Alternative Energy Market Update - Q1'21 - February 2021
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Alternative Energy Market Update – Q1’21 February 2021
Disclaimer
This presentation is for informational purposes only and does not constitute an offer, invitation, solicitation, or recommendation to buy, sell,
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The information in this presentation is based upon GreenFront Energy Partners LLC estimates and reflects prevailing conditions and our views
as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without
independent verification, the accuracy and completeness of information available from public sources. In addition, our analyses are not and
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1
What’s new since our Q4’20 market update?
New Administration New FERC Commissioner Growth in the New Year
Biden in, Trump out Allies in Leadership
▪ Democratic administration significantly Hot Off the Line
▪ Richard Glick, former renewable energy ▪ Even with substantial industry layoffs,
more friendly toward Renewables VP for Avangrid, nominated to be FERC
▪ Conventional wisdom: Biden’s ability to renewable energy investment and
Chair on January 21, 2021 deployment grew in the COVID-restricted
implement ambitious legislation is limited ▪ Former Chair Chatterjee term expires
▪ 50/50 Senate and nominal climate of 2020
June 30; assuming Democratic ▪ Between a COVID vaccine, recovering
Democratic majority in Congress majority at FERC, PJM MOPR may
constrained by conservative courts economy, and Renewables-friendly
get cancelled administration, the industry is positioned
and Dem senators from O&G states ▪ Glick supports transmission reform,
▪ Clean Energy Standard likely only for a dynamic 2021
reassessing capacity markets, and
possible if “clean energy” is broadly continuing efforts to lower barriers
defined, with a 2050 target (not 2035) Investments
to clean energy in regulated markets ▪ Renewables are receiving increasing
▪ Global tariffs on solar likely to remain for ▪ Other key appointments:
their final year; no guarantee that they interest and investment from institutions
▪ Jennifer Granholm – Head of DOE shifting away from O&G, not to mention
disappear in 2022 (nominee) the O&G industry itself
▪ Brian Deese – National Economic
GreenFront view: Addition by subtraction. Council Development, and former
Renewable Energy thrived over the past 4 Utility Support
Global Head of Sustainable ▪ “Items #1, #2, and #3 in the minds of
years in spite of a hostile Trump Investment at BlackRock
administration. That impediment is now Utility management teams and investors
▪ John Kerry – Presidential Envoy for are Decarbonization”
removed Climate Change, will have a seat on
▪ Renewable tax credit extension serves as – Off-the-record comment from senior
the National Security Counsel executive at one of the nation’s largest
an early example of this trend ▪ Gina McCarthy – National Climate utilities
Advisor
▪ Michael Regan – EPA Administrator
(nominee)
Note: please visit the GreenFront website to review last quarter’s Q4’20 Market Update at www.greenfrontenergy.com/perspectives
2U.S. Alternative Energy Trends
Alternative Energy continues to see dynamic growth, driven by end-user demand and decreased costs
Market themes & fundamentals Renewables mix in the overall U.S. Power installed base
2015 2029E
▪ Despite 2020’s macro disruptions, Alternative Energy continues
to see dynamic growth, driven by two key factors
▪ Continued growth in end user demand for Renewable
Power (Corporate ESG, State and Local RPS mandates)
▪ Continued decrease in cost of production for Wind, Solar,
and Battery Storage energy
▪ Biden administration represents a lightening of federal
regulatory obstacles
▪ Battery storage installations becoming more prevalent in
conjunction with solar/wind development 1,009 GW Total 1,259 GW Total
▪ Increased appetite for Renewable Attributes (e.g. REC’s, RIN’s,
Conventional Nuclear Hydro
LCFS) are supporting growth in Renewable Natural Gas and Wind Solar Other
Carbon Capture development Clean Sources
Wind development in the U.S. – Onshore Solar development in the U.S.
