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US steelmaker committing to hydrogen offtake

A US steelmaker has made offtake commitments to several hydrogen hubs in development, in an effort to support reliable supply and affordability. The resulting steel will be sold at a premium to the auto industry.

Cleveland-Cliffs, the largest producer of flat-rolled steel in the US, is starting to make commitments to several hydrogen hubs in the Midwest in an effort to advance the supply of clean hydrogen.

In remarks last week, Cleveland-Cliffs CEO Lourenco Goncalves said his company is seeking to break the hydrogen industry’s chicken-and-egg dilemma by committing to offtake from proposed hubs in Ohio and Northwest Indiana.

As it stands, industrial gas producers don’t produce hydrogen at scale to reduce costs because there’s no demand, Goncalves said. And there’s no demand, he added, because there’s no supply.

“We are breaking this chicken-and-egg conundrum by committing with offtakes to the hubs,” he said, noting his company will take half of the offtake from the Toledo, Ohio hub being developed by Linde and other partners.

“The footprint [of the project] is 100 tons per day,” Goncalves said. “Our offtake there is 50 tons per day,” with the additional 50 tons per day likely taken up by other industries like automotive, he added.

Meanwhile, Cleveland-Cliffs has made an offtake commitment to a Northwest Indiana hub being developed by Constellation and bp, Goncalves said.

Cliffs recently conducted a trial use of hydrogen in steelmaking at its Middletown Works blast furnace, and is set to launch another trial at its Indiana Harbor facility, which is near the proposed Northwest Indiana hub.

Due to the proximity of the company’s steelmaking facilities using hydrogen, Cleveland-Cliffs has committed to 200 tons per day of offtake from the Northwest Indiana hub, which is expected to produce 1,000 tons per day. Cliffs made further commitments for offtake with bp for hydrogen produced elsewhere in Northwest Indiana, Goncalves said.

According to Goncalves, the hydrogen production could turn the region into a producer of hydrogen cars.

“So that would make for us to be the enabler of having the automotive industry building stuff in Northwest Indiana to produce hydrogen cars if the OEMs really pursue this route,” he said.

He added that he is hoping that the hydrogen trial at its Indiana Harbor No. 7 facility will be done with a permanent pipeline.

Steel premiums

Cliffs is already charging a premium of around $40 per ton to automotive clients for steel produced using lower carbon feedstock from the company’s HBI facility. Goncalves estimates that this cost gets passed on to the ultimate buyer of a new car, raising the window sticker MSRP price of a car by around 0.1%.

“As one of the largest suppliers of steel to the automotive industry in the world, Cleveland-Cliffs wants to continue to invest in green initiatives,” Goncalves said. “And therefore, we need to be paid for that. That’s not unreasonable and should actually be expected and universally accepted.”

The current HBI steel product, called Cliffs H, will become Cliffs H2 – and become even more expensive – once hydrogen is available in larger and more affordable amounts, according to the executive. And when hydrogen completely replaces natural gas, the product will be called Cliffs H Max, where the steelmaking process has reached minimum theoretical coke rates – likely around 2029 or 2030, he said.

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SOEC electrolyzer maker Sunfire attracts EUR 500m

German electrolyzer maker Sunfire added new equity investors including GIC and secured a loan from the European Investment Bank.

The German electrolyzer manufacturer Sunfire has raised EUR 215 million in a Series E equity financing round, further complemented by a term loan of up to EUR 100 million provided by the European Investment Bank (EIB).

In addition, Sunfire has access to approx. EUR 200 million from previously approved, undrawn grant funding to support its growth, according to a news release. This makes Sunfire one of the best capitalized electrolyzer manufacturers in the industry.

Sunfire announces the successful completion of a substantial Series E financing round, raising EUR 215 million in equity capital. The new investment will further boost the company’s critical role in ramping up the hydrogen economy. Sunfire welcomes LGT Private Banking, GIC, Ahren Innovation Capital, and Carbon Equity as new investors. The transaction is subject to customary regulatory approvals and is expected to close in Q2 2024.

Sunfire-CEO Nils Aldag said, “This substantial financing round is good news for Europe’s leading role in hydrogen production and for the European clean-tech industry. I am delighted to welcome additional investors backing our vision, product offering, and capabilities to deliver industrial electrolyzers at pace and scale. With this new capital, we are uniquely positioned to further accelerate our company’s growth and industrialization plans to meet the fast-growing demand for electrolysis technologies.”

In addition to the new investors, existing shareholders have increased their investment in Sunfire – among them Lightrock, Planet First Partners, Carbon Direct Capital, the Amazon Climate Pledge Fund, and Blue Earth Capital.

In line with Sunfire’s commitment to financial diversification, the company has also secured a credit of up to EUR 100 million from the European Investment Bank (EIB), which provides increased capacity to boost its development and industrialization of solid oxide electrolyzers.

Sunfire’s pressurized alkaline and high-temperature solid oxide electrolysis technologies are a key enabler of the transition to renewable energy, offering a scalable and efficient means of producing green hydrogen. The company targets installing several gigawatts of electrolysis equipment by 2030 in large-scale green hydrogen projects, securing a leading position in the fast-growing global electrolyzer market.

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Plug Power and Olin launch hydrogen production and marketing JV

Plug Power and Olin Corporation have launched Hidrogenii, a joint venture to provide green hydrogen throughout North America.

Plug Power and Olin Corporation have launched Hidrogenii, a joint venture to provide green hydrogen throughout North America, according to a press release.

Hidrogenii’’s first project will be a a 15 ton per day hydrogen plant in St. Gabriel, Louisiana.

Plug will be the exclusive marketer of the joint venture’s hydrogen and provide logistical support for delivery, while Olin, North America’s largest producer of electrolytic hydrogen headquartered in Missouri, will provide reliable hydrogen supply and operational expertise.

