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US hydrogen and LNG developer raising capital

A Texas-based project developer is conducting a development capital raise for a flagship LNG and green hydrogen project in the Northeast.

New Energy Development Company, a Katy, Texas-based developer with offices in Boston, Texas, is raising between $5m and $8m for an LNG liquefaction, storage and re-gasification facility with additional green hydrogen production and storage, Partner Scott Shields said in an interview.

The company is not using a financial advisor, Shields said, noting that a larger second round capital raise will likely start near the beginning of 2024.

New Energy has secured a brownfield site for a peak-shaving LNG facility in New England with 2 billion cubic feet of storage capacity and 50 MW of solar pv, Shields said. Also planned is an expandable 40 MW PEM electrolyzer line.

He declined to name the state in which the project is located, adding that the company is trying to put a strong support system and marketing plan in place before the location is made public.

The proceeds of the capital raise will go in part to hiring local lawyers and engineering and design work (pre-FEED and FEED), through to FID, Shields said. The project will be built in two phases, Phase 1 being the LNG component and Phase 2 focusing on green hydrogen.

The LNG facility will be the offtaker for the hydrogen, which will run the plant when the solar is insufficient. Through an open season process New Energy has identified five investment grade offtakers for the LNG.

Ramping capex

“We’ve been self-funding up until now,” Shields said of New Energy, which has also put capital and development resources into half-a-dozen other projects around the country.

It’s time for a ramp up in capital expenditures and New Energy is in discussions with strategic and private equity providers, Shields said, noting that the company would prefer the former. Discussions include options to fund just the flagship project, as well as platform equity.

Shields noted that he has investment banking experience and that New Energy Managing Partner Alexander “Hap” Ellis serves as chairman of Old Westbury Funds and the George and Barbara Bush Foundation.

New Energy has partnered with McDermott International to develop patented GreenER hydrogen facilities, a modular, expandable hydrogen facility that can produce 24,000 kg per day (2,760 MMBtu) of renewable hydrogen. The companies in 2021 completed engineering deliverables for multiple designs which are marketed as ideal for grid-scale blending with natural gas pipelines, blending for existing or new power generating facilities and storage injection into salt caverns and above ground storage tanks.

The company has also combined GreenER LNG and hydrogen production and storage plants into an integrated energy hub, capable of producing an additional 200,000 MMBtu of LNG.

New Energy recently hired Chico DaFonte, formerly a vice president at Liberty Utilities, a subsidiary of Algonquin Power, as executive vice president working on LNG and hydrogen projects.

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Tree Energy Solutions and EWE building electrolyzer in Wilhelmshaven

The electrolzser, to be installed and operated starting in 2028, has a planned total capacity of 1 GW at the hub on the North Sea coast.

Tree Energy Solutions and German utility EWE are signing an MoU to build an electrolyzer in TES’ Green Energy Hub in Wilhelmshaven, Germany, according to a press release.

The electrolzser, to be installed and operated starting in 2028, has a planned total capacity of 1 GW.

The hub in Wilhelmshaven is on the North Sea coast and can accommodate up to 2 GW capacity electrolyzers with renewable energy sources such as offshore wind.

In October Tree Energy Solutions agreed to terms for Fortescue Future industries to make an equity investment of EUR 30m to become a strategic shareholder in TES, and to invest EUR 100m for a stake in the construction of the import terminal in Wilhelmshaven. Before that the Belgium-based company concluded its second fundraising round at EUR 65m.

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TPG Rise acquires fuels testing and certification company

The target firm, AmSpec, increasingly facilitates the penetration of biofuels, hydrogen, sustainable aviation fuel, and other alternatives throughout the global fuel system.

TPG Rise Climate, the dedicated climate investing strategy of TPG’s global impact investing platform TPG Rise, has signed a definitive agreement to acquire AmSpec Group, Inc., one of the fastest growing Testing, Inspection, and Certification (TIC) companies specializing in energy, commodities, and fuels.

AmSpec’s existing majority shareholder, Olympus Partners, will retain a minority interest in the company. Additional terms of the investment were not disclosed.

Goldman Sachs and Baird served as financial advisors and Morgan Lewis served as legal counsel to AmSpec in relation to the transaction.

Founded in 1986, AmSpec operates an extensive global footprint of over 300 inspection sites and laboratories throughout 61 countries, many of which are located at key industrial centers, ports, or trade hubs. AmSpec’s core service involves testing and certifying the performance and emission qualities of fuels or commodities at each stage along the value chain.

By monitoring and reporting to regulators and independent certification bodies, AmSpec plays a key role in emissions controls and enforcement on conventional fuels, while also increasingly facilitating the penetration of biofuels, hydrogen, sustainable aviation fuel, and other alternatives throughout the global fuel system.