(Gigawatts of installed base) (Gigawatts of installed base)
140 .0
170 .0
120 .0
150 .0
100 .0
130 .0
80. 0
110 .0
169 176 134 138
156 60. 0
108
144
90. 0
119 40. 0
71
96
105
70. 0
82 89 20. 0
37 44
74 23 28 32
50. 0 0.0
15
2015 2016 2017 2018 2019 2020 2021E 2022P 2023P 2024P 2015 2016 2017 2018 2019 2020 2021E 2022P 2023P 2024P
Source: S&P Market Intelligence
3U.S. Alternative Energy Landscape
More headaches than before, but still growing rapidly
▪ Most developers continuing to flip projects to fund ongoing development
Developers & ▪ Numerous smaller development teams entering the market for greenfield & early stage
IPP’s opportunities, seeking attendant equity capital
▪ Corporate PPA’s remain a strong market force with more sophisticated structuring and terms
Almost all Investor Owned Utilities, and some O&G players, have seen the light
▪ Europeans continue to focus on the U.S. market (e.g. EDF, EDP, Ørsted, ENEL, Avangrid)
Noteworthy ▪ Utilities, through State mandates, see decarbonization as an opportunity to add to rate base
strategics ▪ Traditional fossil fuel companies are dramatically pivoting to clean energy – sidestepping
traditional Wind/Solar for alternatives like Offshore, Renewable Fuels, and Carbon Capture
Moving further out on the risk spectrum
Infrastructure ▪ Traditional later-stage projects are failing to meet required rates of return for PE, who are
& Private responding by funding earlier stage development and focusing more on C&I and DG
Equity ▪ Traditional O&G PE firms focusing on Energy Transition Funds (Encap, NGP, Quantum, etc)
▪ Use of SPAC’s appears to be the investment vehicle of choice
First Wind, then Solar, now the Decade of Storage
▪ Global energy storage capacity to grow at CAGR of 31% to 2030 according to WoodMac
Battery & ▪ Renewable facilities with storage beginning to compete with base load power
Cleantech ▪ Most new and existing solar projects being permitted with a storage component
▪ The U.S. EIA forecasts 4.3 GW of battery capacity additions in 2021, or 11% of total mix
Large addressable market is barely tapped
RNG, CCS, and ▪ Economics driven by the increasing value of Renewable Attributes associated with RNG and
Renewable CCS activity (LCFS, RIN’s, REC’s)
Fuels ▪ 45Q tax treatment allows for an Investment Tax Credit (ITC) structure in CCS (see page 12)
▪ Significant interest from Natural Gas Utilities
Source: S&P Market Intelligence, WoodMac
4Public Market Overview
Price Market Enterprise YTD Total Valuation Credit
Ticker 2/12/21 Cap ($mm) Value ($mm) Returns (%) Div. Yield (%) 2021E P/E (x) 2021E EV / EBITDA (x) Debt / Total Cap (%) 2020 Net Debt / EBITDA (x) S&P Credit Rating
Alternative Energy
Brookfield Renewable Corporation BEPC $50.50 $18,271 $41,286 (13.6%) 2.4% NA NA NA NA NA
SunRun RUN 83.68 16,529 20,168 20.6% NA 95.5x 150.9x 62.5% NA NA
First Solar FSLR 100.75 10,677 9,506 1.8% NA 27.1x 13.8x 10.6% NA NA
Ormat Technologies ORA 118.78 6,649 8,075 31.6% 0.4% 77.3x 19.3x 45.4% 3.1x NA
Array Technologies ARRY 44.34 5,631 5,604 2.8% NA 51.1x 32.5x 24.3% 2.0x B+
Hannon Armstrong HASI 61.46 4,610 5,941 (3.1%) 2.2% 38.4x NA 59.8% 13.6x BB+
SunPower Corporation SPWR 49.81 8,476 9,097 94.3% NA 147.6x 69.6x 111.2% 16.2x NA
Sunnova Energy International NOVA 50.97 5,026 7,175 12.9% NA NA 86.3x 64.4% 30.6x NA
Cleantech
Tesla, Incorporated TSLA $816.12 $783,356 $778,763 15.7% NA 194.7x 85.6x 64.3% NA BB
SolarEdge Technologies SEDG 330.89 16,945 16,361 3.7% NA 70.8x 50.0x 6.7% NA NA
Enphase Energy ENPH 206.51 26,089 25,757 17.7% NA 101.7x 78.8x 30.3% NA NA
Plug Power PLUG 63.19 33,457 33,309 86.3% NA NA NA 75.9% NA NA
Bloom Energy Corporation BE 40.44 6,721 7,450 41.1% NA NA 86.6x 117.9% 14.0x NA
