🔋 Redwood Materials’ $2 Billion DOE Loan Brings Battery Supply Chain Back to US

Good Morning. This is the Sunya Scoop. The newsletter that takes energy transition news and turns it into an easy-to-read email for you.

💘 Here’s what we have for you this Valentine’s Day:

• Redwood Materials scores $2 billion loan from the DOE for EV battery plant

• Total-Adani Indian hydrogen venture on pause

• Petra Nova CCUS project gets a second chance

• DOE announces $74 million for geothermal pilots

• Chart of the week

DOE loans Redwood Materials $2 billion for EV battery plant

• The US Energy Department has made a conditional commitment to Redwood Materials for a $2 billion loan to help build a $3.5 billion recycling and remanufacturing complex for battery materials in Nevada.

• The loan, if finalized, will help create critical materials for electric vehicle (EV) batteries and play an “outsized role” in bringing the battery supply chain home, says Energy Secretary Jennifer Granholm.

• Redwood CEO JB Straubel says the loan will help accelerate production and compress the time to reach full scale at the Nevada complex.

• The US battery supply chain is being shifted away from China due to the Inflation Reduction Act signed by President Biden in August.

• The DOE has previously loaned $2.5 billion to Ultium Cells (GM and LG joint venture) and plans to loan Ioneer Ltd up to $700 million to build a lithium mining project.

• The loans come from the Advanced Technology Vehicles Manufacturing (ATVM) loan program, which also provided low-cost loans to Tesla, Ford, and Nissan in the past.

• Redwood Materials, founded by former Tesla executive Straubel, plans to become a major recycler and remanufacturer of battery materials. It also plans to build a similar facility in South Carolina.

• Each facility will have an initial planned capacity to process 100 gigawatt-hours of electrode materials, enough to supply over 1 million EVs each.

• Redwood Materials has supply agreements with various manufacturers, including Ford, Toyota, and Volkswagen.

Total-Adani Indian hydrogen venture on pause

• TotalEnergies has not signed a contract to extend its partnership with India’s Adani for the production of green hydrogen. According to CEO Patrick Pouyanne, “It was announced, nothing was signed. It doesn’t exist.”

• The CEO stated that TotalEnergies is waiting for the result of an audit launched by Adani in response to allegations of financial irregularities. Pouyanne said, “Mr Adani has other things to deal with now, it’s just good sense to pause things while the audit goes forward.”

• TotalEnergies is not in charge of the financial health of Adani and holds stakes in Adani Total Gas and Adani Green Energy that are still worth more than when they were purchased. Pouyanne said, “Our accounting is healthy, there was due diligence before and due diligence after.”

• Adani has not requested financial support from TotalEnergies for existing projects. Pouyanne confirmed, “Adani had not requested financial support from TotalEnergies for existing projects.”

Petra Nova Carbon Capture Plant to Restart

• The world’s largest carbon capture plant, Petra Nova in Texas, is getting a second chance

• After shutting down in 2020 due to low oil prices, it’s now set to restart operations

• Owners JX Nippon aim to resume operations after repairs to the coal-fired power unit

• Restart marks a significant step forward for US carbon capture industry and is being boosted by the Biden Administration’s Inflation Reduction Act tax incentives

• Petra Nova cost $1 billion to build and captured carbon from burning coal for use in enhanced oil recovery in a Hilcorp oil field

• During its 3 years of operation, it was the world’s largest post-combustion carbon capture plant in terms of annual tons captured

• The system failed in 2020 due to challenging project economics which led to NRG selling its 50% stake to JX Nippon for a cool $3.6 million last year, a far cry from original capex

• JX Nippon wants to obtain further technical knowledge of the carbon capture process and help parent company Eneos Holdings become carbon neutral by 2040

DOE announces $74mm for Enhanced Geothermal Systems pilots

• The U.S. Department of Energy (DOE) announced a funding opportunity of up to $74 million for up to seven pilot projects for enhanced geothermal systems (EGS).

• The pilot projects aim to test the scalability of EGS and provide renewable geothermal energy to over 65 million American homes.

• The funding opportunity is part of DOE’s Energy EarthShots Initiative, which seeks to cut the cost of geothermal energy 90% by 2035.

• The use of EGS aims to make geothermal energy a clean and cost-effective option across the U.S. and support President Biden’s goals of 100% carbon-pollution-free electricity by 2035 and net-zero emissions by 2050.

• Applications for the EGS Pilot Demonstrations will be accepted over multiple rounds, with first-round letters of intent due on March 8, 2023 and first-round applications due on June 16, 2023.

Chart of the Week

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.