Ardmore Shipping Corporation has signed a Letter of Intent with Element 1 Corp. and Maritime Partners to establish a joint venture that would deliver E1’s methanol-to-hydrogen technology to the marine sector.
Oregon-based E1 has developed advanced hydrogen generation systems used to power fuel cells with broad use in mobile applications and remote locations.
As explained, the technology produces hydrogen on demand at the point of consumption, eliminating the logistical challenges and costs inherent in distributing compressed hydrogen.
Maritime Partners, headquartered in New Orleans, Louisiana, as a provider of financing solutions and newbuilding support to the maritime industry, will provide financial support to the JV.
Under the proposal, Ardmore, E1 and MP will establish “e1 Marine,” each owning 33.3% of the joint venture.
Ardmore said that the new company would be in charge of the marketing, development, licensing and sale of E1’s hydrogen generation systems for application to the marine industry.
This would include shipping, refrigerated containers, offshore energy, renewable energy, passenger and leisure, and certain port infrastructure applications.
MP will make an investment in Ardmore in the form of $40 million in perpetual preferred shares in two tranches: the first tranche will be $25 million; the second tranche will be $15 million subject to final approval by MP.
Ardmore plans to purchase a 10% equity stake in E1 in exchange for $4 million cash plus 950,000 ASC common shares. The total consideration is estimated to be $11 million.
The shipping company will also take a seat on E1’s board of directors from the date of the investment. Under the proposal, MP will receive 20% of any profits paid to Ardmore from this equity investment in E1.
The move is part of the company’s energy transition plan . The main elements of Ardmore’s energy transition plan include continued improvements in fuel efficiency as well as early adoption of zero-carbon fuels.
The transactions are expected to close simultaneously early in the second quarter of 2021. Completion of the transactions remains subject to the negotiation and execution of definitive agreements.
“ The establishment of e1 Marine and our investment in E1 advance our Energy Transition Plan, which includes a focus on transition technologies aimed at reducing carbon emissions in the shipping industry and utilizing Ardmore’s engineering and marketing capabilities to accelerate their deployment ,” Anthony Gurnee , Ardmore’s Chief Executive Officer, said.
Gurnee added that E1’s methanol-to-hydrogen technology is safer and cheaper than other alternatives for onboard hydrogen delivery and, when using standard methanol, is operationally cost competitive with diesel engines even today.
The technology emits zero particulates, zero NOx, zero SOx, and 30-50% less carbon than a diesel engine of the same power rating.
“ The E1 system is carbon-neutral when run on renewable methanol, should prove to be very cost-competitive with other alternatives, and if desired can be built or retrofitted to run on ammonia ,” he added.
Dr. Dave Edlund Co-Founder and CEO of Element 1 Corp. said that while fuel cell technology has matured substantially over recent decades, the supply of hydrogen as feedstock to fuel cells has lagged considerably. This has resulted in significant logistic and economic challenges to the wide-scale deployment of fuel cells.
“ E1’s methanol-to-hydrogen technology offers a broad solution to this challenge,” he explained.
“We are particularly excited about the applications for this technology within the inland marine industry, as it offers the potential to materially lower carbon emissions in the near-term and provide a clear path to achieving a zero-carbon footprint,” Bick Brooks , Co-Founder and CEO of Maritime Partners LLC, commented.
RIX Industries LLC, an existing licensee of E1’s M-series hydrogen generators, has expressed an interest in supporting e1 Marine regarding application to marine vessels.
Ardmore’s interest in the JV and its investment in E1 will be held by Ardmore Ventures, a newly incorporated holding company for existing and future potential investments related to the company’s energy transition plan.