Innovation, Project news

ZeroAvia forms hydrogen aviation fuel partnership with Masdar

The UAE-owned renewable energy company will work with the aviation firm to build aircraft refueling infrastructure.

August 24, 2023

ZeroAvia has signed a partnership agreement with the UAE’s Masdar to explore hydrogen production and supply, initially in North America and Europe, in order to establish hydrogen-powered commercial flights, according to a news release.

The partnership will also try to establish clean flight operations in the UAE.

Masdar is targeting 1 million tons of green hydrogen production per year by 2030. The state-owned company’s Green Hydrogen division is already involved in aviation projects targeting the production of green hydrogen.

ZeroAvia, based in the UK and US, is backed by American Airlines and recently acquired California-based fuel cell stack innovator HyPoint.

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M&A, Project news

OCI: Blue ammonia CI on par with green ammonia under CBAM

The carbon intensity for blue ammonia from OCI’s Beaumont, Texas project is expected to be similar to green ammonia under the EU’s Carbon Border Adjustment Mechanism, OCI CEO Ahmed El-Hoshy said today.

The blue ammonia produced at OCI’s Texas Blue ammonia plant will garner the same carbon intensity scores under CBAM as green ammonia when the facility’s compressors run on renewable electricity.

The facility, which is expected to begin operations next year, would capture the same economic benefit under CBAM as green ammonia – but at a lower cost – since Europe’s levy on carbon emissions for certain imported products only includes scope one and two emissions, OCI CEO Ahmed El-Hoshy said today.

“Under the Carbon Border Adjustment Mechanism, or CBAM, our greenfield ammonia plant will capture effectively the same economic benefit as green ammonia, but at materially lower cost, making this greenfield blue ammonia the most cost-competitive product for low-carbon ammonia today,” he said.

The bulk of blue ammonia carbon emissions are due to the upstream methane slip for natural gas that’s being consumed – considered scope three emissions, he added.

“Therefore, if OCI’s blue ammonia were to be made with renewable electricity, as is currently contemplated, the CO2 footprint focusing on just scope 1 and scope 2 would give it a CBAM threshold almost equivalent to green ammonia.”

The executive has previously detailed his belief that the implementation of CBAM starting in 2026 will provide an avenue for a structural premium for blue ammonia products. OCI’s Texas blue ammonia facility and other assets are part of a re-launched strategic review process being led by Morgan Stanley.

El-Hoshy went on to detail his expectations for sources of demand for ammonia in the US and Europe as well as Asia and for marine fuels. He added that the recently published guidance for sustainable aviation fuel in the US could provide additional demand pull.

“For the first time in any federal and state biofuel program, climate smart agricultural practices including the use of sustainable fertilizers are now included as a lever to to lower the carbon intensity of sustainable aviation fuel and creative value,” he said. “This guidance to properly include low carbon fertilizers will potentially provide significant regulatory value for low carbon ammonia and materially benefit OCI on domestic low carbon sales over time.”

May 14, 2024

Project finance, Project news, Raising capital, Regulatory

Biden admin grants $4bn tax credits for 100 energy projects

The administration allocated $2.7bn in tax credits to clean energy manufacturing and recycling; $800m to critical materials recycling, processing, and refining; and $500m to industrial decarbonization.

The U.S. Department of Energy (DOE), the U.S. Department of Treasury, and the Internal Revenue Service (IRS) today announced $4 billion in tax credits for over 100 projects across 35 states to accelerate domestic clean energy manufacturing and reduce greenhouse gas emissions at industrial facilities.

Projects selected for tax credits under the Qualifying Advanced Energy Project Tax Credit (48C), funded by President Biden’s Inflation Reduction Act, span across large, medium, and small businesses and state and local governments, all of which must meet prevailing wage and apprenticeship requirements to receive a 30% investment tax credit. Of the $4 billion tax credits, $1.5 billion supports projects in historic energy communities.

The agencies did not release a full list of the projects awarded tax credits, citing prohibitions in the law. But a news release gave this overview:

Clean energy manufacturing and recycling: $2.7 billion in tax credits (67% of round 1 tax credits)

Selected from applications requesting support for the buildout of U.S. manufacturing capabilities critical for clean energy deployment and span clean hydrogen (e.g., electrolyzers, fuel cells, and subcomponents), grid (e.g., cables, conductors, transformers, and energy storage), electric vehicles (e.g., battery components, power electronics), nuclear power, solar PV, and wind energy (including offshore wind components), among other industries and components critical to supporting secure and resilient domestic clean energy supply chains.

Critical materials recycling, processing, and refining: $800 million in tax credits (20% of round 1 tax credits)

Selected projects are investing in multiple electrical steel applications, lithium-ion battery recycling, and rare earth projects, all critical areas for maintaining a secure, reliable energy system and advancing the clean energy transition.

Industrial decarbonization: $500 million in tax credits (13% of round 1 tax credits)

Selected projects would implement decarbonization measures across diverse sectors, including chemicals, food and beverage, pulp and paper, biofuels, glass, ceramics, iron and steel, automotive manufacturing, and building materials. Low-carbon fuels, feedstocks, and energy sources are well-represented as a solution for decarbonization across these projects.

April 4, 2024

M&A, Raising capital

Power plant manager seeking capital for Boston acquisitions

A manager of natural gas power plants is seeking capital to acquire two facilities in the Boston area and convert them into low-carbon generation assets.

US Grid Company, an owner and operator of electric generation assets in US cities, is seeking to raise capital to make a pair of acquisitions in Boston.

The New York-based plant manager is targeting facilities owned by Calpine and Constellation, CEO Jacob Worenklein said.

