Energy Transition in Motion (Week of Nov. 10, 2023)

Pharmaceutical company AstraZeneca is taking its partnership with renewable natural gas (RNG) producer Vanguard Renewables to the next level, aiming to ramp up production of RNG to bring it in parity with fossil fuel-generated natural gas.

Working together, the two companies seek to improve technology in an effort to lower costs of RNG, seen as a barrier to its widescale deployment. Like other corporations, AstraZeneca set a goal to reduce its greenhouse gas emissions. The company is on a mission to cut its entire value chain footprint in half by 2030 and reduce its Scope 1 and 2 emissions by 98% by 2026 from 2015 levels.

Vanguard Renewables, which was acquired in 2022 by a BlackRock Real Assets managed fund, transforms organic waste into RNG.

“The collaboration will pursue capacity and design improvements to Vanguard Renewables’ Farm Powered process via innovative controls and chemistry to more quickly produce RNG using farm-based anaerobic digestion (AD) from food and farm waste,” AstraZeneca said in a news release. “It also aims to develop Digital Twins for the AD process to enable rapid experimentation and modeling, including the potential integration of artificial intelligence (AI); and thirdly aims to enhance supply chain robustness to scale manufacturing and supply.”

The latest news follows a June announcement that Vanguard Renewables will deliver RNG to all of AstraZeneca’s U.S. research and manufacturing sites by the end of 2026. The deal enables as much as 650,000 MMBtu per year of RNG to be used at AstraZeneca’s U.S. sites by 2026, Vanguard said.

Produced from biogas, RNG is formed when contaminants such as CO2, water and hydrogen sulfide are removed from methane to elevate the gas into pipeline quality. RNG can be used in the same ways as fossil gas but has a much lower carbon intensity.

The expanded partnership will involve AstraZeneca bringing in its global manufacturing, supply chain, digital and scientific expertise to advance RNG technology and production. Also, among the companies’ goal is adding RNG capacity to the U.S. power grid.

“As our partnership with AstraZeneca continues to develop, we believe this cross-collaboration will help us achieve our joint mission of forging a path to net zero,” Vanguard Renewables CEO Neil H. Smith said.

AstraZeneca, Vanguard Renewables Aim to Lower RNG Costs, Boost Production

Here’s a look at other renewable energy project news this week.

Energy Storage

Arizona Lithium Pilot Plant in Saskatchewan Begins Operations

Australia-based Arizona Lithium Ltd. has commissioned its pilot plant at its Prairie project in Saskatchewan, Canada, where operations are underway processing brine and producing lithium concentrate.

The company, which is developing two large lithium projects, is moving toward commercialization with plans to drill its initial wells in first-half 2024. Lithium concentrate produced at the pilot plant will be sent to the company’s Lithium Research Center in Arizona for further upgrading.

“The company has previously produced high purity lithium using this DLE (direct lithium extraction) technology, and will produce larger quantities of high purity lithium as a result of the pilot,” the news release stated. “Arizona Lithium will test various operational parameters and conditions to finalize the design of a commercial extraction facility.”

The push to lower emissions has led to higher demand for lithium, a key ingredient for rechargeable batteries used to power items such as laptops and cell phones—and most notable for the energy transition—electric vehicles (EVs) and energy storage. Unlike lithium mined from rock in open pits, direct lithium extraction is seen as a more environmentally-friendly way of extracting lithium from brine using chemical processes such as ion exchange, solvent extraction or adsorption.

Aypa Power Lands Financing for Storage Projects in Texas, Cali

Independent power producer Aypa Power has secured $550 million in portfolio debt and tax equity financing, helping to advance its 100-megawatt (MW) Cald battery storage project in Los Angeles and the 150-MW Borden County battery storage project in Texas.

Construction is underway for both projects, Aypa Power—a Blackstone portfolio company—said Nov. 8, with commercial operations expected to begin in 2024.

Lenders were First Citizens Bank & Trust Company, Nomura Securities International Inc., National Bank of Canada and MUFG Bank Ltd, according to a new release. U.S. Bancorp Impact Finance was the portfolio's tax equity investor.

Both projects are expected to help stabilize grids in California and Texas. Aypa said the Cald project already secured a long-term tolling agreement with San Diego Gas & Electric.

Hydrogen

Air Products to Add Carbon Capture to its Netherlands Hydrogen Production Plant

Pennsylvania-based Air Products said Nov. 6 it plans to build and operate a carbon capture and CO₂ treatment facility at its existing hydrogen production plant in Rotterdam, Netherlands.

