Ambient Fuels and Generate Capital executives discuss the path to first hydrogen project in Texas

Ambient Fuels now has a sufficient equity backstop to build out its green hydrogen blueprint thanks to its recent commitment from Generate Capital and an ongoing federal grant process that could help make its first project more likely.

The company is initially planning a green hydrogen project at the Port of Corpus Christi, Texas with plans to build a USD 100m electrolyzer, procure renewable energy as the feedstock and sell hydrogen to customers around the port.

Ambient will find out in a few months what its funding scheme for the project might look like as its amongst 30 private partners in the Horizon Clean Hydrogen Hub (HCH2). The Department of Energy (DOE) is set to decide this fall on whether HCH2 is selected amongst 6-to-10 hubs being envisioned for a USD 7bn funding opportunity. A total of 33 hubs recently submitted final bids.

If HCH2 is selected, the hub program provides for the government cost share of up 50% of the capital costs of the projects. The hub prime applicant would then be responsible for leading the allocation of the awarded funding to private party sub-recipients such as Ambient.

“We could receive up to 50% of our capital cost in the form of a government grant, but could also receive a smaller portion,” said Chris Shugart, senior vice-president of development for Ambient, “Through our relationship with Generate Capital, we have adequate capital resources to execute the project without the grant.”

“However, proceeding with the project requires securing a firm offtake for the hydrogen, and the grant would allow us to offer a price for hydrogen offtakers that is more competitive with their alternatives and thus improve the prospects for successfully securing offtake and proceeding with the project,” adds Shugart.

The green hydrogen industry in the US is still in the early innings as hydrogen developers await formal IRS guidance on tax credits and the outcome of the hub process, while at the same time staffing up, developing sites, executing on pilots such as Invenergy’s Sauk Valley project in Illinois and/or securing platform funding like Generate’s recent USD 250m commitment to Ambient.

The Clean Hydrogen Credit (Section 45V) included in the Inflation Reduction Act of 2022, which permits producers to claim up to 3/kg or qualified clean hydrogen if certain labor and wage requirements are satisfied, would effectively level the playing field for GH2 with the likes of natural gas on a competitive basis in areas such as fuel ships or long-haul trucking.

Generate Capital had been looking for a few years now to add green hydrogen to its mix of clean energy investments, which include prior investments in solar (Nexamp, Pine Gate Renewables, Intersect Power) and storage (esVolta).

“The interest in green hydrogen accelerated since the passage of the IRA due to decreased costs of delivery and corresponding larger addressable market,” said Scott Gosselink, managing director for Generate, adding that “we were drawn to Ambient because of our shared core values, the teams customer centric approach and a long-term proven track record across many relevant industries.”

Leading the charge for Ambient is Jacob Susman who was co-founder of the company and CEO who has been developing renewable energy projects for over 20 years which included founding OwnEnergy Inc. in the aughts, growing a 1 GW pipeline and selling to EDF Renewable Energy in 2015.

Susman, echoing, Gosselink’s comments as Ambient focus on the delicate task of decarbonizing industries with a heavy industrial focus such as long-haul transportation and shipping.

“It really starts with engaging with the customers to figure out how does the customer deploy green hydrogren,” said Susman.

Its project at Corpus Christi for instance is located near six refineries, so they will be potential targets for offtake, along with many other current and future industrial sectors in the area.

Susman is also eyeing similar projects in several other hubs across the United States.

*This story was originally published exclusively for NPM subscribers in June.


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