🤠 April Roundup

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.

Howdy folks, and welcome to the April Roundup – the only place to be if you wanna catch up on the ten most popular announcements that had you and your fellow subscribers glued to your screens last month.

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HYDROGEN

#10 – CF Industries and NextEra team up for hydrogen in Oklahoma

• CF Industries and NextEra Energy Resources have announced a memorandum of understanding (MOU) for a joint venture to develop a zero-carbon-intensity hydrogen project at CF Industries’ Verdigris Complex in Oklahoma

• The project envisions a 100 MW electrolysis plant at the Verdigris Complex powered by a dedicated 450 MW renewable energy facility developed by NextEra Energy Resources, with CF Industries as the sole offtaker of 100% of the zero-carbon green hydrogen output

• The green hydrogen would be used to produce up to 100,000 tons per year of zero-carbon green ammonia, which would be facilitated by debottlenecking Verdigris’ ammonia plants

• The green ammonia production is expected to support the transition of American agriculture to low- and zero-carbon fertilizers and help remove up to 130,000 metric tons of carbon dioxide emissions from the agriculture supply chain each year

• The proposed project was included in the funding application submitted to the U.S. Department of Energy (DOE) this month by the HALO Hydrogen Hub, and support from the DOE program will be a key aspect of the project evaluation process

• A final investment decision has not been made for this project.

RENEWABLES

#9 – Sunergy goes public via Energy Spectrum-backed ESGEN SPAC

• Sunergy Renewables, LLC has entered into a business combination agreement with ESGEN Acquisition Corp.

• The combined company is expected to be listed on the NASDAQ

• Sunergy is a leading provider of integrated rooftop solar, energy storage, and energy efficiency solutions to residential customers.

• Sunergy delivered approximately $123 million of revenue and approximately $11 million of EBITDA in 2022, underpinned by nearly 2,400 installations performed during the year.

• Sunergy is growing rapidly in the residential solar market with a differentiated sales approach, vertically integrated offerings, a geographic focus on high growth markets in Florida, Texas and Arkansas, and plans to expand further in the future.

• ESGEN’s sponsor, Energy Spectrum, has committed to a common stock PIPE investment of $10 million at $10 per share.

• The transaction is currently expected to provide gross proceeds of up to $65 million to the combined company.

• The proceeds will provide growth capital to Sunergy for expansion of customer offerings and general corporate purposes.

• The pro forma implied enterprise value of the combined company is expected to be $475 million and expects to close in the 4th quarter

LNG

#8 – Tellurian raises capital via land sale-lease-back

• Tellurian to sell 800 acres of land in Louisiana for $1 billion to an undisclosed institutional investor

• Land was designated for the proposed Driftwood LNG terminal facility

• Company will lease the land back for 40 years at an 8.75% capitalization rate

• Deal creates a 40-year liability of $87.5 million annually, escalating 3% yearly

• Driftwood project faced setbacks, including cancellation of some LNG supply deals

• Project received regulatory approvals in January to begin construction

• Expected to produce 27.6 million tonnes per annum of LNG when completed

• Deal contingent on Driftwood LNG LLC securing financing commitments for Phase 1 of the project on satisfactory terms for the buyer

CARBON CAPTURE

#7 – Louisiana Congressman expects Class VI primacy at year end

• Louisiana is expected to receive permitting authority over Class VI wells, which capture and store greenhouse gases, by the end of 2023.

• Congressman Garret Graves has confirmed the move, saying that the state has more expertise and capacity than the Environmental Protection Agency (EPA) does at this point.

• Primacy, or permitting and enforcement authority, allows states to speed up approvals for these wells and ensure investment dollars for carbon sequestration and storage hubs flow to the state.

• Louisiana has a large number of refineries and other industrial facilities and is vying for control over the wells.

• Occidental Petroleum Corp and Talos Energy have carbon capture projects proposed for Louisiana, while EnLink is eying various carbon dioxide pipeline projects to connect emitters to storage sites.

• North Dakota and Wyoming are the only two states with primacy and have been able to speed up the permitting of Class VI or carbon-injecting wells to months instead of years.

CARBON MARKETS

#6 – Summit and NextGen sign deal on Carbon Dioxide Removal credits

• Summit Carbon Solutions has signed a multi-year agreement to sell Carbon Dioxide Removal credits (CDRs) to NextGen CDR Facility.

• NextGen is a joint venture between South Pole and the Mitsubishi Corporation, with plans to purchase over one million tons of CDRs by 2025.

• NextGen announced the purchase of 193,000 tons of CDRs from three projects, including a leading U.S. direct air capture project and a Finnish biochar manufacturer, making this one of the largest CDR transactions to date.

• The CDRs must be from large-scale technical carbon removal projects and certified under standards endorsed by the International Carbon Reduction and Offset Alliance (ICROA).

• Summit Carbon Solutions has developed a methodology for Biomass Carbon Removal and Storage (BiCRS), currently under review with Gold Standard for the Global Goals to meet the stringent requirements.

