💸 NGP raises a fresh $700 million

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.

Hope your post-MDW weekend hangover isn’t too rough…

Here’s what we have for you today:

• NGP raises a fresh $700 million for energy transition

• TC Energy asks for approval on Mexico-US nat gas pipeline

• Siemens Energy looking at production in US to take advantage of IRA

• Biden – McCarthy debt deal would speed up Mountain Valley gas pipeline

• Hyundai and LG team up on $4.3 billion EV battery cell manufacturing

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FUNDRAISING

NGP raises a fresh $700 million for energy transition

• Specialist investment firm NGP Energy Capital Management has raised $1.23 billion across two funds: NGP ETP IV LP, a clean-energy fund with $700 million in commitments, and NGP Royalty Partners II LP, a fund for mineral rights and royalties in oil and gas with $527 million.

• The clean-energy fund received backing from over 30 investors, including the Kentucky Teachers’ Retirement System.

• NGP Energy Capital Management began investing in clean-energy businesses over 15 years ago and focuses on growth strategies supporting equipment and services providers in the clean-energy industry and developers of sustainable infrastructure.

• The firm has already invested about a fifth of the new clean-energy fund in companies such as Form Energy, EV Realty, and Dandelion Energy, focusing on renewable power sources, electrification, energy efficiency, and carbon management.

• NGP sees attractive investment opportunities in the clean-energy sector due to declining asset prices and the benefits of the Inflation Reduction Act, which extended tax incentives for solar, wind power, and other clean-energy technologies.

• Investment firms targeting the clean-energy sector are increasingly focusing on supply-chain businesses, while NGP’s royalty and mineral rights investments provide participants with a share of well revenue without production costs.

• Clean energy remains popular among investors, and NGP sees growth investment opportunities in the sector as underserved, typically involving minority stakes. Traditional energy also continues to attract investors seeking lower risk and cash-yielding attributes.

Separately, NGP co-founder, Ken Hersh, has a new book out that’s worth a read. (Unfortunately, we do not receive any royalties on this. Ken, you know where to reach us if you want to sponsor!)

LNG

TC Energy asks for approval on Mexico-US nat gas pipeline

• TC Energy’s North Baja Pipeline LLC has requested approval from U.S. energy regulators to put sections of the North Baja natural gas pipeline expansion into service in Arizona and California.

• The North Baja expansion, costing approximately $127 million, aims to increase the supply of U.S. natural gas to Mexico, including the Costa Azul liquefied natural gas (LNG) export plant being constructed by Sempra Energy.

• The Costa Azul project, expected to be operational around mid-2025, will have the capacity to convert around 0.43 billion cubic feet per day (bcfd) of gas into LNG.

• The North Baja expansion is estimated to provide an additional 0.495 bcfd of capacity.

• The North Baja pipeline is bidirectional, allowing gas flow from Arizona to California and Mexico, as well as from Mexico to California and Arizona.

• Prior to the expansion, the pipeline could transport approximately 0.5 bcfd of gas south from Arizona to California and Mexico, and about 0.614 bcfd north from Mexico to California, along with up to 0.695 bcfd from California to Arizona, according to federal energy data.

HYDROGEN

Siemens Energy looking at production in US to take advantage of IRA

• Siemens Energy is considering setting up production in the United States to participate in the modernization of the country’s power grid, driven by the potential of the multitrillion-dollar market following the Inflation Reduction Act (IRA).

• The company aims to expand its presence in the United States as favorable regulations support renewable and hydrogen capacity, which require advanced energy networks.

• The predictability of subsidy conditions under the IRA makes the U.S. market attractive for investors, offering clearer benefits compared to Europe.

• Siemens Energy reassures that its increased presence in the United States will not come at the expense of investments in Europe but acknowledges the need to carefully allocate resources.

• U.S. power grids will require around $2 trillion in investments by 2050 to integrate eligible energy sources, including renewables and hydrogen.

• Siemens Energy is considering setting up local production of network equipment such as transformers in the United States to cater to the power grid market.

• Customers are willing to enter firm off-take agreements if the company establishes manufacturing plants in the United States.

• Siemens Energy plans to restart onshore wind turbine component plants and build offshore wind turbine production sites in the U.S., benefiting from the IRA’s cost advantages.

• The Hydrogen Production Tax Credit under the IRA provides a federal tax credit for clean hydrogen production, encouraging the hydrogen value chain.

• Siemens Energy is actively involved in the hydrogen sector and is expanding its electrolyser capacity in Berlin, with potential for local assembly of stacks in the U.S. for large projects.

• The U.S. market is driving commercial projects in hydrogen, presenting significant opportunities for Siemens Energy.

NATURAL GAS

Biden – McCarthy debt deal would speed up Mountain Valley gas pipeline

• The $6.6 billion Mountain Valley natural gas pipeline, owned by Equitrans Midstream Corp, could receive federal approval as part of a debt limit deal between President Joe Biden and House Speaker Kevin McCarthy.

• Democratic Senator Joe Manchin, who supports the pipeline, is a key figure as Democrats have a slim majority in the Senate.

• The pipeline has faced delays due to court rulings and opposition from environmental groups.

• The text of the House budget bill expedites the pipeline’s federal permits and limits judicial review.

• Equitrans previously estimated the pipeline would be completed by the end of 2023, but risks and uncertainties, including ongoing litigation, remain.

• The Mountain Valley pipeline aims to unlock gas supplies from the Appalachia region, the largest shale gas basin in the U.S.

• Ownership of the pipeline includes Equitrans, NextEra Energy, Consolidated Edison, AltaGas, and RGC Resources.

ELECTRIC VEHICLES

Hyundai and LG team up on $4.3 billion EV battery cell manufacturing

• Hyundai Motor Group and LG Energy Solution are establishing a joint venture for EV battery cell manufacturing in the U.S.

• The battery cell manufacturing joint venture will be located in Bryan County, Savannah, Georgia, adjacent to Hyundai Motor Group’s Metaplant America.

• The total investment amount for the joint venture is over $4.3 billion, with Hyundai Motor Group and LG Energy Solution each holding a 50% stake.

• The joint venture aims to start battery production at the end of 2025, with an annual production capacity of 30 GWh, capable of supporting the production of 300,000 EVs.

• Hyundai Mobis will assemble battery packs using cells from the plant and supply them to the Group’s U.S. manufacturing facilities for Hyundai, Kia, and Genesis EV models.

• LG Energy Solution now has seven battery plants operating or being constructed in the U.S., focusing on expanding production capacity to meet the growing demand for EVs.

• Hyundai Motor Group and LG Energy Solution have a long-standing partnership in the field of electrification, and this joint venture strengthens their collaboration in EV battery production.

• The joint venture in the U.S. follows their previous collaboration on the Indonesia battery cell joint venture, set to start production in the first half of 2024.

• The joint venture aims to drive the EV transition in America and provide sustainable energy solutions to customers.

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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.latest