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World Energy GH2 and Vortex Energy to explore cavern storage

The parties will study cavern storage solutions in Newfoundland and Labrador, Canada.

Vortex Energy Corp. and World Energy GH2 have agreed, by way of a memorandum of understanding, to explore green energy cavern storage solutions in Newfoundland and Labrador, according to a news release.

The MOU was signed in Rotterdam, Netherlands at the Canadian Pavilion during the World Hydrogen Conference.

Recognizing the immense potential of Newfoundland and Labrador as a hub for renewable energy development, World Energy and Vortex have agreed to leverage their collective expertise, resources, and technologies in the pursuit of sustainable energy storage solutions.

Paul Sparkes, CEO of Vortex Energy Corp said, “This MOU marks a significant step towards meeting our shared goal of bolstering the province’s green energy economy and ensuring long-term energy security. We are extremely excited about the next steps.”

Both companies are committed to driving innovation and fostering the development of the infrastructure necessary for the widespread adoption of green energy solutions in Newfoundland and Labrador. Through collaborative research, development, and deployment initiatives, World Energy GH2 and Vortex Energy Corp intend to work together to study and explore scalable and efficient storage solutions.

Sean Leet, CEO of World Energy GH2, commented, “We look forward to working with Vortex Energy in the development of the Green Hydrogen industry in Newfoundland and Labrador. There are many opportunities for collaboration as the development of energy storage is further evaluated. Vortex has been a proactive partner and we are pleased to be working with them in our project area.”

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Electric Hydrogen agrees 1 GW electrolyzer supply with AES

The supply reservation agreement includes commercial requirements for AES to order up to 1  GW of 100 MW electrolyzer plants from Electric Hydrogen.

Electric Hydrogen has reached a comprehensive framework supply agreement with The AES Corporation for up to 1 GW of large-scale electrolyzer plants to produce low-cost, green hydrogen from renewable energy, according to a news release.

This supply reservation agreement includes commercial requirements for AES to order up to 1  GW of fully integrated, low-cost 100 MW electrolyzer plants from Electric Hydrogen.

“AES’ expertise in power markets, project development and new technology integration are best-in-class,” said Raffi Garabedian, CEO of Electric Hydrogen. “We’re excited to help AES deliver on the promise of green hydrogen and look forward to partnering with them on their future hydrogen projects.”

Electric Hydrogen’s 100 MW high-tech electrolyzer plants feature the capability to follow variable renewable energy resources allowing customers to optimize energy use and maximize project returns, the release says. The plants are designed and manufactured in the US, and the company is presently pre-fabricating its first customer-sited plant in Texas and has two operating plants in California.

“Electric Hydrogen’s innovative technology and large-scale product enables AES to offer cost effective decarbonization solutions for our customers in the most difficult to decarbonize sectors,” said Ashley Smith, Chief Innovation Officer, AES. “AES is taking steps to secure our supply chain proactively as we strategically grow our green hydrogen business.”

Electric Hydrogen’s roadmap to scale high-rate manufacturing in the US is intended to make green hydrogen competitive with fossil fuel resources by 2030. That roadmap also will allow US electrolyzer manufacturing to outstrip low-tech electrolyzer alternatives, such as alkaline products currently mass-produced in China.

The procurement reservation agreement enables AES to develop additional green hydrogen projects, capitalizing on EH2’s project scale, efficiency and low capital costs.

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Linde staying out of large-scale green hydrogen – for now

Linde will focus in the near term on developing blue hydrogen projects, where there is more certainty around cost and reliability compared to green hydrogen.

Sanjiv Lamba, the CEO of global chemical company Linde, today re-emphasized his view that green hydrogen still has a roughly five to seven year runway to reach maturity for large-scale projects, noting that his company sees more near-term opportunity in blue hydrogen projects.

“We expect future US onsite clean hydrogen projects to primarily leverage 45Q credits” for carbon capture and sequestration, “since we have not yet identified any large onsite green hydrogen projects that meet our investment criteria,” the executive said. 

“I expect to see small and mid-size green hydrogen projects primarily serve merchant-type demand,” Lamba added this morning on his company’s 4Q23 earnings call.

Linde included a slide in its earnings presentation noting that the nascent green hydrogen market lacks scale, underscoring that electrolyzers are unproven at gigawatt scale and have a high overall cost.

Linde 4Q23 earnings presentation

In contrast, most large pipeline opportunities are in blue hydrogen, and this remains the preferred option for Linde, given its low technical risk, lowest overall cost, and reliability, the presentation notes.

Electrolyzers need to gain reliability and the ability to operate 24/7 for onsite projects with a large demand pool, he said. Additionally, capital efficiency on electrolyzers needs to improve dramatically, “to make sure we’re at a point where that becomes cost effective.”

Lamba reiterated that he believes electrolyzer technology needs another five to seven years to scale up to achieve reliability and cost effectiveness for large-scale inflection to green hydrogen.

