W|EPC: LNG Canada – Updated Satellite Image Analysis & Construction Progress – Q420 Project Monitor

 Shell ∙ Fluor ∙ Mitsubishi ∙ PetroChina ∙ PETRONAS ∙ KOGAS

Table Of Contents:

• LNG Canada Q4 Monitor: Key Takeaways…………………………..….…Page 2
• LNG Canada Cost & Schedule Updates
  • Updated Estimates…………………………..……………….….……..Page 4
  • Project Milestones………………………………………………………Page 5
  • Progress Analysis…………………………………………….….….….Page 6
  • Analyzing Fluor’s 27.5% Reported Progress…….…………….……Page 7
  • Project Staffing……………………………………………..……….….Page 8
• Satellite/Aerial Image Analysis
  • July 2020 Overview………………….…………………….….………Page 10
  • Sep 2020 Site Analysis……………………………………….………Page 11
  • Jul vs. Sep 2020 – LNG Storage Tank…………………………..….Page 12
  • Module Yard Analysis………………………………………………….Page 13

Key Takeaways:

• Delays At LNG Canada Continue to Build   (Pages 4 – 7, 10 – 13)
  • Fluor reported ~27.5% Engineering, Procurement, Fabrication, & Construction (EPFC) progress in September, vs our current estimate of…
  • We believe Fluor’s 27.5% guidance implies module fabrication progress of ~45%, which is ~9x…
  • Fluor also referenced COVID-related project delays (without getting specific)
  • Our Current Delay Estimate:…..
  • Estimated Probability Of Maintaining Schedule:…..
  • Mind The Gap: There are several potential explanations for such a degree of progress variance…
• Examining Fluor’s Goal of 2,500 On-Site Workers By Dec-20 (Pages 4, 8, 10 – 13)
  • Aerial images suggest meaningful concrete, structural steel, and significant construction activities have yet to start (beyond piling)…
  • Pre-COVID, Fluor’s reported onsite labor was higher than the project’s publicly reported staffing levels, leading to cost overruns (Pages, 4, 8)
  • Limited construction work fronts could constrain Flour’s ability to…
• Kicking The Can Down The Road… LNG Canada Starting to Resemble Another Fluor/JGC Project… (Pages 4, 8)
  • In 3Q13, CPChem awarded Fluor & JGC a ~$6B EPC contract for an Ethylene Cracker in Texas. ~39-months later, Fluor/JGC announced the project would be over budget. The project was finished in mid-2018 (a year behind its baseline plan).
  • ~23-months after FID, we believe the LNG Canada (JFJV) schedule is slipping and costs are…

W|EPC: LNG Canada – Updated Satellite Image Analysis & Construction Progress – Q420 Project Monitor

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Hydrogen (H2) – The Production Process Roadmap – Upstream, Midstream, & Downstream – Q420

 Hydrogen  ∙  Ammonia  ∙  Methanol

Table Of Contents:

• Key Takeaways And Flow Of H2 & CO2………………………………………Page 2
• Hydrogen’s Upstream
  • Electrolysis Technologies & Market Leaders…………………….…..…Page 6
  • Blue Hydrogen CO2 Issue………………………………………….…….Page 7
  • Hydrogen Is Getting Cheaper………………………………………….…Page 8
  • Carbon Capture Systems & CO2’s Critical Role…………..………..…Page 9
• Hydrogen’s Midstream – Transportation
  • Ammonia Transportation – Green Hydrogen………………..….…….Page 12
  • Methanol Transportation – Blue & Green Hydrogen……………..….Page 14
  • Cryogenic Hydrogen Energy Loss Concern…………………….……Page 16
• Closer Look – Ammonia vs Methanol
  • Hydrogen Comparison…………………………………………………Page 18
  • Example Product Comparison…………………………………………Page 19
  • Converting Back To H2…………………………………………………Page 20
  • Ammonia & Methanol Co-Production Facilities………..….………..Page 21
• Marine and Fuel Cell Comps
  • Industry Impact – H2 Transportation…………………………………Page 23
  • IMO Driving LNG, Ammonia Or Methanol Fuel For Ships….……..Page 24
  • Carbon Neutral Marine Fuels – IMO 2050………………………….Page 25
  • Ammonia & Methanol Co-Production Facilities…………………….Page 26
• Technology Leaders and Applications
  • H2 – Industry Technology Leaders………………………………….Page 28
  • Applying Technology In The EPC Process…………….………..…Page 29
  • Technology Packaging & Trends…………………………….….….Page 30

