German utility RWE will buy the 1.4GW ‘hydrogen-ready’ gas-fired power station Magnum in the Netherlands from Swedish peer Vattenfall for €500m ($535m).

The plant at the port of Eemshaven in the northern Dutch province of Groningen can be made technically suitable to co-fire hydrogen by up to 30%, RWE said, adding that there may also be the possibility of converting Magnum to rely on hydrogen as its sole fuel by the end of the decade.

The utility, which is already involved in the ‘Eemshydrogen’ project cluster, claims Magnum supports the decarbonisation of the Dutch energy sector and the expansion of the hydrogen infrastructure in the province of Groningen. RWE already owns a nearby hard-coal and biomass-fired 1.56GW power plant.

“We are acquiring a state-of-the-art and already hydrogen-ready plant. Its use in combination with our existing power plant in Eemshaven, enables RWE to develop Eemshaven into one of the leading energy and hydrogen hubs in Northwest Europe,” said Roger Miesen, chief executive at RWE Generation.

“Supplemented by an offshore wind farm Hollandse Kust West, which also provides for 600MW of electrolyser capacity and for which RWE has submitted a bid, we want to actively support the decarbonisation of industry in the Netherlands and thus contribute to achieving the Dutch climate targets.”

Using hydrogen as a fuel in power plants is highly controversial as it is expected to increase costs for electricity consumers and render only limited CO2 reductions, while hydrogen –a very scarce resource for the foreseeable future - instead would be needed for hard-to-abate industries such as steel making or chemicals.

Vattenfall, which seems to have a different strategy from RWE, said it will use the proceeds from the sale to have more resources to invest in the energy transition, such as offshore wind and district heating and cooling.

RWE, however, insists it is strengthening the Eemshydrogen cluster with the acquisition.

“At this site, we want to drive forward the production of low-cost hydrogen at large scale,” said Sopna Sury, chief operating officer for hydrogen at RWE Generation.

“Green hydrogen is the key element for decarbonising the industry and thus an important pillar for the success of the energy transition.”

RWE since 2020 has been developing Eemshydrogen, a project for what it calls environmentally friendly production of hydrogen in Eemshaven.

The transaction includes the purchase of a 5.6MW solar array on the site, and is expected to close in September 2022.