Energy Transition in Motion (Week of Sept. 13, 2024)

Japan-based Mitsubishi Corp. on Sept. 12 said it is advancing talks with Exxon Mobil Corp. about acquiring an equity stake in and securing offtake of ammonia from the energy giant’s massive hydrogen facility being developed in Texas.

Mitsubishi, which intends to convert part of its Namikata LPG terminal in Japan into an ammonia terminal, said it will use the low-carbon ammonia in Japan for power generation, process heating and other industrial activities.

The project’s framework agreement between Exxon and Mitsubishi comes as Japan works to fulfill its decarbonization strategy. Ammonia, which is produced by combining hydrogen with nitrogen, is a key piece of the country’s goal to lower emissions as it shifts from coal. Sights are set on Namikata handling 1 million tons per year of low-carbon ammonia by 2030.

“We are excited to be closely collaborating with Exxon Mobil to develop low-carbon hydrogen and ammonia supply chains that will bridge the United States and Japan,” said Masaru Saito, CEO of Mitsubishi’s environmental energy group. “We are also working with Idemitsu Kosan Co. Ltd., which is developing an ammonia hub near ours and intends to participate in Exxon Mobil’s hydrogen facility with us. Together, we will lead this joint initiative to assist in the acceleration of the hard-to-abate sectors’ transition to clean energy.”

Exxon’s planned hydrogen facility in Baytown, Texas is expected to be the world’s largest. The site plans to produce 1 Bcf of hydrogen daily and more than 1 million tons of ammonia annually, capturing more than 98% of associated CO₂ emissions. The company is working through engineering for the project as it awaits federal action.

“A critical element of that is getting the IRA [Inflation Reduction Act] legislation translated into final regulations. … We’re optimistic that the regulations will reflect the intent of the legislation,” Exxon Mobil CEO Darren Woods said on the company’s earnings call in August. “And if it does, I think we’ll have a very attractive project that we can then FID once those regulations are finalized.”

A final investment decision (FID) on the facility is expected in 2025, a year later than previously expected. Anticipated startup is in 2029, Exxon said.

Last week, Exxon announced that Abu Dhabi National Oil Co. (ADNOC) will acquire a 35% equity stake in the proposed low-carbon hydrogen and ammonia production facility.

In June, Exxon Mobil said it reached an agreement with Air Liquide, enabling the transport of hydrogen through the industrial gases company’s existing pipeline network. Air Liquide also plans to build and operate four large modular air separation units for the facility. The units will supply 9,000 metric tons (mt) of oxygen and up to 6,500 mt of nitrogen daily to the facility.

“Demand continues to build for Exxon Mobil Low Carbon Hydrogen and ammonia,” said Dan Ammann, president of Exxon Mobil Low Carbon Solutions. “We look forward to furthering our leadership position, alongside Mitsubishi Corporation, to advance low-carbon hydrogen and ammonia globally, helping the world achieve a lower emission future.”

Here’s a look at other renewable energy news.

Bioenergy

Brookfield to Invest Up to $1.1B in Sustainable Fuels Provider Infinium

Brookfield Asset Management agreed to invest up to $1.1 billion in efuels producer Infinium as it seeks additional growth opportunities, the private equity firm said Sept. 10.

The company commercially produces ultra-low carbon efuels, including sustainable aviation fuel (SAF). Under the agreement’s terms, Brookfield agreed to invest more than $200 million in Infinium and Infinium’s Project Roadrunner being developed in West Texas. It also agreed to invest up to $850 million more for Infinium to deploy some of its other eFuels projects.

Efuels can be used in place of fossil-based fuels to power planes and ships, for example, without changes to engines or infrastructure, according to Infinium. The company’s eSAF is made through a proprietary process that combines water, waste CO₂ and renewable energy to produce ultra-low carbon fuels. The investment, made by Brookfield Global Transition Fund, marks Brookfield’s first direct investment in SAF. Brookfield will also serve as lead in Infinium’s Series C Preferred Stock offering, the company said in a news release.

“Our first operational facility will be in Texas, and once complete will sell its output to American Airlines and another airline that we’ll announce soon,” Natalie Adomait, managing partner of renewable power and transition for Brookfield, said during the firm’s investor day. “We’re very excited about this space. We think SAF alone could represent a $50 billion market opportunity through 2030.”

In addition to SAF, Brookfield is also targeting investments in hydrogen, carbon capture and recycling solutions, among others.

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Energy storage

SLB Proves Direct Lithium Extraction Technology

SLB on Sept. 10 said it has proven the company’s direct lithium extraction (DLE) technology at scale at its Nevada demonstration plant, recovering 96% lithium from brine.

Using its subsurface and surface engineering expertise, SLB said its integrated technology solution produces lithium from brine 500 times faster than conventional methods while using less land, water and chemicals.

“Lithium is a key enabler of electrification, so we must find ways to accelerate its production without adversely affecting the environment,” said Gavin Rennick, president of SLB’s New Energy business.