Key Takeaways:

Upstream Sources Of Hydrogen – Blue & Green (Pages 4 – 9)
          >95% of Hydrogen (H2) is produced using Steam Methane Reformer (SMR) technology that produces 7 units of CO2/unit of H2 (on average)
SMR w/ a carbon capture system (Blue H2) is the preferred option to environmentally manage excess CO2. (page 7)
Green H2 provides minimal CO2 but current technology limits Green H2’s cost competitiveness. (Page 6)
H2’s Sprint To Market Share… Current Leaders (Pages 17 – 21, 27 – 30)
      We analyzed 13 Technology Companies spanning 12 Process industries, including ThyssenKrupp, Air Products, Air Liquide, & KBR/Johnson Matthey…the clear technology leaders include…
Frozen Industries – Marine, Automotive, & H2 Transport (Pages 22 – 26)
       Outside factors (i.e. carbon neutral fuels, fuel cells, regulations, safety, & other downstream applications) will play a large role in selecting the midstream transportation choice for H2.
International Maritime Organization’s (IMO) mandates for reduced emissions has many ship builders looking at LNG, Ammonia, and/or Methanol; without a clear long-term winner (yet), many shipbuilders are frozen.
Fuel pumps (gas stations) must receive H2 from high-pressure storage vehicles, pipelines, or by converting Methanol or Ammonia to H2 at the fuel pump, with a number of implications.…(page 20)
Midstream For Hydrogen – H2 Transportation Options (Pages 10 – 16)
     Ammonia, Methanol, and Cryogenic H2 are used to transport H2 long-distances.
Ammonia is the clear favorite to…
Methanol is the best option for…
Cryogenic H2 technology/costs…

W|EPC: The Production Hydrogen (H2) Production Roadmap – The Upstream, Midstream, & Downstream Process – Hydrogen ∙ Ammonia ∙ Methanol

For access information, please email us at [email protected], or our institutional sales at [email protected]

Renewable Energy: Expanding Our Hydrogen & Solar Coverage

Initiating Coverage Of PLUG, BLDP, & SEDG 

Plug Power (PLUG)
Company Overview – Page 5
Plug Symposium (Raw Notes) – Page 10
Investment Rationale / Key Points – Page 12
Primary Risks – Page 14
Valuation – Page 15

Ballard Power Systems (BLDP)
Company Overview – Page 22
Analyst Day (Raw Notes) – Page 28
Investment Rationale / Key Points – Page 35
Primary Risks – Page 36
Valuation – Page 37

SolarEdge Technologies (SEDG)
Company Overview – Page 45
Investment Rationale / Key Points – Page 48
Primary Risks – Page 49
Valuation – Page 50
Industry Overviews

Hydrogen & Fuel Cells – Page 55
Solar / Inverters – Page 67

Expanding Our Hydrogen & Inverter Coverage. We are initiating coverage of PLUG (Outperform, PT: $19), BLDP (Outperform, PT: $26), and SEDG (Market Perform, PT: $200). Since launching our first wave of coverage in April (REGI – OP, ENPH – MP, TPIC – MP, and ENS – MP) renewables have continued to aggressively take both mind-share and market-share – positioning the sector for unprecedented investment as governments, counterparties, and end-users move toward carbon neutrality over the next 15-40 years. Benchmark renewable levelized cost of energy (LCOE) figures have declined nearly 75% over the past-10 years, increasing the viability of alternative energy sources. We believe the extension of that process toward low- and zero-carbon hydrogen could create a generational growth engine across Energy, Industrials, and Technology over the next several decades.

The Push For Hydrogen: Major markets worldwide continue to adopt integrated hydrogen strategies and roadmaps, with Europe and China at the forefront. The EU is expected to invest €183-€490B by 2050 to effectively develop a continental hydrogen economy, with green hydrogen (i.e. hydrogen created using renewable sources) at its center. China recently announced its National Hydrogen Fuel Cell Strategy and pledged to reach carbon neutrality by 2060 despite currently deriving two-thirds of its power from coal. We think the increasingly widespread support for carbon-reducing policy creates a deliberate and sturdy foundation for renewables, and particularly hydrogen.