The Louisiana plant will benefit from state and local tax subsidies. It joins Plug’s growing national network of hydrogen plants in various planning and construction phases in New York, Tennessee, Georgia, Texas and California.

By 2025, Plug expects to produce 500 tons per day of liquid green hydrogen.

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Macquarie invests in Dutch SAF developer SkyNRG

By 2030 SkyNRG aims to build its dedicated SAF facilities in Europe and the US under offtake arrangements with strategic partners.

Macquarie Asset Management will support the growth of sustainable aviation fuels (SAF) with an initial investment of up to €175m in SkyNRG via the Macquarie GIG Energy Transition Solutions (MGETS) Fund.

The investment will support SkyNRG’s next phase of growth and help achieve its goal to become a major SAF producer.

BofA Securities Europe S.A. acted as sole private placement agent to SkyNRG. Clifford Chance LLP acted as legal advisor to SkyNRG. RBC Capital Markets acted as sole financial advisor and Freshfields Bruckhaus Deringer LLP as legal counsel to Macquarie Asset Management.

Additional terms of the investment were not disclosed.

By 2030 SkyNRG aims to build its dedicated SAF facilities in Europe and the US, in cooperation with strategic offtake partners. To date, SkyNRG has secured partnerships with, amongst others, KLM Royal Dutch Airlines and Boeing with envisaged long term commitments of up to €4bn in SAF purchases.

SkyNRG has been at the forefront of the development of SAF since it was founded over 14 years ago by, amongst others, Theye Veen and Maarten Van Dijk. They initially focused on creating a market for SAF and supplied the world’s first commercial flight using SAF in 2011. Since then, SkyNRG has expanded and is active in R&D, advisory services and in selling SAF. Today, the company provides SAF to airlines and corporates around the world and is still one of the leading and most active participants on the SAF market.

The SAF industry is benefitting from significant tailwinds, including voluntary corporate offtake commitments aligned to net-zero targets and growing political and regulatory support. This includes the European blending mandate (ReFuelEU) that requires the use of SAF, and the Biden Administration’s SAF Grand Challenge and the Inflation Reduction Act in the US, which is encouraging the use of SAF via strong tax incentives. By 2050, SkyNRG estimates that such incentives will create demand for up to €650bn of investment in the sector and accelerate the aviation industry’s transition away from fossil jet fuels.

Philippe Lacamp, CEO of SkyNRG, commented: “It is critical that SAF production capacity is developed now to enable the aviation industry to meet its net-zero goals. We are very proud that Macquarie has made this strategic investment in our business and are confident that they, with the ongoing support of our existing shareholders, will provide us with the resources and expertise we need to accelerate our growth journey towards becoming a major player in the SAF industry.”

Mark Dooley, Global Head of MAM Green Investments, said: “We have a track record for backing businesses working at the forefront of the energy transition. This is an exciting milestone for us, as our first SAF investment. SkyNRG has been a pioneer in SAF, with an entrepreneurial spirit and a strong commercial focus. We look forward to collaborating with the SkyNRG team as they grow their business and advance solutions to decarbonize the aviation industry.”

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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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Exclusive: Wisconsin RNG portfolio for sale with large renewables portfolio

A major Canadian utility is auctioning off four Wisconsin RNG assets as part of a larger renewables selldown. The subsidiary at auction has previously indicated that it would take part in Northeastern US hydrogen development.

Algonquin Power & Utilities is selling a package of four renewable natural gas assets, totaling 532 mmbtu, in Wisconsin as part of a larger renewables auction, according to two sources familiar with the matter.

JP Morgan is advising on the process, codenamed Project Power, the sources said.

The process comprises mostly operational onshore wind (2,325 MW) and solar (670 MW), along with an 8 GW development pipeline across 10 power markets, according to a teaser seen by ReSource. The renewable assets are collectively known as Liberty under the Algonquin banner.

The pipeline includes 1,600 mmbtu of RNG. The operational RNG assets reached COD in 2022.

Algonquin did not respond to requests for comment. JP Morgan declined comment.

The Wisconsin assets are apparently the former Sandhill Advanced Biofuels projects, which were acquired by Algonquin in 2022.

When that acquisition was made, it was announced that Liberty had signed on as a “hydrogen ecosystem partner” in the multi-state Northeast Regional Clean Hydrogen Hub. That hub ultimately was not selected by the US department of Energy for hub funding.

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Hydrogen firm launches equity raise

A US hydrogen infrastructure and project development outfit has mandated a banker to conduct a raise for equity and project capital.

Lifte H2, the Boston-based hydrogen infrastructure and project developer, has mandated a banker to conduct a Series A capital raise, according to two sources familiar with the matter.

Energy & Industrial Advisory Partners is running the process, which launched recently, the sources said. Lifte H2 is seeking equity in the topco and development capital for its first project.

Talks with strategic and financial investors are being conducted now.

Lifte H2, which also has offices in Berlin, is led by Co-founder and CEO Matthew Blieske, who served as global hydrogen product manager for Shell before starting Lifte H2 in 2021. The founding team also includes Jeremy Manaus, Angela Akroyd, Richard Zhang, Paul Karzel, and Richard Wiens, all of whom previously worked at Shell.

In January, the company launched two hydrogen transport and dispensing products, the MACH₂ Mobile Refueler, which is a combination dispenser and high-capacity trailer; and the MACH2 High-Capacity Hydrogen Trailer, which has a capacity of 1,330 kg at approximately 550 bar and, according to the company, enables the lowest cost per kilogram for over-the-road transport.

The company signed an MOU last year with Swiss compressor manufacturer Burckhardt Compression to develop a joint offering of hydrogen solutions.

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