• NextGen’s initial purchase commitments from three projects puts them on a clear pathway to realize their target of 1M durably stored tons of CO2 by 2030.

• Summit Carbon Solutions is providing critical infrastructure at scale needed to support the build-out of the carbon removal industry in the USA.

LOW-CARBON FUELS

#5 – EnCap-backed Humble Midstream sells JV to Enbridge

• Humble Midstream exits joint venture with Enbridge for an undisclosed amount

• Joint progress made in engineering and capacity marketing for low-carbon ammonia production and export facility at Enbridge Ingleside Energy Center (EIEC) in Texas

• Yara Clean Ammonia shows interest in engaging directly with Enbridge to jointly develop the project, enhancing its long-term prospects

• Utility-scale production facility to supply ultra-low-carbon ammonia for growing global and domestic demand

• Up to 95% of CO2 generated from production to be sequestered in new carbon capture infrastructure

• We covered the Yara-Enbridge announcement 

CARBON MARKETS

#4 – EQT announces nature-based carbon offset project

• EQT announces its first nature-based carbon offset initiative

• Partnership with Wheeling Park Commission, Teralytic (soil analytics company), and Climate Smart Environmental Consulting

• Forest management projects to generate carbon offsets across 1,000+ acres of forest land at Oglebay and other properties

• Teralytic’s soil probe technology to ensure accurate, transparent quantification of offsets

• Initiative to support EQT’s efforts to reach net-zero Scope 1 and Scope 2 GHG emissions by or before 2025

• Conservation Practice Standards (CPS) by the U.S. Department of Agriculture’s NRCS and alignment to Verra guidelines

• Advanced soil probe technology to measure project impact on soil health, generating higher quality carbon offsets at lower cost

• EQT partners with Wheeling Country Day School for educational learning program on soil health

CARBON-FREE ENERGY

#3 – Oxy and Rice Family double down on NET Power

• NET Power and Rice Acquisition Corp. II announce an additional $275 million in PIPE commitments for their proposed business combination.

• Occidental increases its commitment by $250 million, bringing its total investment to $350 million.

• The Rice family commits an additional $25 million, bringing their total investment to $125 million.

• The expected gross proceeds of the business combination are now $845 million for NET Power.

• Assuming no RONI shareholders exercise their redemption rights, the combined company is expected to have a market capitalization in excess of $2.0 billion.

• NET Power is making excellent progress towards commercialization of its utility-scale power plant, including FEED commencement on the Occidental-hosted Serial Number 1 project.

• Occidental is expected to be a key offtaker of the clean power generated by SN1 and manage the transportation, storage, and utilization of the captured CO2 from SN1.

• Following this additional commitment, Occidental’s ownership stake in the combined company will increase to approximately 39%, assuming no redemptions.

• NET Power expects $200 million of net proceeds from the business combination and the PIPE to fully fund corporate operations through commercialization of SN1, which is expected to be operational in 2026.

ENERGY TRANSITION

#2 – Exxon suggests low-carbon businesses could grow to be larger than base business

• ExxonMobil expects low-carbon businesses to potentially become more lucrative than fossil fuel production

• Company outlines plans to generate billions from biofuels, hydrogen, and carbon capture within a decade

• Low-carbon business could be worth “hundreds of billions of dollars” as world approaches net zero

• Success dependent on reducing hydrogen fuel and carbon capture costs, and government incentives

• Critics question Exxon’s commitment to reducing emissions and ability to build large-scale projects

• Company has announced several hydrogen and carbon capture projects, expecting cash generation by 2025

• Exxon plans to spend $17 billion on low-carbon business through 2027, about 10% of oil and gas project spending

FUNDRAISING

#1 – Apollo launches ACT Capital – $4 billion energy transition fund

• Apollo Global Management has launched a new investment strategy called Apollo Clean Transition Capital (ACT Capital).

• ACT Capital seeks to redefine the capital market for climate solutions by providing competitive, flexible, and patient financing to support corporates in their transition to clean energy and sustainable industry.

• The strategy launches with $4 billion in deployable capital from Apollo affiliates and strategic partners.

• ACT Capital will work towards Apollo’s sustainable investing platform target of deploying $50 billion in clean energy and climate capital by 2027, and sees the opportunity to deploy more than $100 billion by 2030.

• Given the approximately $4.5 trillion in investments needed annually to achieve the global energy transition by 2050, ACT Capital seeks to accelerate the pace of climate and transition capital deployment.

• The strategy will leverage Apollo’s sourcing capabilities across market cycles to target global opportunities in energy transition, industrial decarbonization, sustainable mobility, sustainable resource use, and sustainable real estate.

• Apollo’s broader sustainable investing platform and sustainability ecosystem will be employed to execute the strategy.

• ACT Capital is expected to address significant gaps that exist in the capital markets for climate and transition financing.

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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.