Energy Transition in Motion (Week of March 3, 2023): Advancing Projects, Investment

Billion-dollar investment plans are moving forward and contracts are being sealed, making way for more electric vehicle (EV) battery manufacturing facilities, cathode materials and battery storage.

A pipeline operator has partnered with a company that converts food waste into renewable natural gas (RNG), committing to invest $1 billion to expand RNG facilities.

Plus, billions more dollars are being pumped into the hydrogen sector.

Here’s a look at some of this week’s renewable energy news.

Batteries

Panasonic Selects Turner, Yates to Build Kansas EV Battery Facility

Panasonic Energy has tapped the joint venture team of Turner Construction Co. and Yates Construction to build a manufacturing facility for EV batteries, Yates said March 1.

The facility, which will be located in De Soto, Kansas, is part of a $4 billion program that will also include construction of a central utility plant and support buildings.

Word of the new facility came as Panasonic boosts EV battery production capacity in the U.S. The U.S. aims to strengthen the domestic manufacturing of batteries for EVs for shelling out incentives as part of the Inflation Reduction Act.

“The battery manufacturing facility is a critical part of Panasonic’s investment in the United States to expand EV battery production capacity,” Yates said in the release.

Production at the Kansas facility, which is targeting about 30 gigawatt-hours (GWh) of annual production capacity, is slated to begin by the end of March 2025.

Tesla Inks 2-Year, $2.9 Billion Order with L&F

South Korea’s L&F Co. has landed a $2.9 billion contract with Tesla Inc. and affiliates to supply the company with cathode materials, a key ingredient for EV batteries, according to a regulatory filing.

The contract period runs from Jan. 1, 2024, to Dec. 31, 2025.

Daishin Securities analyst Jeon Chang-hyun told The Korea Herald that the estimated shipment will be about 70,000 tons of cathode materials, enough to produce 44 Gwh to 47 GWh of EV battery that can power up to 550,000 units of the Tesla Model Y.

“The three biggest implications of this deal are becoming a main cathode material vendor and an essential partner of Tesla’s plan to internalize the battery supply chain, raising anticipation of securing follow-up contracts and diversifying the customer base,” he told the Herald.

Masdar Pledges $1.2 Billion to UK Battery Storage Projects

Renewables developer Masdar said on March 2 it plans to invest an additional $1.2 billion in battery storage projects across the U.K.

The United Arab Emirates (UAE) state-owned company said the additional investment is part of the UAE-U.K. sovereign investment partnership and comes as it works to grow energy storage globally.

“As we look ahead to COP28 in the UAE later this year, Masdar will continue to accelerate the deployment of clean energy around the world to help drive a successful energy transition,” said Masdar CEO Mohamed Jameel Al Ramahi.

The company said it has already invested about £4 billion in clean energy projects in the U.K.

Battery Start-up Freyr Accelerates US Plans on IRA Support

Norwegian battery start-up Freyr is accelerating investment in a U.S. plant to benefit from Inflation Reduction Act (IRA) tax credits, its CEO told Reuters this week.

The IRA incentives have made production in the United States three times as profitable as in Norway, increasing pressure from investors to build where the returns are biggest, Freyr CEO Tom Jensen said in an interview.

Of the two large battery plants Freyr is building, plans for Giga America, in the state of Georgia, were previously anticipated to be 10 months to 12 months behind those of Giga Arctic, in northern Norway.

However, the two are now being developed in parallel, he said. Tax credits offered through the IRA meant that Freyr would receive $37 million per GWh of capacity installed in the United States, he added.

“It’s important for us to be clear that we have a big ambition to complete Giga Arctic, but there are many other things we can use our capital on as well,” Jensen said.

The IRA also offers investment tax credits for energy storage projects, he said.

“We have already had many of these developers approaching us, saying they can share some of their investment tax credits with us in order to secure batteries made in the U.S.”

Giga Arctic and Giga America will be capable of producing up to 27 GWh and 34 GWh of battery capacity per year respectively. Giga America could start up in 2025, Jensen said. A first, smaller customer qualification site in Norway will start production on March 28, but commercial operations are scheduled for 2024.

Hydrogen

BP Earmarks $2 Billion to Build Spanish Green Hydrogen Hub

BP said on Feb. 28 it plans to invest up to 2 billion euro (US$2.12 billion) by 2030 in its refinery in Spain to produce low-carbon hydrogen and biofuels.