FuelCell Energy FCEL 26.20 8,447 8,553 134.6% NA NA NA 47.6% NA NA
Switchback Energy Acquisition Corporation SBE 37.98 1,491 1,491 (5.2%) NA NA 15.1x NA NA NA
Eos Energy EOSE 25.49 1,270 1,492 22.3% NA NA NA NA NA NA
YieldCo
NextEra Energy Partners NEP $81.70 $6,201 $15,636 22.7% 3.0% NA 10.5x 39.4% 2.6x BB
Northland Power NPI 38.75 7,834 14,529 8.0% 2.4% 29.3x 15.6x 83.8% 5.7x BBB
Innergex Renewable Energy INE 21.15 3,695 7,462 (1.8%) 2.7% 112.3x 18.1x 88.7% 10.1x BB+
Clearway Energy CWEN.A 30.64 3,716 10,866 3.7% 4.2% NA 9.5x 75.8% 6.1x BB
Boralex BLX 37.21 3,818 6,166 0.0% 1.4% 59.4x 14.1x 79.1% 6.9x NA
TransAlta Corporation TA 9.24 2,498 6,569 21.4% 1.5% NA 8.8x 46.6% 3.4x BB+
Noteworthy Investor-Owned Utilities
NextEra Energy NEE $83.13 $162,924 $218,450 7.8% 1.7% 33.0x 18.5x 50.5% 4.5x A-
Duke Energy Corporation DUK 89.82 69,072 136,071 (0.9%) 4.3% 17.2x 11.7x 56.7% 6.0x BBB+
Southern Company SO 60.10 63,480 116,538 (1.1%) 4.3% 18.2x 12.4x 60.3% 5.6x A-
Dominion Energy D 71.87 58,633 101,250 (4.4%) 3.5% NA NA 53.4% NA BBB+
Xcel Energy XEL 61.54 32,337 53,897 (7.7%) 2.8% 20.7x 12.1x 60.8% 4.9x A-
Avangrid AGR 47.11 14,580 24,059 3.7% 3.7% 21.2x 11.0x 34.3% 4.4x BBB+
Pinnacle West Capital Corporation PNW 76.19 8,579 15,345 (3.7%) 4.4% 15.2x 9.7x 51.1% 4.4x A-
Note: Prices as of 2/12/2021
Source: S&P Market Intelligence
5Stock Market Performance
S&P Global Clean Energy
Alternative Energy Cleantech Yield Co Investor-Owned Utilities
Index
ARRY NOVA BE PLUG BLX NEP AGR PNW
BEPC ORA BMRG SBE CWEN.A NPI D SO
FSLR RUN ENPH SEDG INE TA DUK XEL
HASI SPWR FCEL TSLA NEE
Indices Total Return (LTM) Total Return (2021 YTD)
30%
425% 435%
25%
325% 20%
15% 14%
225% 13%
11%
10%
134% 8%
125% 125%
5% 4%
25% 28%
-
3%
(75%) (5%)
Note: Prices as of 2/12/2021
Source: S&P Market Intelligence
6Alternative Energy | Capital Markets Trends | SPAC’s
Please contact GreenFront for additional information around SPAC structures & market background
What is a SPAC? Market commentary
▪ A Special Purpose Acquisition Company (“SPAC”), or “blank- ▪ SPAC’s have become more prevalent in the past 24 months
check company”, is a shell entity created to raise public equity ▪ Hundreds of SPAC’s debuted in 2020, and over 90 were
capital through an IPO to acquire another company launched in January 2021 (nearly 5 new SPAC listings every
▪ SPAC is formed and managed by a sponsor - typically a well- trading day)
regarded investor or investment firm with significant credibility ▪ A large percentage of SPAC’s are targeting acquisitions in
▪ Sponsor typically receives a 20% promote on outstanding “Clean Energy” and “Energy Transition”
shares upon successful initial acquisition ▪ Average SPAC IPO size is $250mm - $350mm, which implies
▪ After IPO, funds are held in a trust until the initial acquisition targeted acquisition valuations in the ~$1bn range
▪ Initial acquisition is referred to as a “De-SPAC”, and must occur ▪ A number of De-SPAC’s in the ESG/Cleantech space are trading
within 24 months of IPO or funds are returned to investors up 100% or more, bolstering the trend’s growing popularity
▪ Investors are granted walkaway rights to redeem their shares ▪ Traditional Renewable Development companies are
for cash if they do not support the acquisition target; increasingly being approached by SPAC aquirers
acquisitions tend to include a Private Investment in Public ▪ The increase in SPAC’s looking for deals means more buyer
Equity (PIPE) component to help fund any redeemed shares or competition and higher valuations
incremental acquisition capital
Selected clean energy SPAC data (not exhaustive)
SPAC De-SPAC Transaction Price Performance Current Equity