Energy companies have been working to commercialize DLE technologies amid efforts to lower global emissions. Lithium is considered a key metal to transition to a lower-carbon technology, as it is critical ingredient in electric vehicle batteries and energy storage systems. Companies are turning to DLE as an alternative to conventional methods involving hard rock mining and evaporation ponds.

The DLE method produces fewer emissions than hard rock mining, and it doesn’t require as much land as lithium brine extraction in evaporation ponds, where brine sits for several months or years as the sun evaporates most of the liquid content, ultimately leaving behind lithium and other metals. The brine, with its higher concentration of lithium, is then pumped to a facility for processing.

“SLB’s demonstration plant in Clayton Valley proves our unique integrated approach to produce scalable quantities of lithium in the fastest, most economical and sustainable way for today’s market,” Rennick said. “This accelerates deployment of viable commercial-scale facilities for high-quality lithium products that are the backbone of our electrification economy.”

Operating at about one-tenth the size of a commercial-scale facility, SLB said the plant reached a verified recovery rate of 96% lithium from brine. The process results in high-purity lithium carbonate or hydroxide.

SLB proved its DLE technology at the company’s pilot plant in Clayton Valley, Nevada. Completion of the technical milestone qualifies SLB to acquire 100% ownership interest in the Clayton Valley Project as part of the earn-in agreement with Pure Energy Minerals Ltd., SLB said.

China Minmetals to Jointly Set up $1.4B Lithium Miner in Qinghai

(Reuters) State-owned China Minmetals plans to establish a $1.41 billion miner with local companies in the lithium-rich province of Qinghai in northwestern China, a statement and exchange filing showed.

Minmetals said in a statement that the jointly owned company, tentatively called China Salt Lake Industry Group, will build a “world-class” production hub and enhance national security of potassium and lithium resources.

Major uses of lithium include electric vehicle batteries and solar-power panels. Potassium is also used in batteries.

The new company will buy 12.54% of Qinghai Salt Lake Industry and become a controlling shareholder, the latter said in a filing to the Shenzhen Stock Exchange.

Qinghai Salt Lake Industry, currently owned by local authorities, controls the most potassium and lithium resources in China.

Minmetals plans to invest 5.3 billion yuan in China Salt Lake Industry, whose main operations will include mining, exploration and the production of lithium chemicals and other battery materials, the stock exchange filing showed.

It will invest alongside Qinghai state-owned Assets Investment Management and Qinghai Assets Supervision and Administration Commission, the filing showed.

SK On Selects IHI Terrasun as US BESS Integrator

Chicago-based IHI Terrasun Solutions (IHI Terrasun) has been selected as the integrator of choice for battery energy storage system (BESS) projects by EV battery maker SK On, a subsidiary of South Korean global conglomerate SK Group, according to a Sept. 11 news release.

The partnership aims to bring more BESS projects online in North America.

IHI Terrasun said it will deploy its Assured Controls power plant software to run all of SK On’s BESS projects in North America. The company’s integration and field engineering teams will also bring projects online and keep them operating at top performance, it said in the news release.

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Geothermal

Fervo Energy Achieves ‘Record Breaking’ Geothermal Well Flow Rates

Geothermal company Fervo Energy on Sept. 10 said it has achieved record-breaking commercial flow rates at its Cape Station well site in Beaver County, Utah.

The 30-day test achieved a maximum flow rate of 107 kg/s at high temperature, the company said in a news release. The flow enabled production of more than 10 megawatts (MW) of electricity, three times the per production well output the company achieved with its Project Red commercial pilot in Nevada.

“Fervo continues to achieve technical milestones for geothermal development that experts predicted to be set decades from now,” said Fervo Energy CEO Tim Latimer. “At a time when 24/7 clean energy is urgently needed, Fervo has shown that the geothermal industry is ready to meet that need with power projects that can come online this decade.”

The Houston-based company has been marking milestones in the geothermal energy space as it utilizes oilfield technology, techniques and equipment. These have included horizontal drilling, polycrystalline diamond compact drillbits and mud coolers. Fervo said fossil fuel workers have accounted for more than 90% of on-site labor hours at Cape Station.

Results of the well test demonstrate the company’s utility-scale power generation capabilities

and establishes Cape Station as “the most productive enhanced geothermal system in history,” Fervo said.

The Cape Station project will generate 90 MW of renewable energy capacity during its first phase and is expected to begin delivering electricity to the grid in 2026. The multi-phased development will create 400 MW of capacity by 2028.

“The accomplishments that Fervo is announcing today confirm that next-generation geothermal is on the cusp of commercial success,” said Jeff Marootian, principal deputy assistant secretary for the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy. “It’s this type of literal ground-breaking achievement that is paving the way to expand geothermal energy and realize its crucial role in our clean energy future.”

Fervo also announced it secured a $100 million construction loan from X-Caliber Rural Capital to accelerate its Cape Station operations. X-Caliber’s affiliate XRL-ALC closed on the bridge loan.