The British company aims to develop a large plant to produce 2 GW of green hydrogen, which is produced by splitting water using renewable energy, in order to replace polluting hydrogen used to produce fuels at the Castellon refinery.

The project, HyVal, will also increase the refinery’s biofuels production three-fold to 650,000 tonnes per year by 2030, BP said in a statement.

The green hydrogen will also be used as a feedstock in biofuel production, including sustainable aviation fuel.

The clean hydrogen, a nascent technology whose production remains limited due to high costs, will also be used in nearby industries such as ceramics and chemicals.

A first hydrogen electrolyzer unit of 200 megawatts (MW) is expected to be operational in 2027 and produce up to 31,200 tonnes of green hydrogen per year.

Under CEO Bernard Looney, BP aims to reduce its oil and gas output by 25% while sharply increasing its renewable power generation and low-carbon fuel production by 2030 in order to slash greenhouse gas emissions.

BP set a target to produce 0.5 million tonnes to 0.7 million tonnes per year of low-carbon hydrogen by 2030.

Spain aims to become a major player in the production of low-carbon hydrogen and biofuels thanks to its ample solar and wind power and proximity to sea.

Spanish oil company Cepsa plans to invest 3 billion euros (US$3.2 billion) in one of the largest green hydrogen projects in Europe.

Everfuel, Hy24 Form Clean Hydrogen JV

Green hydrogen producer Everfuel has formed a joint venture (JV) with the Hy24 clean hydrogen infrastructure fund to develop green hydrogen infrastructure in the Nordic region.

Focusing on Denmark, Norway, Sweden and Finland, the companies are targeting up to 1 GW of green hydrogen projects.

The duo’s first investment was the acquisition of the HySynergy Phase 1 20-MW green hydrogen production plant in Fredericia, Denmark, according to a news release. The JV paid an estimated EUR 28 million to Everfuel to acquire HySynergy Phase 1.

The HySynergy Phase 1 electrolyzer is expected to begin commercial operations second-quarter 2023.

“This is a major step towards making green hydrogen commercially available through an accelerated deployment of our hydrogen hubs,” Everfuel CEO Jacob Krogsgaard said in the release. “Hy24 is a leading global hydrogen infrastructure investor and the ideal partner and co-investor for us as the number one developer of electrolyzer capacity in Europe.”

Under the agreement, the JV—to be renamed Everfuel Hy24 A/S— will deliver revenue and cash flow to Everfuel through fees during the project development, construction and operation phases, the release said.

RNG

Enbridge, Divert Partner in $1 Billion Plan to Scale Up RNG

Canadian pipeline operator Enbridge Inc. has bought a 10% stake in Divert Inc., a company that converts food waste into renewable natural gas (RNG), agreeing to invest $1 billion to expand its facilities.

The transaction, expected to close in March, is the latest move by Enbridge to bring RNG into the market as the world works to lower carbon emissions. The deal, plus an $80 million equity investment from Enbridge, came alongside a $20 million equity investment from private equity firm Ara Partners.

With the investments, Massachusetts-based Divert said it plans to expand its facilities to “every major geographic region in the U.S.” within the next eight years. With the deal, the company also said it is considering adding new facilities in Canada to convert food waste to RNG, according to a press release.

“Enbridge’s agreement with Divert represents a historic commitment from the company in advancing technologies and solutions that achieve a cleaner energy future,” said Caitlin Tessin, vice president of strategy and market innovation for Enbridge. “Divert has emerged as a leader in creatively managing wasted food, and our partnership aligns with Enbridge’s priorities in pioneering RNG as an effective solution to achieve net-zero greenhouse gas emissions.”

Solar

First Solar Lands 4-GW Solar Module Order

Lightsource BP said Feb. 28 it has placed an order with First Solar Inc. for 4 GW of advanced thin film solar modules for the company’s planned solar projects in the U.S.

The order, with modules scheduled for delivery between 2026 and 2028, came as the utility-scale solar company aims to deploy 25 GW globally by 2025.

“The U.S. solar industry is at a pivotal moment, poised to expand at an exponential rate with the Inflation Reduction Act serving as the catalyst,” Lightsource BP Americas CEO Kevin Smith said in a news release. “We are seizing the opportunity by not just growing our 20-GW development pipeline across the United States, but also creating sizeable demand for our U.S.-based partner First Solar, which, in turn, is investing in innovation and manufacturing and supporting thousands of direct and indirect American jobs.”

