Danish utility Orsted and shipping giant Maersk have signed a landmark agreement to build a power-to-X plant on the US Gulf Coast linked to renewable energy, which they say could spur the largest ever offtake agreement for green fuels in the maritime industry.

Maersk also announced massive green fuel offtake deals with five more companies from the Americas and China.

Orsted and Maersk signed a letter of intent to develop a 675MW power-to-X facility that is slated to produce about 300,000 tonnes of e-methanol per year from green hydrogen, which Maersk would offtake for its newly ordered fleet of 12 methanol-powered vessels.

The plant would be powered by some 1.2GW of new onshore wind and solar PV farms. The biogenic carbon needed to produce e-methanol is slated to be extracted through carbon capture at one or more large facilities.

“Partnerships with large offtakers of green fuels, like Maersk, are an important part of Orsted’s strategic journey, as we broaden our power-to-X footprint across the world to become a global leader in renewable hydrogen and green fuels,” Orsted chief commercial officer Martin Neubert said.

“The project with Maersk is our first in the US, and we look forward to help accelerating the US power-to-X market while creating local jobs and economic activity, just as we’ve done in the growing offshore wind industry in the US.”

The deal with Orsted is part of a wider push by Maersk to source at least 730,000 tonnes of green methanol per year by end of 2025 from companies in the Americas and China, including developer European Energy, from which the shipping firm aims to receive another 200,000-300,000 tonnes per year.

European Energy was somewhat less specific about the letter of intent it signed with Maersk. The company said it will develop and build large-scale e-methanol projects in North and South America, with production planned to begin in 2025/26, but the developer didn't provide further detail about the location or exact volume of those projects.

"We are very happy to further strengthen our partnership with Maersk which began with the supply agreement of e-methanol from our plant in Kassø, Denmark," European Energy chief executive Knud Erik Andersen said.

"With this new letter of intent, we significantly increase the size of our e-methanol projects and locate them in areas with some of the most inexpensive renewable energy available."

Maersk as part of its green fuel push by 2024 also plans to source 50,000 tonnes of bio-methanol each from two Chinese companies (CIMC ENRIC and GTB). Those volumes could be greatly increased after 2025. And the shipping giant plans to receive 30,000 tonnes of bio-methanol from South America the company WasteFuel, as well as 100,000 tonnes of either bio- or e-methanol from North America by Proman.

Orsted Gulf project follows up on giant Danish plans

Orsted and Maersk aim at commissioning the project in the second half of 2025, making it the by far most ambitious project globally producing e-methanol at scale, Orsted claims. A final investment decision could be taken late next year.

The power-to-X project on the US Gulf Coast is the second green fuels collaboration between Orsted and Maersk after the potentially 1.3GW Green Fuels for Denmark project in Copenhagen.

“To transition towards decarbonisation, we need a significant and timely acceleration in the production of green fuels,” said Henriette Hallberg Thygesen, chief executive of fleet & strategic brands at A.P. Moller-Maersk.

“Green methanol is the only market-ready and scalable available solution today for shipping.”

The US Gulf states have an abundance of cheap solar and wind resources, making it ideal for large-scale production of green fuels, Orsted onshore CEO Neil O’Donavan said.

“The power-to-X project with Maersk will expectedly be powered by approx. 1.2GW of new onshore wind and solar PV, which in itself represent a significant investment in the region, while also helping Orsted reach its target of 17.5GW of installed onshore capacity in 2030.”

The utility’s power-to-X development pipeline consists of 11 projects, including the 70MW FlagshipOne project in Sweden, which Orsted is developing together with Liquid Wind. FlagshipOne is targeted to be commissioned in 2024 and could become one of the world’s first large-scale sustainable e-methanol facilities.

UPDATES to add detail on Maersk deals with European Energy, others