LNG, Lithium and LK-99

RENEWABLES

First Solar gets $710 million in subsidies

• First Solar is benefiting greatly from U.S. government subsidies for domestic renewables production and expects to receive around $710 million this year, almost 90% of its forecast operating profit.

• The company has a significant share of the U.S. market for large-scale solar installations due to government policies encouraging the use of made-in-America components.

• First Solar’s shares have more than doubled since the beginning of 2022, and it has committed over $2.8 billion to new manufacturing and research facilities in the U.S.

• The company’s success is attributed to its technology, persistence, and lobbying efforts to secure a level playing field against low-cost Chinese competitors.

• First Solar spent a significant amount on lobbying as the U.S. government considered green tax-credit details, which could be worth $11 billion over the next decade for the company.

• The definition of a U.S.-made solar panel for tax-credit purposes could be crucial for First Solar, as it could unlock lucrative incentives to spur renewables developers to buy more American equipment.

• First Solar is capitalizing on the demand for U.S.-made equipment, amending contracts, and charging a premium for domestically produced panels.

• The company is investing heavily in research and building new factories to expand its manufacturing capacity, aiming to have over 20 gigawatts of global capacity by the end of 2025, with nearly half in the U.S.

NATURAL GAS AND LNG

Williams and Chattanooga Gas sign agreement for low-emission natural gas

• Williams (NYSE: WMB) and Chattanooga Gas (a subsidiary of Southern Company Gas) signed an agreement for the delivery of certified low-emission NextGen Gas over 3 years.

• Williams’ Sequent Energy Management business will provide trusted low-carbon and net-zero NextGen Gas to utilities, LNG export facilities, and clean energy users.

• Chattanooga Gas will achieve a minimum annual emissions reduction of approximately 646 tons of methane or 16,152 tons of carbon dioxide, equivalent to removing emissions from over 3,500 gasoline-powered automobiles for a year.

• Williams aims to lead the industry in providing credible solutions to benefit customers in a low-carbon energy future.

• The NextGen Gas platform utilizes blockchain secured technology to track and measure emissions through various data sources and provides methane intensity certification.

• An advanced QMRV program uses technologies like optical gas imaging cameras, aerial flyovers, and satellite monitoring to verify and report emissions, supported by a blockchain secured carbon accounting ledger.

Conoco and Mexico Pacific sign LNG agreement

• Mexico Pacific and ConocoPhillips signed sales and purchase agreements for approximately 2.2 million tonnes per year (MTPA) of liquefied natural gas (LNG) across trains 1, 2, and 3 of Mexico Pacific’s LNG export facility, Saguaro Energia in Mexico’s west coast.

• ConocoPhillips will purchase LNG on a free on-board basis over a 20-year term, with an option for further expansion train volumes.

• The first phase of the facility will have three trains with a total capacity of 15 MTPA.

• Mexico Pacific is pleased to have ConocoPhillips as a partner, and their sales volumes exceed the requirements for Train 1 and 2 FID (Final Investment Decision).

• ConocoPhillips sees this opportunity as a way to meet the growing global natural gas demand and enhance their LNG footprint.

• Mexico Pacific is proud to be the first project with an initial FID independently anchored by three major companies.

• They aim to bridge competitive Permian Gas with the Asian LNG market, free of Panama Canal risk and unnecessary shipping emissions and costs.

• Train 1 and 2 sales are now closed, and they are focused on executing the contracting momentum for a subsequent Train 3 FID as quickly as possible to meet global energy security and transition needs.

   

Crown LNG to go public via Catcha SPAC

• Crown LNG Holdings, a developer of liquefied natural gas (LNG) terminals for harsh weather conditions, will go public in New York through a merger with Catcha Investment Corp, a special purpose acquisition company (SPAC), in a deal valued at $685 million.

• Catcha Investment Corp, backed by tech entrepreneurs Patrick Grove and Luke Elliott, raised $275 million in its IPO in February 2021.

• Oslo-based Crown is developing two infrastructure projects in India and Scotland and plans to use the proceeds from the SPAC deal to fund both projects to final investment decision (FID).

• Crown intends to expand into new markets, including Vietnam and Canada, using its gravity-based structure for offshore LNG terminals, making them cheaper and easier to operate than land-based infrastructure.

• The deal with Catcha marks the first investment in the energy sector for Catcha Group, which has previously invested in technology and media companies in Southeast Asia and Australia.