“I do expect small and medium-sized electrolyzer complexes to be built, and they will largely serve what we call merchant-type demand, where you have a bit of flex in terms of how much product is available, how much product is provided…”

In the meantime, Linde is developing its liquid hydrogen capabilities to support the smaller-scale green hydrogen projects it expects will be developed in the near term, he said.

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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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CCS developer initiating discussions for corporate capital raise

Following its sale of a stake in a mega-scale carbon capture project in the Gulf Coast, Carbonvert is planning to initiate conversations to raise additional corporate capital, with plans to deploy as much as $500m into new projects.

Carbonvert, a Houston-based carbon capture and sequestration developer, is planning to start conversations soon with an eye to raise corporate capital that will allow it to advance mega-scale CCS projects, CEO Alex Tiller said in an interview.

Owned by a group of outside investors and the management team, Carbonvert is advancing a business model that takes advantage of the group’s expertise in early-stage project development, Tiller said.

The company recently completed the sale of its 25% interest in the Bayou Bend CCS project to Norway’s Equinor, which will now own the development alongside Chevron (50%) and Talos Energy (25%).

Bayou Bend CCS is the type of mega-scale project that Carbonvert will be pursuing in coming years, and for which the company will need to raise as much as $500m in corporate capital due to the capital-intensive nature of the projects, Tiller said.

Chevron last year bought its 50% operating stake in Bayou Bend for $50m, implying a $100m valuation for the project, which is positioned to become one of the largest CCS developments in the US for industrial emitters, with nearly 140,000 gross acres of pore space – 100,000 onshore and 40,000 offshore.

Carbonvert’s stake sale, announced yesterday, was “a positive result” for the company, Tiller said, though he declined to comment further on the valuation.

“It delivers capital to our balance sheet and allows us to grow our pipeline of projects and fund additional projects,” he said. Carbonvert used Jefferies as sell-side financial advisor in the sale to Equinor, he added.

Tiller, a veteran of the renewable energy industry, is a founding member of Carbonvert alongside Chief Development Officer Jan Sherman, who previously had a 30-year career with Shell and helped build the oil major’s Quest CCS project in Alberta, Canada.

For the upcoming capital raise, Carbonvert has not decided on whether to use a financial advisor; the structure of the capital raise will likely determine if an advisor is needed, Tiller said.

“We’ll definitely be out raising more corporate capital – these projects are tremendously expensive,” he said. “We’ll be starting conversations soon.”

The company has a line of sight to deploy as much as $500m of capital into its own projects over the next several years, he said, an indication of how much capital it will need to raise.

“These are large infrastructure projects that are going to take many years to bring to fruition, followed by decades of operations,” he said. “We live at the front end of the projects,” he added, “and when the appropriate parties are at the table, it’s really an act of humility to say ‘hey, maybe we’ve taken this as far as we can or should,’” a reference to finding the right time to sell the company’s stakes in the projects it is developing.

In addition to the Bayou Bend CCS project, Carbonvert is part of a consortium that’s developing a carbon hub in Wyoming. The company is also collaborating on an exploratory study for the direct air capture and storage of CO2 emissions from a nuclear power plant in Alabama.

“You can expect to see project announcements that look like Bayou Bend in the future,” Tiller said. “We like that type of mega-scale project, we like offshore, and we’re also pursuing some opportunities onshore that are less mature.”

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Analysis: States with hydrogen use and production incentives

Some states are mulling hydrogen-specific incentives and tax credits as they wait for final federal regulations for clean hydrogen production, Bianca Giacobone reports.

[Editor’s note: Paragraphs six through nine have been modified to clarify that Colorado legislation does in fact include ‘three pillars’ language.]

Final guidelines for the federal hydrogen production tax credits are still a work in progress, but in the meantime, legislatures across the country have been mulling their own incentives to spur production. 

So far, 14 U.S. states have or are considering legislation that includes tax credits or other incentives for the use or production of hydrogen, five of which specify the hydrogen has to be “green,” “clean” or “zero-carbon.” 

The industry is waiting for the final regulations relating to the 45V tax credit for production of clean hydrogen, a draft of which was released last December, and states are similarly waiting to make their own moves. 

“States have interest in developing hydrogen programs, but they will lag the federal initiatives,” said Frank Wolak, CEO of the Fuel Cell and Hydrogen Energy Association. “The new suite of things that the states will do is largely dependent upon the reaction from the federal government, which is brand new.” 

The ones that aren’t waiting opt for vagueness. 

Val Stori, senior program manager at the Great Plains Institute, a non-profit focused on the energy transition, notes that Washington state has a bill supporting renewable electrolytic hydrogen, but it doesn’t specify whether electricity has to be sourced directly from renewables or if it can come from the grid. It doesn’t touch upon the more granular “three pillars” requirements for clean hydrogen which could be included in federal regulations: new supply, temporal matching, and deliverability.

