oligomerization and advanced hydroprocessing technologies through Chevron Lummus Global, a joint venture with Chevron.

This integrated offering makes the entire ethanol to SAF value chain available for exclusive licensing by Lummus.

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Gas-fired peaker sale touts hydrogen blend potential

An equity process for 25% ownership of a California peaker plant includes plans to blend up to 30% hydrogen as part of the sales pitch, according to a teaser.

An opportunity to acquire 25% of the Sentinel Energy Center in California includes decarbonization initiatives like blending 30% hydrogen and installation of on-site battery storage, according to two sources familiar with the matter.

Project Oasis is being run by CIBC, the sources said. Voltage Finance, an entity managed by Guggenheim Partners Investment Management, is exploring the sale of its 25% indirect equity interest in the 850 MW generating facility in Riverside County.

The facility has more than 75% of its capacity contracted through 2027, according to a teaser seen by ReSource. The potential to execute a long-term green hydrogen offtake contract on several of Sentinel’s turbines is being evaluated.

“Sentinel is pursuing the implementation of hydrogen blending capabilities and has advanced the engineering and design through an agreement with a global OEM with beta testing expected in Q1 2025,” the document states.

Sentinel is also co-located with 15 MW of battery storage.

Guggenheim and CIBC did not respond to requests for comment.

Diamond Generating holds a 50% stake in Sentinel. The remaining 25% interest is owned by California-based fund manager Climate Adaptive Infrastructure (CAI), which bought its stake from Partners Group last year.

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Caliche CEO talks hydrogen and CO2 storage expansion

Following the acquisition of assets in Texas and California, Caliche Development Partners CEO Dave Marchese discusses opportunities for growth in the hydrogen and C02 storage market.

Caliche Development Partners II has made a pair of acquisitions with the aim of expanding into growing hydrogen and CO2 storage markets in Texas and California, CEO Dave Marchese said in an interview.

The company, which is backed by Orion Infrastructure Capital and GCM Grosvenor, this week announced the purchase of Golden Triangle Storage, in Beaumont, Texas; and the anticipated acquisition of Central Valley Gas Storage, in Northern California – two regions with increasing demand for storage to support variable power loads, natural gas liquefaction, and high penetrations of renewable resources.

Caliche and seller Southern Company did not use financial advisors for the transaction. Caliche used Willkie Farr as its law firm for the financing and the transactions.

Marchese, who has a private equity background and first worked on a successful investment in a fuel cell company in the year 2000, has also racked up years of experience investing in and operating underground storage assets. The Caliche team developed and sold a natural gas liquids and helium storage business – called Coastal Caverns – earlier this year.

“We know how to put things underground and keep them there, including very small molecules, and we have relationships with many of the customers that are using hydrogen today,” he said.

Roughly a third of the industrial CO2 emissions on the Gulf Coast come from the Golden Triangle area, a region in Southeast Texas between the cities of Beaumont, Port Arthur, and Orange. Much of this CO2 comes from the steam methane reformers that are within 15 miles of Caliche’s newly acquired Golden Triangle asset, Marchese said. The site is in similar proximity to pipelines operated by the air companies – Air Products, Air Liquide, and Praxair – that run from Corpus Christi to New Orleans.

“We’re within 15 miles of 90% of the hydrogen that’s flowing in this country today,” he added. “Pipeline systems need a bulk storage piece to balance flows. We can provide storage for an SMR’s natural gas, storage for its hydrogen, and we can take away captured CO2 if the plant is blue.”

The Golden Triangle site, which sits on the Spindletop salt dome, has room and permits for nine caverns total, with two currently in natural gas service. Three of those caverns are permitted for underground gas storage. “We could start a hydrogen well tomorrow if we had a customer for it,” Marchese said.

The Central Valley assets in Northern California are also positioned for expansion, under the belief that the California market will need natural gas storage for some time to support the integration of renewables onto the grid, he said. Additionally, the assets have all of the safety, monitoring and verification tools for sequestration-type operations, he added, making it a good location to start exploring CO2 sequestration in California. “We think it’s an expansion opportunity,” he said.

“Being an operator in the natural gas market allows us to enter those other markets with a large initial capital investments already covered by cash flowing business, so it allows us to explore incrementally the hydrogen and CO2 businesses rather than having to be a new entrant and invest in all the things you need to stand up an operation.”

Caliche spent $186m to acquire the two assets, following a $268m commitment from Orion and GCM. The balance of the financial commitment will support expansion.

“We’re capitalized such that we have the money to permit, build, and operate wells for potential CO2 sequestration customers,” he said. “The relationship with these stable, large investors also meets the needs of expansion projects: if somebody wanted not only a hydrogen well but compressors as well, we have access to additional capital for underwritten projects to put those into service.”

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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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