• Catcha supports Crown’s business as it can bring LNG to previously overlooked markets and accelerate the replacement of coal as a fuel for power generation.

CARBON REMOVAL

ANA buys carbon removal credits from Oxy

• ANA becomes the world’s first airline to sign a purchase agreement with 1PointFive for carbon dioxide removal (CDR) credits through Direct Air Capture (DAC).

• ANA will purchase 10,000 metric tonnes of CDR credits per year for three years starting in 2025 from 1PointFive’s DAC plant in Texas, expected to be operational by mid-2025.

• The purchase is part of ANA’s broader climate transition strategy, focusing on reducing emissions through operational improvements, infrastructure changes, and Sustainable Aviation Fuel, while using DAC to remove residual emissions.

• The CDR credits will be enabled by Carbon Engineering’s DAC technology, capturing CO2 from the atmosphere, specifically benefitting hard-to-decarbonize sectors like aviation and transportation.

• The CO2 captured will be sequestered in saline reservoirs not used for oil and gas production.

• ANA aims to achieve carbon neutrality by 2050 and views DAC as a vital and scalable carbon removal technology to help reach this goal.

• The airline continues to invest in sustainable and innovative technologies to contribute to a carbon-neutral society.

LITHIUM

Exxon in talks with Tesla, Ford, VW, Samsung, SK On for lithium

• Exxon Mobil is in talks with Tesla, Ford Motor, Volkswagen, and other automakers to supply lithium for electric vehicle batteries.

• The talks also involve Samsung and SK On Co.

• The discussions are at a very preliminary stage as Exxon currently has no way of producing the battery metal.

• Exxon has agreed to study ways with Tetra Technologies Inc to develop lithium-rich brine in Arkansas, but extracting lithium from these brines will require direct lithium extraction (DLE) technology, which has not been implemented at commercial scale yet.

• Exxon has also held talks with International Battery Metals about licensing DLE technology.

• Exxon’s expansion into the lithium sector comes amid growing interest from traditional energy companies and others in emerging technologies to boost the global supply of lithium.

FUNDRAISING

Ares raising $2 billion fund to buy secondary interests in infrastructure

• Ares Management is raising a new infrastructure-secondaries investment vehicle called Ares Secondaries Infrastructure Solutions Fund III, with a fundraising goal of $2 billion.

• The fund aims to buy stakes in private funds holding utility, transportation, communications, and renewable energy assets, among others.

• Ares will target relatively mature infrastructure funds that are likely to divest assets in the near-term, providing relatively quick returns to investors.

• Ares Chief Executive, Michael Arougheti, expects a first close for the fund to happen “over the next several quarters.”

• Ares acquired secondaries firm Landmark Partners in 2021 for $1.08 billion, adding more than $18 billion of private equity, real estate, and infrastructure assets to its operations.

• The predecessor fund, Landmark Infrastructure Partners II, closed in May 2021 with $915 million from investors, falling short of its $1.5 billion target.

• Ares plans to do deals of $10 million to $350 million through its third infrastructure secondaries vehicle, with a target internal rate of return of 11% to 14% and aims for returns of 1.65 times invested capital net of fees.

• The infrastructure secondaries market is dominated by Blackstone, Ardian, and Goldman Sachs Group, among others.

• Infrastructure secondary deal making slowed down last year, with around $7 billion of deals in 2021 and $3 billion in the first half of last year.

ELECTRIFICATION

LK-99 hype

• LK-99 is a compound made from lead and copper that could potentially be a groundbreaking room-temperature superconductor material.

• A paper released last month claimed LK-99 showed “levitation at room temperature,” sparking excitement in the scientific community.

• A superconductor with no electrical resistance and no need for extremely low temperatures would revolutionize industries like electronics, energy, and transport, and enable practical quantum computing.

• However, it’s unclear if LK-99 is a real breakthrough or a misunderstanding as the papers haven’t gone through peer review.

• Replication efforts by teams in Berkeley and China are underway to confirm the results from the South Korean team.

• It could take months or years to confirm or refute the claims of creating a room-temperature superconductor, and commercial-scale production would likely be a longer-term process.

• The excitement around LK-99 reflects modern times where information spreads quickly through the internet and social media.

• Scientific research takes time, and although LK-99 might not be the superconductor hoped for, the journey of discovery and renewed excitement can lead to other technological advances with significant impact.

VISUALS 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.