The company said the facility will be the largest of its kind in Europe when the facility is fully operational.

Serving Exxon Mobil Corp. and other customers using the industrial gas company’s hydrogen pipeline network, the facility is expected be onstream in 2026.

Plans are to capture CO₂ from Air Products’ existing hydrogen plant and Exxon Mobil’s Rotterdam refinery, according to a news release. The captured CO₂ will then be transported, along with CO₂ from other industrial sources, to depleted gas fields in the North Sea for permanent storage more than 3 km belowground using the Porthos CO₂ transport and storage system.

The facility retrofit comes as major industries turn to cleaner forms of hydrogen production to lower emissions.

“Industrial companies here are continually looking for ways to realize synergies, create economies of scale, drive energy efficiencies and ultimately decarbonize,” Air Products COO Samir J. Serhan said in the release. “This project fulfils that demand. By sequestering CO₂ through Porthos and bringing additional blue hydrogen to Exxon Mobil and other customers, we can help generate a cleaner future.”

Canada Firm to Build C$4B Green Hydrogen Project in Quebec

Montreal-based renewable energy firm TES Canada H₂ Inc. will build a CA$4 billion (US$2.9 billion) green hydrogen project in Quebec that is expected to create 200 permanent jobs and reduce 3% of the province’s carbon emissions by 2030, a source familiar with the project told Reuters on Nov. 9.

TES Canada, a unit of Tree Energy Solutions, is expected to make an announcement on the project on Nov. 10 with Canadian Industry Minister Francois-Philippe Champagne, the source said, declining to be named because details are not yet public.

The green hydrogen project will use a wind and solar farm to produce most of the energy it needs, and it will create over 1,000 temporary jobs during the construction period, in addition to permanent positions, the source said.

The project will produce 70,000 tonnes of green hydrogen annually from 2028—about a third of which will be dedicated to decarbonizing long-haul transportation—and the remaining will be used to produce electric renewable natural gas, the source said.

Canada pledged to reduce its greenhouse gas emissions output by 40% to 45% below the 2005 level by 2030, though Ottawa’s plan was found to be insufficient in a report released this week.

Solar

EDF Renewables Marks Completion of Arrow Canyon Solar, Storage Project

With the energy storage component of the Arrow Canyon project finished in Nevada, EDF Renewables North America and partners ceremoniously marked the project’s completion Nov. 9.

Located on the Moapa Indian Reservation in Nevada’s Clark County, the project features 275 MW of solar with a 75-MW, 5-hour battery energy storage system, according to a news release. EDF said the solar part of the project was finished in December 2022 and the storage was completed in November 2023. As part of a 20-year power purchase agreement, energy generated at Arrow Canyon is going to NV Energy.

“Arrow Canyon represents an important milestone for EDF Renewables as it marks our first solar and storage project in Nevada,” said Ryan Pfaff, executive vice president with EDF Renewables. “We are pleased to have collaborated closely with our partners, including the Moapa Band of Paiutes, NV Energy and McCarthy Building Companies to successfully bring this project to fruition.”

Arevon Energy’s Tax Credit Sale Helps Fund Vikings Project in California

The purchase of investment and production tax credits by J.P. Morga,n coupled with debt facility financing from several banks, is enabling Arevon Energy to move forward with its Vikings solar-plus-storage project in California.

The Arizona-headquartered company said Nov. 8 that J.P. Morgan agreed to purchase $191 million of tax credits, a transaction made possible by the Inflation Reduction Act. An additional $338 million debt facility was financed with MUFG, BNP Paribas, Sumitomo Mitsui Banking Corp. and First Citizens Bank, which acted as coordinating lead arrangers. National Bank of Canada also participated as a lender.

Vikings, one of the first solar peaker plants in the U.S., will have 157 MW of solar power and 150 MW (600 megawatt hours) of energy storage. With a contract in place with San Diego Community Power, the power plant is expected to startup in 2024.

“ITC and PTC tax credit transferability is a major step forward for the energy transition, post-IRA, and we are excited to be able to leverage it on the Vikings financing structure,” Daniel Murphy, Arevon’s director of project finance, said in a news release. “This solar peaking project concept is a key strategy for Arevon, and we are grateful to our financing parties for their support on this groundbreaking financing using tax credit transferability.”

Stoel Rives represented Arevon as legal counsel. Milbank LLP served as transfer counsel. Winston & Strawn LLP served as lender counsel.

