Ardmore Shipping has filed notice of a strategic investment and joint venture with Element 1 Corp and Maritime Partners LLC to deliver fuel cells to the marine sector
The Ardmore Shipping filing with the US Securities and Exchange Commission stated the company has signed a letter of intent with Element 1 Corp (E1) and Maritime Partners in which the parties propose to establish a joint venture, e1 Marine, for the purpose of delivering E1’s unique methanol-to-hydrogen technology to the marine sector.
Ardmore Shipping was the first US-listed shipping company to report carbon emissions on its fleet. Its chief executive Anthony Gurnee commented on the announcement, “We are very pleased to establish a strategic relationship with E1 and Maritime Partners to deliver this unique hydrogen delivery system to the marine sector.”
“The establishment of e1 Marine and our investment in E1 advances our Energy Transition Plan, which includes a focus on transition technologies aimed at reducing carbon emissions in the shipping industry and utilising Ardmore’s engineering and marketing capabilities to accelerate their deployment.”
He continued, “We are excited about the market opportunity for E1’s methanol-to-hydrogen technology. We believe it 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, while emitting 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 can be built or retrofitted to run on ammonia.”
Element 1 Corp (E1) is headquartered in Oregon, and is a leading developer of advanced hydrogen generation systems used to power fuel cells with broad use in mobile applications and remote locations such as marine, trucking, automotive, off-road vehicles, rail, warehousing, and backup power supply sectors.
E1’s proprietary technology produces hydrogen on demand at the point of consumption, eliminating the logistical challenges and costs inherent in distributing compressed hydrogen.
E1 co-founder and chief executive Dr Dave Edlund said, “Element 1 is delighted to ally with Ardmore and Maritime Partners to deliver commercial solutions for the marine sector that will significantly reduce the carbon intensity as well as other harmful emissions traditionally associated with burning fossil fuels. This strategic relationship is the direct result of our partners’ vision as well as their commitment to environmental responsibility.
“Whereas fuel-cell technology has matured substantially over recent decades, the supply of hydrogen as feedstock to fuel cells has lagged considerably, resulting 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. Importantly, Ardmore and Maritime Partners provide unique access to existing markets in international shipping and inland waterways.”
Maritime Partners, headquartered in Louisiana, is a leading provider of flexible financing solutions and newbuilding support to the maritime industry, with a focus on Jones Act vessels and inland marine transportation.
Maritime Partners co-founder and chief executive Bick Brooks, said “We are pleased to partner with E1 and Ardmore to drive the adoption of E1’s hydrogen purification technology across the global maritime landscape. 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 provides a clear path to achieving a zero-carbon footprint. Importantly, we believe this technology is currently cost competitive with diesel internal combustion engines.
Ardmore Shipping, E1 and MP will establish e1 Marine, each owning 33.3% of the joint venture. e1 Marine will have a worldwide mandate for the marketing, development, licensing and sale of E1’s unique hydrogen generation systems for applications to the marine industry, including shipping, refrigerated containers, offshore energy, renewable energy, passenger and leisure, and certain port infrastructure and related applications.
MP will invest in Ardmore in the form of US$40M in perpetual preferred shares in two tranches: the first tranche will be US$25M: the second tranche will be US$15M subject to final approval by MP.
The preferred shares will carry a dividend of 8.5% per annum paid quarterly subject to potential increases upon the occurrence of customary events, incorporate payment in kind provisions, and be redeemable by Ardmore commencing after three years.
Ardmore will purchase a 10% equity stake in E1 in exchange for US$4M cash plus 950,000 ASC common shares. The total consideration is estimated to be US$11M based on Ardmore’s net asset value as of February 2021. Ardmore will also take a seat on E1’s board of directors from the date of the investment.
MP will receive 20% of any profits paid to Ardmore from this equity investment in E1.
The transactions are expected to close simultaneously early in Q2 2021.
Ardmore’s interest in the joint venture and its investment in E1 will be held by Ardmore Ventures, a newly incorporated holding company for existing and future potential investments related to Ardmore’s Energy Transition Plan.
The use of fuel cells would also significantly enhance the ESG profile. Sign up here for the free Maritime Environmental Social and Governance Webinar Week, series of ESG-related webinars.
Catch up on the latest on using methanol, hydrogen and fuel cells by watching Marine Fuels Webinar Week in the Riviera webinar library.