Figure 58. California Advanced Clean Truck Regulations

Figure 50. Hydrogen Production Costs From Renewables & Fossil Fuels

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Webber Research Hydrogen Tracker

Introducing the Webber Research Hydrogen Tracker

Yesterday we launched our Hydrogen Tracker – a weekly research product dedicated to the build out of Hydrogen production, technologies, and associated markets. For information about access to our Hydrogen Research, Renewables, or our Utility, Energy, & LNG Infrastructure Project coverage, please email us at [email protected]

Highlights:
• Recent News (page 1)
• LH2 Carrier Progress (page 3)
• M&A Tracker (page 4)
• Valuation Details (page 4)
• Hydrogen Production Costs (page 5)
• Demand Trends (Page 7)
• Electrolyzer Market Share & Technology Growth (page 8)

• Data & Updates:
• EU Hydrogen Strategy: On 7/8 the European Commission provided additional details on its broader energy transition including its hydrogen strategy…
• APD, ACWA Power, & NEOM Form JV For $7B Green Hydrogen Facility In Saudi Arabia: On 7/7 APD announced, in conjunction with equal JV partners, ACWA Power and NEOM, the signing of a $5B agreement for a global-scale green hydrogen-based ammonia production facility…
• Air Liquide & Port of Rotterdam Joint Initiative For Hydrogen Trucking: On 7/6 Air Liquide (AI-FR) and the Port of Rotterdam Authority announced a joint initiative to adopt and build the infrastructure for 1,000 hydrogen-powered zero-emission trucks by 2025…
• CARB Passes Zero-Emission Truck Regulations: On 6/25 the California Air Resources Board (CARB) passed the Advanced Clean Trucks (ACT) Regulation which accelerates the large-scale transition of zero-emission medium and heavy duty vehicles in California. Beginning in 2024, 9% of all on-road Class 4-8 trucks sales…
• NEL +NOK 150MM Purchase Order: On 6/30 NEL announced a +NOK 150MM purchase order for multiple H2Station units from…
• BLDP $7.7MM Purchase Order From JV: On 7/2 BLDP announced it received a $7.7MM purchase order of membrane electrode assemblies (MEAs) for use in…
• NKLA Starts Preorders: On 6/29 NKLA opened preorders for its Badger pickup truck, NZT off-highway vehicle (OHV), and WAV jet ski…
• FCEL Terminates Exclusivity Agreements With POSCO, Seeks +$200MM In Compensation: On 6/28 FCEL officially notified POSCO Energy and…
  …continued

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Webber Research: Renewables Weekly

Renewable Energy Highlights:

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• Wild Week For ENPH (page 1)
• PLUG Acquires United Hydrogen & Giner ELX (page 2)
• BLDP Follow-On Order From Wrightbus (page 2)
• JinkoSolar To Supply Bifacial Modules In Chile (page 2)
• RUN To Launch 2 Virtual Power Plants (page 2)
• FCEL Restarts Operations At Torrington, CT Facility (page 2)
• NOVA Closes Solar Backed Notes (page 2)
• NEL +$3MM Purchase Order (page 2)
• GE Nearly Doubling Headcount At LM Wind Facility (page 2)
• SGRE SG 14-222 DD Turbine Backlog Up To 4.3GW (page 2)
• MHI Vestas Supplier Begins Taiwanese Blade Facility Construction (page 3)
• Vestas Recent Order Summary (page 3)
• Denmark To Develop First Offshore Wind Energy Islands (page 3)
• Germany’s National Hydrogen Strategy (page 4)
• New Jersey Plans Offshore Wind Port (page 4)
• EPA Receives 52 New SREs For 2011-2018 (page 4)
• Australian Storage Capacity To More Than Double In 2020 (page 4)
• US Net Electricity Generation (pages 5-6)
• Solar PV Pricing (page 6)
• LCOE Benchmarks & Timeseries (page 7)
• Global Wind Turbine Market Share (Page 8)
• Solar PV Inverter Market Share (page 9)
• US Wind & Solar Projects Announced Or In Early Development (page 10)

Wild Week For ENPH: Last week ENPH traded down 26% on the back of a short report alleging various accounting violations and more serious fraudulent activity, before recovering most of the lost ground in the days that immediately followed (-4% on the week). From our perspective, the report highlights a number of red flags, however…..

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