“As part of its broad set of services, AmSpec has developed deep expertise in the control of pollutants and emissions factors in legacy fuels, and they will play a critical role in processing, testing, and certifying the growing volume of increasingly complex renewable fuels that we see coming online,” said Marc Mezvinsky, Partner at TPG and senior member of its climate investing team. “We are thrilled to be investing in AmSpec’s best-in-class lab network at this inflection point in the global fuels mix, and we look forward to working closely with the management team to enter new markets and accelerate the global energy transition.”

As part of the transaction, Mezvinsky will join AmSpec’s Board of Directors along with TPG Rise Climate’s Roger Stone and Tracy Wolstencroft, a TPG Senior Advisor who served as former president and CEO of both the National Geographic Society and executive search and management consulting company Heidrick & Struggles. He also served as former chair of Goldman Sachs’ clean energy technology practice.

“Our commitment to innovation and service has made us a leader in the industry, and we are excited about what we will be able to accomplish with this new partnership. TPG Rise Climate has the resources, network, and vision to drive our next phase of growth, particularly as global supply chains rapidly change and the flows of critical molecules begin to transition,” said Matt Corr, CEO of AmSpec. “Our team is fully aligned with TPG on capturing the opportunity set in front of us and we are grateful to have Olympus’s continued partnership and support.”

The transaction is subject to regulatory review and customary closing conditions and is expected to close in the fourth quarter of 2023.

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New JV to provide H2-blending solutions to gas utilities

Progressus Clean Technologies and Alkaline Fuel Cell Power have entered into a JV for a H2-blending pilot project for natural gas utilities.

Progressus Clean Technologies and Alkaline Fuel Cell Power have entered into a JV for a H2-blending pilot project for natural gas utilities, according to a news release.

The JV is intended to combine Progressus technologies with AFCP fuel cells to serve residential and small building customers across North America. PowerTap Hydrogen owns 49% of Progress.

Gas distribution companies and municipalities are setting-up projects to inject hydrogen into the local gas distribution grid.; generally up to 20% hydrogen.

The project is designed to use the Progressus hydrogen separation technology to efficiently extract hydrogen at high purities from the existing natural gas grid, and then convert the purified hydrogen using either AFCP’s 4 kW Micro-CHP or 4 kW generator to produce electricity, and potentially heat. This project could be put to immediate use in a residential home or commercial building, providing truly zero-emission power. AFCP has already identified interest from natural gas and electric utilities and municipalities to pilot the concept.

The exact location of the JV pilot project remains under consideration but, initially, North America will be the focus with secondary priority given to potential future pilots in Europe.

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Exclusive: Ammonia plant sale paused until commercial operations

The sale process for a Texas ammonia plant has been paused until the facility reaches commercial operations.

Gulf Coast Ammonia, the developer of a world-scale ammonia plant in Texas City, Texas, has paused a sale process until the plant reaches commercial operations, according to two sources familiar with the matter.

The process to sell the plant, which will produce 1.3 million tons of ammonia per year, was underway earlier this year, led by Jefferies as sellside advisor. The plant was expected to reach COD in 2023, according to documentation.

The project was initiated by Agrifos Partners LLC and advanced to FID in collaboration with joint venture development partners Mabanaft and Macquarie Capital. Following the FID taken in late 2019, GCA is wholly owned by a joint venture of Mabanaft and Lotus Infrastructure (formerly known as Starwood Energy).

GCA is investing $600m towards the construction, operation, and ownership of the ammonia plant, which is situated on land owned by Eastman Chemical Company within Texas City’s industrial park. It includes a portion of Eastman’s port access. 

In tandem with the ammonia plant construction, Air Products is building a $500m steam methane reformer to provide hydrogen to the plant via pipeline. Air Products noted in a recent investor presentation that the SMR project recently came onstream.

Officials at Lotus, Mabanaft, and Jefferies did not reply to inquiries seeking comment.

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Mitsubishi laying groundwork for additional equity raise

Mitsubishi Power Americas and its JV partners are preparing to raise additional equity for the ACES Delta project in Utah, as well as for other hydrogen developments in the Americas.

Mitsubishi Power Americas is conferring with its financial partners to raise equity from existing investors in the Advanced Clean Energy Storage (ACES) Delta green hydrogen project in Utah, Senior Vice President, Investment and Business Development Ricky Sakai said in an interview.

Haddington Ventures formed Haddington ESP I and raised $650m in June 2022 from institutional investors to fund projects developed by ACES Delta, which is a joint venture between Mitsubishi Power Americas and Haddington portfolio company Magnum Development.

The investors — AIMCo, GIC, Manulife Financial Corporation, and Ontario Teachers’ Pension Plan Board — have additional rights to increase their collective investment to $1.5bn, according to a press release announcing the deal.