XRA provided $65 million to fund development costs associated with subsurface development, including geothermal wells, pads, roads and associated infrastructure. The remaining funds are being allocated to development costs associated with surface development, such as power plants and associated energy collection and distribution infrastructure, Fervo said.

“Helping this significant project advance and grow in rural America is a true testament to how investing in communities and businesses not only has local influence, but can have a global, long-lasting impact by promoting sustainability and stimulating rural economies,” said Jordan Blanchard, co-founder of X-Caliber Rural Capital.

Hydrogen

Iberdrola, BP to Build 25-MW Hydrogen Project in Spain

(Reuters) Spanish renewable power company Iberdrola and Britain’s BP said on Sept. 12 they had agreed to build a 25-MW green hydrogen plant in Castellon, on Spain’s eastern coast.

The project, which will benefit from a 15 million euro- (US$16.5 million) EU subsidy, is designed to help BP reduce the carbon footprint of its oil refinery located in Castellon, both companies said in a joint statement.

BP and Iberdrola will each finance half of the project, but they did not disclose the cost of building the plant.

Green hydrogen production uses electricity from renewable power plants, such as wind and solar, to separate hydrogen from water through electrolysis and is part of Europe's strategy to tackle carbon emissions and improve energy security.

China’s Envision to Invest $1B in Spain to Make Hydrogen Machinery

Spain said on Sept. 10 it had signed a deal with Envision Group for the Chinese group to build a $1 billion plant to manufacture machinery used for the production of green hydrogen.

A memorandum of understanding showed Envision would start building the factory that will produce electrolyzers, the machinery separating hydrogen from water, by June 2026. The Chinese company will finance the project with private partners at a yet-to-be announced location in Spain, it said.

Envision is also set to invest in the green hydrogen value-chain and help to develop other related industries such as fertilizers and biochemicals.

The company is currently negotiating further renewable energy deals, specifically in e-methanol, green hydrogen and green infrastructure, with potential Spanish and European partners, the memorandum said.

Green hydrogen is produced using renewable electricity, and Spain is positioning itself as a leader in the field in Europe, taking advantage of its abundant wind and solar power potential.

While it is seen as key to decarbonizing Europe’s economy in the future, green hydrogen projects in general are not competitive without subsidies due to their high costs.

Two years ago, Envision signed a deal with Spain on investments worth 3.8 billion euros (US$4.19 billion), including a car battery gigafactory and green hydrogen projects.

The document signed on Sept. 10 did not say whether the planned electrolyzer plant was part of the 2022 project.

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Solar

Altus Power Adds Solar Projects in Colorado

Connecticut-based Altus Power has added 2.5 MW of operational solar projects in Colorado, the commercial-scale power provider said Sept. 12.

Power generated by the ground-mounted systems will benefit local municipalities, including the city of Pueblo, Pueblo Community College and the Pueblo County School District, the company said.

The Blackstone-backed company is generating the power through its Altus Power Community Solar program, which is a part of the Black Hills Energy Colorado community solar program.

“Community solar provides enterprises, homeowners and renters of diverse income brackets with the benefits of clean energy savings in the form of discounts on their utility bills without requiring customers to install or maintain their own solar panels,” Altus said in a news release.

Combined, the projects are expected to offset the equivalent of nearly 54,462 mt of carbon emissions over their lifetimes, according to Altus.

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Wind

New England States Move Forward with Three Giant Offshore Wind Farms

(Reuters) Massachusetts and Rhode Island are moving ahead with three offshore wind projects totaling 2.9 gigawatts (GW), or enough electricity to power about 1.6 million homes, government officials announced Sept. 6.

The project selections, following a joint solicitation in March for wind farms to be built off of New England’s shores, move Massachusetts and Rhode Island closer to state renewable energy goals aimed at combating the effects of climate change.

“We are taking an important step towards energy independence, cleaner air and transforming our economy,” Governor Maura Healey said in a statement.

The U.S. offshore wind industry stabilized in the second half of 2024 after a disastrous year that saw developers cancel multiple project contracts and take $9.1 billion in write-offs and impairments on abandoned projects.

New England’s newly selected offshore projects include SouthCoast Wind, New England Wind 1 and Vineyard Wind 2. Avangrid is behind New England Wind 1, Southcoast is backed by a joint venture between EDP Energias de Portugal and Engie and Vineyard Wind 2 is being developed by Vineyard Offshore, which is held by funds managed by Copenhagen Infrastructure Partners.

The projects are expected to begin delivering power in around the end of the decade.

Federal and state climate pledges have largely centered around decarbonizing electrical grids by replacing fossil-fired power with renewable wind and solar. Massachusetts aims to slash its power sector's carbon emissions by 50% by 2030 and 100% by 2050. The much smaller Rhode Island has set a goal to use all renewables by 2033.

Reuters and Hart Energy Staff contributed to this report.