Hydrogen and Other Advisory
Utilities Aruba is undertaking several transformational initiatives to decarbonize the energy and water sectors in Aruba. These initiatives include a proposal to create a Hydrogen Valley where energy from a new solar PV facility would power the grid and produce green hydrogen for local uses and eventually for export. Green hydrogen would be used to power fuel-cells in buses, taxis, port and airport vehicles, hotels, and public buildings. The green hydrogen would also be blended with natural gas to power reciprocating engines that supply power to the grid.
K&M will conduct economic modeling of the solar PV plus green hydrogen project proposed to understand its impact on the energy cost to Arubans. K&M will also perform independent due diligence on the technology proposed. K&M will provide assistance exploring and applying for capital grants that could reduce the solar PV + green hydrogen project’s costs. The economic modeling work will also estimate the grant amounts required to make the cost of the green hydrogen project competitive with the alternative options.
A large renewable energy developer, directly or indirectly through one or more affiliates, was participating in a competitive process for the potential sale of 100% of the shares in (1) one 52.5 MW wind farm and one 1.5 MW solar PV plant in operation (“Operating Assets”) and (2) development projects comprising 200 MW wind farms and 8 MW in a solar PV plant in the same location as the Operating Assets, and a 140 MW solar PV plant in another location (the latter three jointly referred to as the “Growth Projects” and together with the Operating Assets the “Target Companies”). The Target Companies are located in the Dominican Republic.
K&M’s role is to provide market and technical due diligence services to assist our client in all steps and activities in M&A transactions for the acquisition of 100% of the outstanding shares of the Target Companies. The first stage was to assist in the preparation of the submission of the non-binding offer.
The firm contracted K&M to provide market and technical due diligence services to assist in all steps and activities in M&A transactions for the acquisition of 100% of the outstanding shares of the Target Companies. The Target Companies include (1) one 52.5 MW wind farm and one 1.5 MW solar PV plant in operation (“Operating Assets”) and (2) development projects comprising 200 MW wind farms and 8 MW in a solar PV plant in the same location as the Operating Assets, and a 140 MW solar PV plant in another location (the latter three jointly referred to as the “Growth Projects”). The first stage was to assist in the preparation of the submission of the non-binding offer.
As part of the study, K&M completed the following tasks:
- Red Flags Report and Analysis
- Technical due diligence of operating assets and growth projects, including performance, commercial, financial, technical, and main technical, development, and construction risks
- Review of key commercial contracts
- Provide technical and financial inputs for the financial model/valuation
- Analysis of the Capex and O&M structure of the Operating Asset
- Analysis of the Pipeline (Growth Projects)
- Energy and capacity analysis
- Market assessment
The energy systems of Grenada, Saint Vincent and the Grenadines, Saint Lucia, Dominica, and Saint Kitts and Nevis are highly dependent on fossil fuels. Estimates and drilling results show these countries have 160 MW of geothermal energy production capacity. However, this capacity is significantly greater than the local demand. This situation provides opportunities to use the excess geothermal energy in creative ways that can promote the energy transformation in the Caribbean. Two examples are exporting the excess geothermal power to nearby islands or using it for electrolysis to create green hydrogen—a clean and versatile energy carrier. The Inter-American Development Bank hired K&M for this assignment to assess the potential synergies between excess geothermal energy production capacity not needed for local use in the Eastern Caribbean and the creation of a Caribbean-based green hydrogen market.
K&M carried out a pre-feasibility assessment for green hydrogen production from geothermal power and commercialization in the Eastern Caribbean (EC) with a focus on Grenada, Saint Vincent and the Grenadines, Saint Lucia, Dominica, and Saint Kitts and Nevis. This included an electricity sector analysis, estimation of geothermal energy potential, and conducting a geothermal energy cost analysis. K&M also estimated the demand for green hydrogen for energy, industrial use, heavy transport, and petrochemical production in the EC and Trinidad and Tobago.
Our team identified the export opportunities for green hydrogen produced in the EC, as well as the required technologies and options for the production and export of green hydrogen. Additionally, an inter-island hub for green hydrogen logistics and international export was determined. The team estimated the volume of green hydrogen produced from excess geothermal power in the EC, assessed the investment needs for green hydrogen production from geothermal sources, and calculated the levelized cost of green hydrogen.
Furthermore, a cost-benefit analysis was conducted comparing green hydrogen to subsea transmission and battery storage. These activities contributed to the development of a preliminary business model for a green hydrogen network in the EC. As part of this work, technical, commercial, and regulatory barriers for a regional green hydrogen market were identified, potential business models to support the market’s development were analyzed, contractual schemes to deliver green hydrogen to T&T were identified, and the range of pricing for green hydrogen offered to key regional and international markets from T&T was determined.
The objective of the assignment was to assist WEB in performing a spot background check of five companies that will be invited to submit proposals for a turnkey contract for constructing an SWRO plant in Aruba. The background check will cover the companies’ activities in their country of origin (location of their headquarters) and their subsidiaries in a sample of countries where they are active.
K&M performed a background check that identified the red flags that WEB could consider when deciding if any of the five tenderers should not be invited to submit a proposal. To this end, the background check included a review of each tenderer’s legal, reputational, and financial background. The background check was performed using publicly available information.
K&M calculated the financial ratios that indicate the tenderers’ financial strength relative to the SRWO turnkey contract size and performance guarantee. K&M obtained the information to calculate these ratios from the financial statements included in the tenderers’ latest annual reports and/or the financial information submitted by the tenderers in the expression of interest.
