Babcock & Wilcox Enterprises, Inc. (NYSE:BW) Q3 2023 Earnings Call Transcript

But we’re not at that point yet. But the short term aspect, the opportunity, as Lou mentioned, Ohio now is moving into a real project for us. The financing is coming into place, the offtake agreements are moving into definitive agreements for up to 10 years, take or pay on that hydrogen. Obviously, it’s not a big plant, relatively speaking. But it’s important because it puts in the ground commercial technology for us and moves it from where we were before. The state discussions that we’re having with several states now continue, those applications are moving into a real status. Some of those will start to move into public domain soon, and you’ll see further announcements on that. It might be a phased in approach on some of that funding coming from states.

And we’re — we continue the discussions on the federal level as well too. The other aspects, again, it’s kind of a circular piece, but the hydrogen hubs that were just recently announced by the DoE, in particular, the Appalachian hub, there’s mentioned we’ve mentioned before, previously, some of the work that’s taking place there and Mountaineer in West Virginia, that’s all pull through that will eventually some of that will get down to us. That’s going to take time obviously, but those things keep moving on. We’ve increased testing now, boy, I’m going to throw out a number, it’s probably we’re up to about 30 different fuel testing. Samples that we’re testing across a broad range both in, in utilizing solid fuels, such as certain coal developments also in biomass developments in multiple locations that’s going through our labs at this point time.

So we keep increasing the amount of fuel testing related to the opportunities. And we keep developing the opportunities as we keep unfolding the projects that are there before us. But as mentioned in the comments today, the developments around Air Products and getting to a 10 year agreement with moving forward with them to finalize a 10 year agreement that location is a big step, that plus the general hydrogen announcement puts us in an offtake of up to 220 tonnes a day. We are in negotiations on the feedstock aspect, mainly biomass in that particular location. And we’re in negotiations on the lease, and then the air permitting process there. We are also in discussions on funding around that project. So all corners of that pyramid are coming together.

The same — and some of the other locations is and, we’ll keep announcing that obviously, as we continue to make progress there. But Bright Loop keeps expanding. And we’re excited about those opportunities. One of the areas I didn’t talk about in the comments, but I’ll say it on the call here that we’re starting to see more early on this. So we’ll identify this as we move along. But what we’re starting to see globally, and potentially in the U.S. is actually combining ammonia, either net negative or net neutral ammonia with coal-fired plants to reduce the overall CO2 offset of those coal fired plants. We see a wide that activity happening a lot, especially in Asia. There’s been some discussions with a few here in the U.S. So really early on on that application.

But that’s exciting for us. Because, as I mentioned before, a lot of these plants now we’re looking to extend their life cycle and power generation. And if we can introduce a net neutral, or net negative ammonia production from biomass, which Bright Lube can do, these power plants can actually have a carbon offset, that would take literally, depending on the mix could take a coal plant down to net — at least net neutral by 2030. And we think that’s an exciting development. We’re early in that discussion, but it bodes well for us, because it’s both aftermarket parts and services for our baseload power generation and thermal group. But it also opens up offtake for the ammonia produced by net negative carbon intensity Bright Lube using biomass.

So we’re excited about both ends of that spectrum. And that’s one of the decision points that went into our thinking that get more around our thermal parts and services and our renewable parts and services and focus more on the Bright Lube Climate Bright, because it’s becoming more real for us at the same time reduce some of the costs associated with some of the other areas. So all of that adds into that realignment strategy.