The first phase of the project in Utah will be to produce 100 tons of hydrogen per day. Once that is complete, existing investors can scale up their investment, Sakai said.

ACES Delta rendering

Mitsubishi is involved in several regional hydrogen hubs applying for funding from the US Department of Energy.

Hydrogen capable

Depending on how that $7bn is ultimately allocated, Mitsubishi is interested in replicating the Utah project in other regions, a source familiar with the company said.

MPA and Magnum recently closed on a $504.4m loan guarantee from the DOE for ACES Delta, electrolyzers for which will be supplied by Norway-based HydrogenPro.

ACES Delta will support the Intermountain Power Agency’s IPP Renewed Project — upgrading to an 840 MW hydrogen-capable gas turbine combined cycle power plant using Mitsubishi’s M501JAC gas turbines. The plant will initially run on a blend of 30% green hydrogen and 70% natural gas starting in 2025 and incrementally expand to 100% green hydrogen by 2045.

Mitsubishi is also supplying the hydrogen-capable gas turbines to Entergy’s Orange County Advanced Power Station; to an Alberta coal plant owned by Capital Power; and to J-Power’s Jackson Generation Project in Illinois, which reached commercial operations last year.

Mitsubishi Power

Investing in startups

Mitsubishi is doubling down on a strategy of investing in startup producers and technology in renewable fuels, Sakai said.

Recent investments in the space include: C-Zero, a drop-in decarbonization tech startup in California; Cemvita Factory, a Houston-based synthetic biology firm focused on the decarbonization of heavy industries; Infinium, an electrofuels company innovator in California forming decarbonization solutions for industries in Japan; and Starfire Energy, a modular green ammonia solution provider in Denver.

Series A and Series B valuations for US companies are much higher now than they were a few years ago, Sakai said. Still, the US is the leading climate tech startup ecosystem in the world and provides rich opportunity for capital deployment, Sakai said. Biofuels, SAF and waste-to-energy are leading sectors for MHI investment moving forward.

“We have several hundred of these in the pipeline that we are looking at right now,” he said. “In the next few years, we will increase the number of these portfolio companies.”

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Green hydrogen developer in exclusivity with new investor

New York-based green hydrogen developer Ambient Fuels is in exclusivity with a new investor, with proceeds from the capital raise slated to fund project development and acquisitions.

Ambient Fuels, the New York-based green hydrogen developer, is in exclusivity with a new investor for a bilateral capital raise, CEO Jacob Susman said in an interview.

Susman declined to name the private equity provider but said the backing will allow Ambient to develop several projects, as well as acquire projects from other developers. The deal is proceeding without the help of a financial advisor.

Once the company reaches its run rate, Ambient plans to complete three to four projects per year costing $50m and up, Susman said, with the first expected to reach operation in 2025.

The company’s initial geographic focus is on the Gulf Coast, centered on the Port of Corpus Christi, Susman said. New York, California, the Pacific Northwest and traditional wind energy states in the Midwest and West are areas of additional work.

Hydrogen hubs

Ambient is closely following the DOE hydrogen hub applications process, Susman said. Which regions are awarded funding could make a difference for where the company locates new projects.

According to ReSource‘s project tracker, Ambient is involved in at least two of the hubs that were encouraged by the DOE to submit a final application: California’s Alliance for Renewable Clean Hydrogen Energy Systems (ARCHES), and the Port of Corpus Christi Green Hydrogen Hub.

In 2021 Ambient completed a funding round led by SJF Ventures. Several other VC funds and angel investors also participated.

Open for offtake business  

Ambient is looking for offtakers in industries that use the molecules for feedstock and energy but need to meet decarbonization targets.

The company is working to provide hydrogen as an industrial feedstock and energy source to sectors including transportation, oil and gas, mining, glass and steel production and automobile manufacturing. Supplying hydrogen for ammonia fertilizer is another target market.

Advisors with clients in those industries should reach out to Ambient, Susman said.

M&A strategy

Ambient strives to be a fully integrated devco with the resources, capital and expertise to take a project to fruition, Susman said. Projects developed by smaller companies can look to Ambient as a buyer for their projects.

“We want to be a home for those great projects that are being developed independently,” Susman said. “Absolutely we will be acquiring projects.”

Smaller developers with good projects could also be targets for takeover with the backing from the new investor, Susman said. The firm could also make a technology buy in software for project development, operations, or possibly the equipment side, though Susman said there’s a low probability of that.

Financial advisors that have leads on good projects Ambient can acquire are welcome to pitch, Susman said.

Susman said he is not in a hurry to exit Ambient and can see the company being independently financed for years to come.

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