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  • 💵 Neos raises $800 million for energy transition

💵 Neos raises $800 million for energy transition

PLUS: Kinder Morgan - Neste renewable fuel hub, KKR solar, Talos CCS, Diversified sustainability, EPA $4bn port electrification, German hydrogen

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Sunya Scoop
May 09, 2023

Good Morning. This is the Sunya Scoop. The newsletter that takes energy transition news and turns it into an easy-to-read email for you.

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LOW-CARBON FUELS

  • Kinder Morgan and Neste have announced the commercial in-service of their renewable feedstock storage and logistics hub project.

  • Neste will store raw materials like used cooking oil at Kinder Morgan's Harvey Terminal in Louisiana to be used as feedstock in the production of renewable fuels and plastics.

  • Rail, truck, and marine infrastructure enhancements have been made at the facility to meet the modal flexibility requirements of Neste's feedstock supply chain.

  • The project supports a sustainable future and is a step forward for Louisiana's long-term strategy for emissions reduction and energy sector diversification.

  • The project is backed by a long-term commercial commitment from Neste and can be expanded further at Neste's option.

FUNDRAISING

  • Neos Partners, a clean-energy-focused investment firm founded by former executives of Oaktree Capital Management, has raised about $800 million for its debut fund, Neos Partners I LP.

  • The San Diego-based fund has attracted backing from some of the largest U.S. endowments, including those of Yale University, Stanford University, and the University of Pennsylvania, among others.

  • The fundraise was carried out with the assistance of UBS's private funds group as placement agent.

  • Neos focuses on supply-chain businesses that benefit from the shift to clean energy, a strategy similar to that of Oaktree's power opportunities group, where Neos' managing and senior partners worked before founding Neos.

  • Neos Partners has plans to invest in critical infrastructure and clean energy services and equipment providers rather than infrastructure operators, a strategy that other firms investing in clean energy have also favored.

  • The managing and senior partners at Neos participated in deals at Oaktree that included Shoals Technologies, a supplier of equipment used in solar, battery, and electric vehicle-charging systems.

SOLAR

  • SunPower and KKR signed an agreement for KKR to commit to purchasing $550 million of solar energy loans made to SunPower customers.

  • The transaction is subject to customary post-closing conditions and will support SunPower Financial's ability to offer attractive loan options to customers.

  • The additional capital raised will fund a total of $1 billion of incremental solar loans for SunPower's customers, powering loan bookings volume into 2024.

  • Residential solar is a key area of focus for KKR's Asset-Based Finance business, and they look forward to supporting SunPower through this transaction.

  • SunPower Financial was launched in 2021 to provide a seamless solution for purchasing solar and other home energy services through a single provider.

  • In 2022, SunPower's loan business grew 99% year-over-year.

CARBON CAPTURE

  • Talos executed lease agreements on private land in Q1 2023 for over 21,000 acres, nearly doubling the acreage under lease in the Baton Rouge/New Orleans, Louisiana industrial corridor, increasing the gross prospective storage resource by over 120 million metric tons of CO2.

  • The Bayou Bend CCS project located along the Texas Gulf Coast expanded its storage footprint in March 2023 through the acquisition of nearly 100,000 onshore acres, positioning it to be a leading carbon transportation and storage solution for industrial emitters in one of the largest industrial corridors of the country.

  • The total acreage holds over one billion metric tons of gross prospective storage resource, and equity interests in Bayou Bend CCS remain 50% Chevron, 25% Talos, and 25% Carbonvert Inc.

  • The Bayou Bend partnership expects to drill an offshore stratigraphic data collection well during the third quarter and plans to file two to three EPA Class VI permit applications by year-end.

  • Chevron became the operator of Bayou Bend CCS, effective March 1, 2023.

SUSTAINABILITY

  • Diversified completed the deployment of handheld emissions devices in the Central Region and has performed more than 4,000 emissions inspections to date in the region, with initial no-leak rates of 90% of sites surveyed.

  • Upstream and midstream emissions detection activities in the Appalachian region continue to progress, with upstream emissions testing via handheld devices yielding a consistent no-leak rate of <95%.

  • Through Next LVL Energy, Diversified has safely retired 56 wells, of which 26 were operated by Diversified and 30 were owned or operated by third-party companies or state plugging programs.

  • Diversified expects to retire 200+ operated wells in 2023 including the 43 operated wells retired year-to-date.

  • Diversified has been in discussions with several large solar project developers in the US and anticipates additional partnership agreements to be consummated in the future.

ENERGY TRANSITION

  • The Biden administration has launched a $4 billion effort to electrify U.S. ports and cut heavy-duty truck emissions, seeking to address the disproportionate impacts on nearby communities.

  • The U.S. Environmental Protection Agency (EPA) is seeking input on its $3 billion Clean Ports Program and $1 billion Clean Heavy-Duty Vehicle Program to reduce pollutants at ports and vehicle emissions near ports and other truck routes.

  • The EPA is asking for details about the availability, market price, and performance of zero-emission trucks, zero-emission port equipment, electric charging, and other infrastructure needs for zero-emission technologies.

  • Ports account for a significant share of emissions and are pockets of concentrated pollution, according to White House National Climate Advisor Ali Zaidi.

  • Earlier this year, the EPA finalized new clean air standards for heavy-duty trucks for the first time in more than two decades that are 80% more stringent than current standards.

  • California regulators recently approved new rules requiring all medium- and heavy-duty vehicles sold in the state in 2036 to be zero-emission and new reduced emission regulations for locomotives.

HYDROGEN

  • Germany can only meet 30% of its own needs for green hydrogen, and the remaining 70% will need to be imported from trade partners.

  • Green hydrogen is a key component of Berlin's plan to move away from fossil fuels and is produced using solar and wind power.

  • Contracts and memorandums of understanding are being drawn up to secure green hydrogen imports.

  • German Economy Minister Robert Habeck emphasizes the need to find multiple partners to avoid dependency on individual nations.

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.