IPO Date Ticker Original SPAC Name Sponsor Announced Transaction Target Industry Focus since De-SPAC Value ($ mm)
9/22/2020 ACTC ArcLight Clean Transition Corp ArcLight 1/11/2021 Proterra Decarbonization 105.3% $207
7/25/2019 SBE Switchback Energy Acq. Corp NGP 8/17/2020 Chargepoint EV Development / Infrastructure 267.0% $1,491
9/21/2020 FII Forum Merger III Corp Forum 12/11/2020 Electric Last Mile Solutions EV Development / Infrastructure (3.3%) $1,377
10/9/2020 TPGY TPG Pace Beneficial Corp TPG 12/10/2020 EVBox EV Development / Infrastructure 165.7% $1,329
8/17/2020 STPK Star Peak Energy Transition Corp Magnetar 12/4/2020 Stem Battery / Storage 129.8% $1,874
8/17/2020 NGA Northern Gensis Acq. Corp Stone Capital 11/30/2020 Lion Electric EV Development / Infrastructure 73.4% $230
2/19/2020 EOSE B. Riley Principal Merger Corp II B. Riley 11/16/2020 Eos Energy Battery / Storage 140.7% $1,270
6/25/2020 QS Kennsington Capital Acq. Corp Kennsington 11/12/2020 QuantumScape Battery / Storage 47.7% $19,832
Note: Prices as of 2/12/2021
7Alternative Energy | M&A Overview
Noteworthy Wind, Solar, & Storage Transactions
Date Buyer / Seller Size (MW) Location Resource Commentary
▪ Purchase of Exelon’s distributed generation solar
portfolio
Dec. 2020 1,060 N/A Solar ▪ Brookfield will expand its DG portfolio to 2 GW
through this transaction, making it one of the largest
C&I DG asset owners in the country
▪ Portfolio acquisition expands sPower’s Northeast
portfolio in advance of completing its merger with AES
Dec. 2020 1,000 NYISO Solar
Corporation, which will create a combined portfolio of
12+ GW of renewable assets in the US
▪ GIG acquired a substantial equity stake in esVolta
Jan. 2021 N/A CAISO Storage ▪ Investment will finance esVolta’s work on developing a
2+ GWh pipeline in California
▪ Partnership with Morgan Stanley proves critical
Solar resources to accelerate development of SolMicroGrid
Jan. 2021 N/A N/A
Microgrid as an Energy-as-a-Service (“EaaS”) platform for C&I
customers
▪ French O&G giant Total expands its US renewable
Solar + energy presence by acquiring ERCOT Solar+ projects
Feb. 2021 2,200 ERCOT
Storage ▪ Projects are development-stage, and Total will also
procure 1 GW of their generation through PPAs
Source: Company data, S&P Market Intelligence, GTM/WoodMac
8Alternative Energy | Solar/Wind Project Development Overview
GreenFront tracks over 100 independent developers across the United States
Market commentary
▪ EIA forecasts 32 GW of solar/wind/battery capacity additions in 2021 ▪ End user demand remains strong (State RPS & Corporate ESG)
▪ Improving input costs are counterbalanced by increased I.A. burdens ▪ Increasing interest in smaller utility scale, C&I, and DG
▪ Capital Markets ▪ Smaller sized projects can be better priced, with lower
▪ Project Debt: markets remain open, but choppy. PF bank debt regulatory hurdles; tax equity remains a challenge
grew 12% yoy in 2020 to $69bn. L+125-137.5 for plain vanilla ▪ Property insurance expense has more than tripled in past year
loans & back leverage. ▪ Regulatory obstacles creating more uncertainty
▪ Equity: public market appears healthy; private capital is in ample ▪ Tariffs ▪ Tax Equity legislation
supply, but investors are maintaining ROC discipline ▪ PJM MOPR ▪ Interconnection queues
▪ Tax Equity: $18bn of 2020 investment set a record, but still ▪ ERCOT GTC ▪ NIMBY
struggling to meet developer demand ▪ Bulk Power Executive Order
2021 Planned generating capacity Largest utility-scale renewable developers1 (MW of projects)
3% Invenergy 17,728
11% NextEra Energy 13,780
Apex Clean Energy 11,812
39%
17% EDF Renewables 4,956
Less than 20%
