Northern Europe has a huge potential to produce hydrogen and e-fuels for other regions that is likely to lead to the emergence of “a new energy landscape”, Orsted’s power-to-x chief operating officer, Anders Nordstrom, told Recharge as the global renewables giant began construction of the continent’s largest e-methanol project.
Orsted on Wednesday broke ground on its more than SKr1.5bn ($139m) FlagshipONE plant in Örnsköldsvik in northern Sweden, which will churn out 50,000 tonnes of e-methanol annually from 2025 onwards to supply a growing fleet of methanol-powered vessels.
The e-fuel will be produced from green hydrogen made using a 70MW electrolyser fed with power from onshore wind and the addition of CO2 captured at a nearby biomass combined-cycle plant.
The company for its renewable power can tap directly into the grid, which lies in Sweden’s 'zone two' of transmission that already carries more than 90% green electricity. Orsted is also in dialogue with several potential PPA suppliers, Nordstrom said. Northern Sweden is home to several of Europe’s largest wind farms and projects on land, such as the giant Markbygden complex.
“One of the reasons why financially speaking this location is so good is the availability of electrons as well as the availability of biogenic CO2. Basically, the feedstocks you need for production,” Nordstrom said in an interview.
To meet global 2050 net zero ambitions, for sectors that cannot directly be electrified, hydrogen and e-fuels are “the missing piece”, he added, pointing to shipping, the chemical industry (as feedstock), or steel making.
“In certain regions with surplus renewable potential, the conversion to hydrogen or e-fuels is going to play a major role.”
But what happens in regions not equally blessed with a huge potential for renewable energy generation as thinly populated and windy northern Sweden?
“That’s where we need to work together as Europe. Scandinavia – Sweden, Finland – has huge potential for production of e-methanol because of the availability of green electrons as well as biogenic CO2,” Nordstrom said.
Also “countries like Denmark, the Netherlands, [or] the UK for instance, have a huge coastline and more renewable potential for instance in offshore than is actually needed domestically.”
Those countries could export energy to more densely populated economies with lesser renewable generation potential such as Germany, he reckoned.
“For instance, moving renewable hydrogen from Denmark to Germany will be a key element,” he said. “I think you'll see a new energy landscape in Europe.”
But to build up a hydrogen and e-fuels economy, initial support is needed, Nordstrom insisted, pointing to a significant cost gap between fossil fuels today – which had more than 100 years to mature and bring cost down – and green fuels.
Support can come on the demand side or the supply side, or both, he said, adding that the EU with its Fit-for-55 package, and ReFuelEU Aviation initiative for sustainable air transport and its maritime policy has already been paving the way for support by member states.
Sweden as part of its Klimaklivet scheme for local climate investments has granted SKr151m for the FlagshipONE project.
“It's important that there is a bit of support in terms of CapEx or risk relief, because, of course, the first project is more difficult and more costly than the second project and the third project,” Nordstrom argued.
Mechanisms such as the EU’s hydrogen bank or provisions foreseen in the US Inflation Reduction Act are also instrumental to make the e-fuels industry competitive, he said.
As well as FlagshipONE, Orsted is advancing its Green Fuels for Denmark plan, which after gaining the status of one of the EU’s important projects of common European interest (IPCEI) (that frees up possible Danish government support). A first phase of that project with a 10MW electrolyser is likely to be in operation in 2025. Methanol output and larger production volumes are scheduled to follow later in the decade.
“It's going to be hydrogen for mobility for heavy trucks and then it scales from there basically,” Nordstrom said. “We don’t see [the first phase] as much as a pilot, but more as a production plan for the transport sector.”