Calpine owns the Fore River Energy Center, a 731 MW, combined-cycle plant located 12 miles southeast of Boston, while Constellation owns Mystic Generating Station, a 1,413 MW natural gas-fired plant in Everett, Massachusetts.

Worenklein would acquire the assets and seek to implement lower-carbon generation solutions such as batteries, renewables, or clean fuels, he said.

He has held conversations with both Calpine and Constellation about acquiring the assets, and would need approximately $100m of equity capital to make an acquisition, he said, with the balance coming in the form of debt capital.

US Grid Company previously had investment backing from EnCap Energy Transition and Yorktown Partners, but the funds for the deal were pulled.

Worenklein has had a storied career in the US power sector, serving as a global head in roles at SocGen and Lehman Brothers. He was also founder and head of the power and projects law practice at Milbank.

From 2017 to 2020 he served as chairman of Ravenswood Power Holdings, the owner and operator of a 2,000 MW gas-fired plant in Queens, New York.

October 16, 2023

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M&A, Project finance, Project news

3Q deals in focus: Macquarie’s investment in Atlas Agro

In one of the largest and most compelling clean fuels deals of 3Q23, Macquarie made a $325m investment into Americas-focused Atlas Agro, a developer of industrial-scale green nitrogen fertilizer plants that utilize green hydrogen as a feedstock. William Demas, head of Macquarie Asset Management Green Investments in the Americas, provides a closer look.

Macquarie Asset Management’s investment into green nitrogen developer Atlas Agro gives the manager a stake in the company along with the ability to invest in the developer’s projects.

The $325m investment, made via the Macquarie GIG Energy Transition Solutions fund, will benefit Atlas Agro’s previously announced fertilizer plant project in Richland, WA, and will also support the company’s global pipeline of green fertilizer facilities, according to William Demas, head of Macquarie Asset Management Green Investments in the Americas.

In addition to the 700,000 tons-per-year Richland project, Atlas Agro is pursuing a project in Minas Gerais, Brazil that will produce 500,000 tons per year. Both projects would make nitrate fertilizer and are estimated to cost $1bn. An additional facility is planned for the US Midwest.

In the production process, the plants utilize air, water, and renewable electricity as the only raw materials.

“There are a number of things that attracted us to Atlas Agro,” Demas said in response to written questions. “They have a strong management team with an established track record managing established companies and delivering projects in the fertilizer space.”

The GIG Energy Transition Solutions fund has a target size of approximately $1.9bn, which to date is just over 50% committed, according to a source familiar with the fund.

Next phase

Equally important for the Atlas investment, Demas added, is that the company is aligned with Macquarie’s next phase energy transition thesis in the US – in this case hydrogen.

“In this application, green hydrogen will be used as a feedstock rather than as an energy carrier, and the end-product of green fertilizer will attract customers looking to enter into long-term offtake contracts,” he said.

Through the development of plants in Washington state and the US Midwest, Atlas Agro is seeking to take advantage of favorable logistics to displace the need for imported fossil-fuel based fertilizer. Brazil also imports around 95% of its nitrogen fertilizers, according to Atlas.

“An important benefit of Atlas Agro’s model is the availability of locally produced, high-quality fertilizer, eliminating many of the issues associated with international supply chains,” Demas said, noting that offtakers are local to Atlas Agro’s operations.

Further, Macquarie and Atlas plan to pursue a project finance model for funding the projects under development.

“As an infrastructure investor, we focus on opportunities that are bankable, which means, ultimately project financeable,” Demas said. “We backed Atlas Agro because we believe their approach to project development, commercialization, construction and operations aligns with our views on how to underwrite infrastructure investments.”

October 6, 2023

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M&A, Project news

Exclusive: National RNG developer in equity sale process

A large US developer and operator of renewable natural gas projects has tapped an advisor and is in the early stages of a sale process.

DTE Vantage, a developer of renewable energy projects with a national footprint in the US, is in the first round of a process to sell its RNG business, according to two sources familiar with the matter.

Lazard is running the process, the sources said. First round bids were recently received.

The company’s RNG portfolio includes 13 projects, four of which are landfill-to-gas while the remainder are on dairy farms, with more under construction, according to company materials. One of the largest RNG producers in the Midwest, the company also has projects in North Carolina, California, New York, and Wisconsin.

Of note, the Riverview Energy landfill gas asset in Riverview, Michigan produces 8.6 mmcfd of pipeline natural gas and includes 6.6 MW of solar. Pinnacle Gas in Moraine, Ohio, produces 4.5 mmcfd, while Seabreeze Energy in Angleton, Texas produces 5.8 mmcfd.

DTE Vantage is a non-utility subsidiary of DTE Energy. Founded in the 1990s, it has about 600 employees and operates 64 projects in 16 US states, with one asset in Canada. The company serves industrial, agricultural, and institutional clients across three core groups: Renewable Energy, Custom Energy Solutions, and Emerging Ventures.

DTE declined to comment. Lazard did not respond to a request for comment.

January 3, 2024

Project finance, Raising capital

Exclusive: Appalachian biogas firm seeking project debt

An RNG developer based in Appalachia with projects across the US is seeking project debt financing.

Northern Biogas, the West Virginia-based developer and operator of anaerobic digester and RNG facilities, is independently seeking debt for its project pipeline, according to two sources familiar with the matter.

Backed by HIG Capital, Northern Biogas serves diary, landfill, food waste and municipal projects. The company has raised some $200m in debt with assistance from alternative energy finance provider Pathward National Association, one source said. Project debt has typically been raised in tranches of $20m to $30m for individual projects.

Northern Biogas’ portfolio includes five dairy farm projects under construction in Wisconsin and one in Michigan, according to the company’s website. The company has a presence in Texas and Colorado as well.

Representatives of the company did not respond to requests for comment.

February 21, 2024