Canadian Solar to Build 5-GW Plant in Thailand

Ontario-based Canadian Solar Inc. said Nov. 9 it will build a 5- GW solar photovoltaic production facility in Chonburi, Thailand, aiming to start production in March 2024.

Plans are to initially use the produced solar wafers at the Thailand TOPCon cell manufacturing plant in the same location. However, when Canadian Solar’s 5-GW cell factory in Jeffersonville, Indiana, comes onstream, the wafers will be used as inputs to the Indiana factory, the company said in a news release. Production at the Indiana facility is expected to start by the end of 2025, producing about 20,000 high-power modules per day.

“Establishing this solar wafer factory in Thailand is a key milestone that will enable us to better serve our U.S. customers with a more diversified and resilient supply chain, complementing our recently announced investments in the U.S. in solar cell and solar module manufacturing,” Thomas Koerner, senior vice president of Canadian Solar, said in a news release. “Importantly, it will also allow us to responsibly meet the new requirements related to the latest and adjusted AD/CVD ruling by the U.S. Department of Commerce.”

Indonesia President Inaugurates $108 Million Floating Solar Plant

Indonesia’s President Joko Widodo on Nov. 9 inaugurated a 192-MW peak (MWp) floating solar power plant on a reservoir in West Java province as part of a drive to increase renewable energy sources and switch away from coal.

The 1.7 trillion rupiah (US$108.70 million) project was developed by PLN Nusantara Power, a unit of Indonesia’s state utility company Perusahaan Listrik Negara (PLN) and United Arab Emirates renewable energy company Masdar, a unit of Mubadala Investment Company.

“I spoke with Minister Thani from the UAE that this would be expanded to around 500 MWp, and we hope more renewable energy could be developed in Indonesia,” the president popularly known as Jokowi told reporters, referring to UAE Minister of Foreign Trade Thani bin Ahmed Al Zeyoudi.

The solar power infrastructure was built on Cirata reservoir, 108 km (67.11 miles) southeast of Indonesia capital Jakarta. A hydropower plant at the dam has an installed capacity of about 1,008 MW.

The plant is the third largest floating solar plant in the world and could be expanded up to 1,000 MWp, PLN CEO Darmawan Prasodjo said, as the 13 arrays installed so far only occupy 4% of the reservoir's surface.

Wind

Aker Solutions Gets Notice to Proceed Contract for Norfolk Offshore Wind Project

Vattenfall awarded Aker Solutions a limited notice to proceed contract for the 1.4-GW Norfolk Vanguard West Offshore Wind Farm off the U.K., according to a Nov. 8 news release.

The project, which is the first phase of Vattenfall’s Norfolk Offshore Wind Zone, awaits regulatory approvals and Vattenfall’s final investment decision. If needed approvals are secured, the wind zone is expected to produce enough electricity to power more than four million homes.

“The development of the entire Norfolk Offshore Wind Zone could ultimately require up to three HVDC platforms in succession, which would improve the long-term predictability and give positive repeat effects and standardization within the supplier industry,” said Sturla Magnus, executive vice president of newbuild at Aker Solutions.

Aker Solutions’ work scope, according to the news release, includes the engineering, procurement, construction and installation (EPCI) of the high voltage direct current (HVDC) offshore platform. Aker said it will book a contract value of about NOK 4 billion in the fourth quarter of 2023 in the renewables and field development segment, reflecting the compensated work that will be performed until the expected final investment decision. The total contract value for Aker is estimated to be about NOK 6 billion following the final award, the company said.

Norway’s Statkraft May Return to British Offshore Wind

Norway’s state-owned Statkraft could return to the British offshore wind market, but its key focus remains Ireland, Norway and Sweden, its CEO told Reuters on Nov. 10.

“We are looking at Britain,” Christian Rynning-Toennesen said after Statkraft’s third quarter earnings presentation, highlighting the country’s plans for steady auctions.

He expected future rounds were being re-calibrated after Britain’s most recent renewable energy auction failed to attract new offshore wind projects as subsidies were deemed too low and not reflecting rising costs in the industry.

Statkraft is also one of Britain’s biggest onshore renewables developers, has a large office in London and knows the market well from previous offshore wind projects, he said.

The company previously held stakes in the Dogger Bank, Dudgeon, Sheringham Shoal and Triton Knoll wind farms, but sold these in 2017 to focus on other technologies.

“We don’t have any early-stage projects in England, so to the extent that we would go in now, it would have to be that we entered projects that others are selling out of,” he said.

Reuters contributed to this report.