fossil fuels Engie 4,881 2020 Record Capacity Installations (Total US)
National Grid 3,872 16,913
+85%
RWE 3,562
31% Macquarie GIG
11,158
2,700 9,132 +100%
Hecate Energy 2,699
5,580
Solar Batteries Terra-Gen 2,519 +303%
Wind Nuclear / Other 242 734
NatGas
Solar Energy Wind Energy Storage 2019 2020 2019 2020 2019 2020
Source: EIA, Company data, S&P Market Intelligence, GTM/WoodMac, Refinitiv, American Clean Power; 1Onshore, U.S. Figures are limited to projects with reported in-service years
9Alternative Energy | ESG & PPA Market Overview
Corporates are responding to stakeholders’ demands for greater sustainability commitments
Corporate VPPA – Market commentary
BlackRock Larry Fink’s 2021
▪ While Corporates purchased a record of 23.7 GW of clean
Letter to CEO’s energy in 2020 globally, the U.S. Corporate PPA volume
“In 2020, the world not only confronted the pandemic, it dropped 16% yoy from 2019 (11.9 GW vs 14.1 GW)
also sharpened its focus on the existential threat of climate ▪ Two competing drivers in the U.S. Corporate PPA marketplace
change. As more and more companies, investors, and appear to be at odds
governments focus on the global goal of net zero emissions ▪ The growth of Corporate interest in pursuing aggressive
by 2050, an economic transformation is accelerating…We ESG initiatives continues to accelerate,…
know that climate risk is investment risk.” ▪ …but the current opportunity set of available U.S. projects
offers Corporate Buyers a lower economic margin of safety
▪ GreenFront advised Nucor Steel, the nation’s largest
2020 Top corporate clean energy buyers (MW announced) steelmaker, in its inaugural VPPA
Amazon 3,163
250 MW ERCOT Nov. 2020
Google 1,040
Verizon 840
McDonald's 750 25. 0
Global Corporate PPA Activity (GW) 23.7
Facebook 725 2.9
20.1
General Motors 610 20. 0
Americas
1.2
Nucor 325
Europe, the Middle East, and Africa 2.6 7.2
Evraz North America 300
Nestle Asia-Pacific 13.6
250
15. 0
Lowe's 250 2.2
0 500 1,0 00 1,5 00 2,0 00 2,5 00 3,0 00
10. 0
2.3
Diverse Solutions for Scope I Emissions 16.3
6.2
▪ Giants like Ikea are reshaping their supply chains with electric 5.0
4.7
4.1 1.2
13.6
1.1 9.1
vehicles and sustainable manufacturing to go carbon negative 2.3
1.1
1.0
▪ Companies like Stripe are investing in carbon sequestration 0.1 0.3 0.3
1.5
3.4 2.3
3.9
0.0 0.6
technologies in pursuit of negative emissions profiles 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: BloombergNEF, REBA, Company data, S&P Market Intelligence, GTM/WoodMac
10Alternative Energy | Storage Overview
GreenFront tracks over 25 pure play battery developers & storage specialists
U.S. Battery Energy Storage Power Capacity (MW) Market commentary
5,000
▪ California is hosting the most Battery ▪ Exponential growth underway
installation activity by far, followed by ▪ Roughly 2 GW of installed storage capacity today versus 200
4,000 Nevada, Florida, and New York MW 5 years ago
▪ Installation costs expected to fall 50-
65% by 2030 ▪ 4.3 GW of expected capacity additions in 2021 and longer-
3,000
term pipeline of over 75 GW
2,000 ▪ Seven states now have dedicated storage procurement targets
▪ 11 GW+ of storage deployment targeted in State policies
1,000 ▪ Record Southern Cal Edison procurement order of 770 MW was
the highest to date
- ▪ Stand-alone developers negotiate up to 4 revenue stream
agreements for their projects (in addition to merchant): capacity
sales, ancillary services financial hedges, demand response grid
Operating Capacity Annual Capacity Additions services, and demand-charge management
Go-to-market strategies are multiple Recent noteworthy transactions & deals in the market
▪ Utility scale development ▪ Investment to support development of 2 GW