“The lack of specificity is the trend,” she said.

Meanwhile, Colorado’s Advance the Use of Clean Hydrogen Act is the exception to that rule with what’s considered the country’s first clean hydrogen standards, including “matching electrolyzer energy consumption with electricity production on an hourly basis” and requiring that “the electricity used to produce clean hydrogen comes from renewable energy that would otherwise have been curtailed or not delivered to load or from new zero carbon generation.”

The standard will be enforced starting in 2028 or when the deployment of hydrogen electrolyzers in the state exceeds 200 MW.

(Colorado also has a Clean Air Program and a recently launched Colorado Industrial Tax Credit Offering that can offer financial support for industrial emissions reduction projects, including hydrogen projects, but they don’t mention hydrogen use or production specifically.)

“You might see the beginnings of laws that are starting to appear now,  but it might take two or three years before states build the momentum to figure out what they should be doing,” said Wolak. 

Nine out of the 14 states that have hydrogen-specific legislation don’t target clean hydrogen, but hydrogen in general. Kentucky, for example, has a 2018 tax incentive for companies that engage in alternative fuel production and hydrogen transmission pipelines. 

More recently, Oklahoma introduced a bill that proposes a one-time $50m infrastructure assist to a company that invests a minimum of $800m in a hydrogen production facility. According to local news reports, the bill is aimed at Woodside Energy’s electrolytic hydrogen plant in Ardmore. 

“We are an oil and gas state and we will be a primarily oil and gas state for a long time,” Oklahoma Senator Jerry Alvord, the bill’s sponsor, said in an interview. “But we could be at the forefront in our area of hydrogen and the uses that hydrogen puts before us.” 

Depending on the state, general hydrogen incentives could potentially add to federal tax incentives for clean hydrogen projects. 

Meanwhile, other states have been implementing Low Carbon Fuel Standards to encourage the development and use of clean fuels, including hydrogen, in transportation.

Last month, for example, New Mexico enacted its Low Carbon Fuel Standard, a technology-neutral program based where producers and vendors of low-carbon fuels, including clean hydrogen, generate credits to sell in the clean fuels marketplace, where they can be bought by producers of high carbon fuels. 

Similar programs exist in Oregon, Washington, and California, which was early to the game and began implementing its program in 2011. 

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US hydrogen developer auditioning bankers

A US-based clean fuels developer has large capital needs for unannounced green hydrogen projects in California and Illinois, as well as an ammonia facility in Texas.

A US-based clean fuels developer has large capital needs for unannounced green hydrogen projects in California and Illinois, as well as an ammonia facility in Texas.

Avina Clean Hydrogen has yet to formally engage an investment banker to raise the equity and debt needed for a trio of projects under development in the US, CEO Vishal Shah said in an interview.

The company, which recently announced the formation of a strategic advisory board composed of executives from companies like Cummins, bp and Rolls Royce, will need $600m or more of debt and between $200m and $300m of equity, as previously reported by ReSource. Capital raising talks are focused on the operating company and project level.

Capital raises for Avina’s 700,000 mtpa green ammonia project in the Texas Gulf Coast and a larger operating company raise will launch next month, Shah said.

“The amounts that we are going to need to raise have gone up,” Shah said. “We are working with a number of banks but we’ve not engaged anyone formally.”

Buildout of the Texas project has been accelerated. The company recently announced an agreement with KBR for that project, which is scheduled to come online next year.

Project level capital has been raised for Texas and a green hydrogen project in Southern California, Shah said. An additional green hydrogen project in Illinois is in development as well.

Finding the renewable power

Renewable power needs for these facilities are big, but Shah said the company doesn’t see a shortage of power. Instead, developers are facing interconnection issues and subsequent cost increases.

Hydrogen developers in California are in many cases offering higher prices for renewable energy than other buyers, Shah said. The issue is that credit-worthy investment counterparties are often seen as more attractive offtakers regardless of the higher price offers from aspiring hydrogen producers.

“I would say California is different,” Shah said. “The offtake market is a challenge.”

There are renewables developers with a genuine interest in hydrogen looking at the sector as a long-term play, Shah said. But for some without a strategic interest in hydrogen, a community choice aggregator offering a 15-year offtake is more certain than a hydrogen developer offering a 10-year offtake; higher price can be seen as a trade-off.

“That’s the nature of the beast, right now.”

Regulatory uncertainty

Investors looking into the space are hesitating to deploy capital in some cases because of uncertainty around IRA clarifications, particularly with regards to the PTC qualifications, Vishal said.

“A lot of the customers, lenders, everybody’s waiting to make decisions,” Vishal said. Offtakers also have hesitations. “Nobody wants to sign long-term contracts in an environment where pricing is not clear.”

Shah said investors should look for offtake when investing in projects. Avina has two of three contracts signed for each of its projects.

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