First Solar has been growing its manufacturing capacity in the U.S., targeting 10.6 gigawatts direct current (GWdc) by 2026. Its third factory is expected to come online in Ohio in first-half 2023, and a fourth—located in Alabama—is set for commissioning by 2025.

Lightsource BP’s order, which follows prior order for up to 4.3 GWdc in 2021, includes First Solar’s Series 6 Plus and next-generation Series 7 modules, according to the release. First Solar’s new factories will produce Series 7 modules.

Wind

Vårgrønn, Flotation Partner to Develop Cenos Floating Wind Farm

Norway-based offshore wind company Vårgrønn and partner Flotation Energy have proposed building a floating offshore wind farm with a capacity up to 1.4 GW in the U.K. Central North Sea.

The scoping report for the Cenos floating wind farm has been submitted to Marine Scotland, Vårgrønn said on March 1. The companies plan to mark first power from the wind farm in 2028, delivering 5.5 terawatt-hours (TWh) of power to the U.K. grid annually while cutting carbon emissions by more than 2 million tonnes per year.

Developers say the project will also deliver renewable power to oil and gas platforms.

“The scale of the project is huge,” said Lord Nicol Stephen, CEO and co-founder of Flotation Energy. “It will deliver billions of pounds of new infrastructure investment and help create thousands of local jobs, helping to make the energy transition a reality.”

Flotation Energy and Vårgrønn have also partnered on the Green Volt floating offshore wind project. Leasing applications for both projects have been submitted, the companies said, as part of the Crown Estate Scotland’s Innovation and Targeted Oil and Gas (INTOG) leasing round. Winners are set to be announced in second-quarter 2023.

BlueFloat Gears Up for Eastern Rise Project in Australia

BlueFloat Energy said Feb. 28 it plans to develop a 1.725-GW floating wind project called Eastern Rise Offshore Wind in Australia.

Development and construction of the project is expected to take about seven years, the company said.

“The announcement is the latest demonstration of BlueFloat Energy’s commitment to being a long-term partner to Australia and New Zealand, developing world-class offshore wind projects,” said BlueFloat CEO Carlos Martin. “BlueFloat Energy hopes that through collaboration with government at all levels, industry, communities and other offshore wind proponents, it can create a lasting impact on Australia’s transition and cement the nation’s position as a clean energy superpower.”

The Spain-based company said it has more than 22 GW of planned capacity under development globally.

Inpex Buys Stake in UK Offshore Wind Farm from Mitsubishi

Inpex, Japan’s largest oil and gas E&P company, said March 2 it has bought a 16.7% stake in the Moray East offshore wind farm in Scotland from Mitsubishi to expand further into renewable energy.

The Moray East offshore wind farm, launched last April, has capacity of 950 MW from 100 turbines, with French energy company Engie and Kansai Electric Power Co. among its other shareholders.

The sale was part of Mitsubishi’s “value-added cyclical growth model,” or redirection of resources to other areas if the business environment has changed, Mitsubishi said in a statement to Reuters. The company also said it would continue expanding its power business in Europe through Eneco, its Dutch joint venture with Chubu Electric.

Inpex did not provide the value of the deal but said the acquisition's impact on its financial results would be minimal.

Spain Maps Out First Boundaries for Offshore Wind Parks

Spain's government on Feb. 28 approved its first delimitations for where wind farms can be developed off the country’s coast, a significant, if contentious, step toward developing the offshore sector.

The decree allows for the development of offshore wind parks on 5,000 sq km of maritime area in 19 blocks, Energy Minister Teresa Ribera said during a news conference.

With about 1 million sq km of waters, Spain has one of the largest expanses of sea in the European Union and vast potential for harnessing offshore wind. A regional leader in renewable power generation, Spain has, however, trailed its European peers such as Britain, the Netherlands and Denmark in developing offshore wind capacity.

The delimitations, which were developed following five years of negotiations with other stakeholders in the maritime sector, including regional governments and the powerful fishing and tourism industries, will restrict offshore wind activity to less than 0.5% of its waters but will be reviewed every six years.

Hart Energy staff and Reuters contributed to this article.