▪ C&I, DG, Microgrid development 2 GW
ERCOT,
Feb. 2021
solar + storage and standalone storage projects
PJM ▪ Partnership provides both financing and
▪ Residential installations development experience
▪ Storage as a Transmission Only Asset (SATOA)
▪ Virtual Power Plant networking software ▪ Seeking equity investment in its San Juan solar +
300 MW / storage project
▪ Non-lithium battery technology development 520 MWh
NM Jan. 2021
▪ Project is being constructed to replace a coal-
▪ Zinc air ▪ Fuel cell fired generator
▪ Cryogenic ▪ Kinetic
▪ Flow ▪ Compressed air/H2O ▪ Seeking an acquirer of two solar + storage
1,050 MW /
▪ Geomechanical pumped storage 700 MWh
MISO Jan. 2021 projects and two standalone solar assets
▪ Projects are already contracted under PPAs
Source: Global Battery Alliance, World Economic Forum, Norton Rose Fulbright, Energy Storage Association, PFR, U.S. Energy Information Administration, NERC
11Alternative Energy | RNG & CCS Overview
Increasing interest from heritage O&G Private Equity sources, favorable tax equity developments, and
Government standards focusing more on “carbon management” should spur growth in 2021
Market commentary U.S. Carbon capture utilization & sequestration (“CCUS”)
Carbon Capture Sequestration (CCS) There are currently 12 Commercial CCUS facilities operating in the
▪ Treasury/IRS released final regulations regarding Q45 tax equity United States – Texas (3), Louisiana (1), Oklahoma (1), Kansas (3),
treatment for CCS projects on January 9th, which provide Wyoming (1), N. Dakota (1), Illinois (1), Michigan (1)
significant clarity to the market Facility Name State Star Year Facility Industry
▪ Key items, all of which are “investor-friendly”, include 1) a
The ZEROS Project TX Mid 2020’s Power Generation
clearer definition for what qualifies as CCS equipment; 2)
Cal Capture CA Mid 2020’s Power Generation
the ability for operators to aggregate multiple facilities as San Juan Generating Station NM 2023 Power Generation
one “project”; 3) reducing the tax credit recapture period Project Tundra ND 2025 Power Generation
to 3 years from 5 years Gerald Gentleman Station NE Mid 2020’s Power Generation
▪ The two largest tax equity investors in the market, J.P. Morgan Integrated Midcon Hub NE 2025 Various
& BAML, have indicated a likelihood of making their first CCS Mustang Station TX Mid 2020’s Power Generation
investments in 2021 Lake Charles Methanol LA 2025 Chemical Production
Plant Daniel MI Mid 2020’s Power Generation
Renewable Natural Gas (RNG) Prairie State Gen Station IL Mid 2020’s Power Generation
▪ Currently 157 operating RNG production facilities in North CarbonSAFE Hub IL 2025 Various
America, with an additional 110 facilities under construction Wabash CO2 Sequestration IN 2022 Fertilizer Production
▪ Natural Gas Utilities, Renewable PE/Infrastructure, and In Construction Advanced Development
traditional O&G PE investors are all showing increased appetite
10 additional U.S. Commercial CCUS facilities are in “Early Stage
for RNG opportunities
Development”, with most start dates slated for 2025 and beyond
▪ Atmos (NYSE: ATO) announced on Q1’21 earnings call it is
assessing more than 20 RNG opportunities across 8 states Key Carbon Capture Players
▪ New Jersey Resources (NYSE: NJR) announced $24mm for
RNG and renewable hydrogen projects in its 2021 budget
▪ UGI’s 2020 acquisition of RNG marketer GHI Energy
Markets positions the utility as an advantaged RNG offtaker
Sources: RNG Coalition, S&P Market Intelligence, V&E, Global CCS Institute, Company Data
12Alternative Energy | Green Hydrogen (H2)
While still early stage, many market participants believe this to be the decade of Green Hydrogen