An electric utility is selecting a company that will supply natural gas for power generation. The prospective supplier is expected to import LNG delivered at an onshore or floating terminal and send gas via pipeline to the client’s power plants. The client intends to select one of the shortlisted firms as a “Preferred Supplier” and commence negotiations. The client requested K&M’s commercial and technical advisory services during these negotiations and the contract implementation with the prospective gas supplier. The services K&M is providing in this project include estimating the LNG demand, analyzing the business case to switch from diesel to natural gas, analyzing the viability of various sites, developing the gas quality specifications, and advising throughout the process of negotiating a gas supply agreement (including setting a negotiation roadmap, developing an issues list, participating in negotiations, and providing support until the agreement is executed).
K&M’s scope of work includes:
- Analyzing historical operational and dispatch information of power plants that will be converted to gas
- Developing an hourly merit order dispatch model to estimate hourly generation for each plant during the next 25 years
- Analyze the technical viability and costs of converting generation units to gas
- Calculate the levelized-cost of electricity under various generation expansion scenarios and advise on the least-cost option
- Develop gas quality specifications
- Estimate the all-in cost of gas delivered at the power plant battery limit and benchmark it against similar projects
- Actively support throughout the negotiation process
Funded by a USTDA grant, GreenCo enlisted the services of K&M to conduct a comprehensive feasibility study for the proposed development and implementation of a battery energy storage system pilot (BESS Pilot) with a capacity ranging from 10 to 25 MW and energy storage capacity of 40 to 100 MWh. Additionally, the study aimed to assess the feasibility of an expanded portfolio of BESS projects totaling 400 MWh, all to be located in Zambia.
GreenCo, as an intermediary and grid operator, recognizes the challenges posed by the intermittency and limitations of renewable energy sources. To address these challenges and complement its growing solar PV portfolio, GreenCo aims to develop a portfolio of BESS projects. These projects will play a crucial role in balancing the intermittency of renewable energy and optimizing supply curves. The initial BESS project is planned to be co-located with GreenCo’s PV Pilot Project. The primary objective of the feasibility study is to evaluate the technical, economic, and financial viability of implementing the BESS Pilot in Sesheke District, Zambia. Furthermore, the study will provide recommendations for the expanded 400 MWh BESS Portfolio.
K&M’s scope of work encompasses various critical aspects of the feasibility study. Firstly, they will conduct a technical assessment of battery storage technologies suitable for both the BESS Pilot and the BESS Portfolio. This assessment will consider the specific requirements and objectives of GreenCo’s business model. Economic and financial analyses will be carried out to evaluate the operational costs, commercial viability, and market dynamics related to the project. K&M will also explore financing options and assess their feasibility.
To ensure the sustainability and social impact of the project, an environmental and social impact assessment will be conducted. Additionally, a development impact analysis will be performed, along with a review of potential U.S. sources of supply. K&M will also be responsible for developing preliminary implementation schedules and necessary documentation for the project, including requests for qualification and proposals related to battery procurement, as well as engineering procurement and construction. Furthermore, they will assist in developing operations and maintenance agreements, as well as connection agreements, to support the long-term functioning of the BESS Pilot and the BESS Portfolio.
Sixth Street engaged K&M for a technical due diligence review of a new 940 MW natural gas-fired combined cycle electric generating facility in the Village of Lordstown, Trumbull County, OH. The project will feature a 2×1 configuration, employing two Siemens Energy SGT6-8000H 1.6 combustion turbine-generator units (CTGs), two Nooter/Eriksen heat recovery steam generators (HRSGs), and one Siemens steam turbine generator (STG). The facility, collectively known as the Power Island Equipment (PIE), may utilize Vogt or Siemens HTT HRSGs. Additionally, the project will incorporate supplemental firing and evaporative cooling for enhanced power output in specific conditions.
K&M conducted a technical due diligence review, focusing on the Independent Engineer’s report, EPC and O&M contracts, and financial model assumptions. Following the review, K&M prepared a memo identifying project risks and recommending adjustments to the financial model assumptions.
The Inter-American Development Bank (IDB), contracted K&M, GeothermEx, and POWER Engineers to assess new approaches and develop business models for medium/high-enthalpy geothermal energy for electricity, green hydrogen, and industrial application in Chile.
To accomplish this, the team will (i) formulate a conceptual model for an exploration risk-mitigation mechanism, suitable for promoting geothermal use in district heating, industrial applications, and/or electricity generation, (ii) develop a business model for medium/high enthalpy district heating/cooling systems, (iii) design of a contractual and market strategy for increasing the competitiveness of geothermal power generation, (iv) develop a business model for the production of green hydrogen using geothermal energy, (v) a business model for the application of geothermal heat into an energy intensive industrial activity.
The IDB Group, through the assistance of K&M Advisors LLC (K&M) and Alliant Insurance Services (Alliant), has completed the initial development of the proposed Caribbean Water Utilities Insurance Company (CWUIC). CWUIC will be a mutual insurance company for water utilities in the Caribbean. In this phase of development, CWUIC’s main components, governance framework, potential sources of funding, and target members have been largely defined. As a result, the IDB Group plans to submit a proposal to the Green Climate Fund (GCF) requesting funding for CWUIC. Before the IDB Group submits the proposal to the GCF, it must define the entity—whether an existing one or one to be created—in which CWUIC will be established. The K&M team is advising the IDB on the best alternatives for establishing CWUIC
The National Water Commission (NWC) in Jamaica is working on a multi-year financial planning exercise. In support of this work, the Inter-American Development Bank (IDB) contracted K&M to develop an advanced, detailed, and dynamic financial model. To further support NWC in its multi-year financial planning exercise, K&M is providing capacity building and training to the NWC regarding the use of advanced simulations with the financial model. The K&M model will allow NWC to make detailed 10-year projections of the financial statements.