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SUMMARY

Funding will meet all near-term capital needs of modular CCS developer Entropy.

By Dale Lunan

POSTED IN:

Americas Finance Canada

Canada’s Entropy, the subsidiary of Advantage Energy developing modular carbon capture and storage (CCS) technology, said March 28 it had closed a strategic C$300mn (US$239mn) investment agreement with Brookfield Renewable.

The agreement was first announced by Entropy in late December 2021.

The commitment will help fund Entropy’s near-term projects, including the first two phases of its first project at Advantage Energy’s Glacier natural gas plant west of Edmonton. It also brings potential for “significant” follow-up capital and access to a large-scale international portfolio of CCS projects.

“In order to have a meaningful impact on a global scale, we must invest in the highest efficiency projects with advanced technology, at scale,” Advantage CEO Michael Belenkie said. “Entropy has a strong pipeline of these projects under development and owns the full suite of next-generation CCS technology. Combining Brookfield’s financial power and international presence is a key step to achieving global scale. With the growing need to balance carbon abatement with world-wide energy security, CCS needs to play a leading role and Entropy intends to be an important part of accelerating its deployment.”

The committed capital will be drawn down by Entropy to fund CCS projects that reach final investment decision as certain predetermined return thresholds are met.

Brookfield is pursuing this investment through its Brookfield Global Transition Fund (BGTF), the largest fund in the world focused on the energy transition, and is the first of its kind for a pure-play CCS developer.

“Countries and companies are in the midst of an unprecedented transition as decarbonisation is now firmly established as a critical priority worldwide,” said Jehangir Vevaina, Brookfield Renewable’s chief investment officer. “As a global leader in decarbonisation, Brookfield Renewable has delivered clean energy and transition solutions for more than 30 years. We are excited to invest into a leading CCS business as we continue to expand the decarbonisation solutions that we provide to our partners”.

Brookfield’s investment, along with an expected CCS investment tax credit from the federal government, will provide Entropy with all its near-term capital funding needs, with no additional contributions from Advantage. Advantage will continue to control Entropy until substantially all of Brookfield’s committed capital has been invested, at which time it would own about 50% of Entropy, on an as-converted basis.

Entropy continues to expand its project pipeline, and now has signed memorandums of understanding representing the capture and sequestration of more than 3mn mt/yr of CO2 and a potential investment of about C$1.5bn.