Hydrogen (H2) basics Hydrogen (H2) market commentary
Hydrogen can be produced at varying levels of cost & cleanliness: ▪ Green H2 projects on the ground are starting to emerge, but
▪ Grey H2: produced from methane through “steam reforming”, still require government support to be economic
with excess CO2 (most common) ▪ Multiple governments have signaled energized support for
▪ Blue H2 : CO2 emissions are captured and sequestered initiatives that will create more of a Hydrogen economy
▪ Turquoise H2: derived from methane through experimental ▪ Industrial commitment and investment may already exceed
process called methane pyrolysis, with lower emissions $100B; public sector commitment is approaching $50-$60B
▪ Pink H2: obtained from electrolysis using nuclear energy ▪ There is no merchant market for H2. Bankable offtake
▪ Green H2: obtained from electrolysis using renewable energy structures must be in place for project financing
▪ Current Green H2 costs between $4.00-$8.00/kg, with some
Hydrogen has numerous applications:
electrolyzer companies predicting $1.50/kg by 2025
▪ Mobility: currently trucks and forklifts. Heavy transport, Rail,
Aviation, and Shipping hold more promise for H2 than light Select early-stage initiatives at U.S. gas utilities
vehicles, where electrification seems to have taken the lead
CenterPoint Energy
▪ Industrial Processes: ability to produce high heat makes H2 a 1% green hydrogen National Grid
promising clean feedstock in steel-making, cement, etc. blending pilot Green hydrogen / gas
▪ Power Generation: can be used instead of NatGas or Coal Northwest Natural Holding blending demonstration
Green hydrogen and
▪ Chemical Feedstock: currently the most used application synthetic natural gas project
(predominantly oil refining & ammonia production)
Key Value Chain / Business Model questions for clean H2:
Dominion Energy
▪ Production: How do you manage the intermittency of
Testing hydrogen blends New Jersey Resources
solar/wind in Green H2 electrolysis? in pipeline systems Green hydrogen / gas
▪ Transportation: Do you pursue scale efficiencies through a large blending demonstration
H2 production center and subsequent transport, or do you
distribute production through on site modular electrolyzers?
Sempra Energy SoCal Gas Co; One Gas Inc
▪ Infrastructure: Do you build/retrofit H2 pipelines or blend H2 1% green hydrogen blend H2@Scale project testing
into NatGas lines? Most NatGas systems can hold up to 20% H2 in natural gas stream commercial hydrogen use
before compression upgrades are necessary
Sources: S&P Market Intelligence, NortonRose, V&E, GreenTech, Woodmac, The Hydrogen Institute
13GreenFront Energy Partners
GreenFront offers a comprehensive suite of investment banking and advisory services
Service offering
Capital Formation M&A Advisory PPA Advisory
Raising capital for projects and platform Advising on purchase/sale of Representing corporates in renewable
growth initiatives alternative energy assets + equity energy procurement efforts
Our team
Robert Birdsey - Partner Adam Hahn - Partner Whit Wall - Partner
▪ Head of BB&T Energy Investment Banking ▪ Led BB&T’s Utility Investment Banking ▪ Led BB&T’s Infrastructure Investment
2013-2020 coverage 2015-2020 Banking coverage 2015-2020
▪ VP in J.P. Morgan’s Energy Investment ▪ Prior to BB&T, worked in the CFO’s group ▪ Environmental consultant for JJ Blake &
Banking group prior to joining BB&T at Dominion Energy Associates prior to BB&T
▪ MBA, University of Virginia; BA, Sewanee ▪ MBA, University of Richmond; BBA, James ▪ MBA, University of Virginia; BS, James
Madison University Madison University
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