A 700MW green hydrogen plant powered by a dedicated Orsted offshore wind farm and producing carbon-neutral aviation fuel could be up and running in Europe by 2030 if an ambitious project backed by the German government goes according to plan.
The Westküste 100 project — which has nine project partners, including developers EDF Energy, Orsted and industrial giant Thyssenkrupp — has been named by federal energy and economy minister Peter Altmaier as one of Germany’s “real-world laboratories of the energy transition” and is set to receive “close to €100m” of government funding.
The project in northwest Germany, at the site of the Heide oil refinery, will be a unique example of cross-sector co-operation and technology, and show how local wind farms how they can use their excess energy — about 40% of which was wasted last year due to grid constraints.
For the pilot project, surplus wind energy that would otherwise be curtailed will power 30MW of alkaline electrolysers that will split water molecules into hydrogen and oxygen. The oxygen will be sold to a nearby cement plant for use as “oxyfuel”, with the waste heat from the electrolysis process sold to a nearby district heating system, thus creating additional revenue streams. Most electrolysis projects simply release the heat and oxygen into the air.
The green hydrogen will be combined with carbon dioxide captured from the cement plant to produce synthetic methanol, which would then be refined into carbon-neutral synthetic kerosene (ie, aviation fuel), for use at the nearby Hamburg airport. The airport is hoping that 5% of all fuel used there will be carbon-neutral by 2025.
The Heide refinery happens to have huge salt caverns on its land where up to ten millions tonnes of hydrogen can be stored, as well as a dedicated bidirectional hydrogen pipeline to a Linde grey-hydrogen facility 30km away — so large amounts of green hydrogen could eventually be stored and transported via pipeline for use elsewhere, including injection into the natural-gas grid.
Decarbonising an oil refinery
The Westküste 100 project, named after the “west coast” of Schleswig-Holstein state where it is located, is the brainchild of Raffinerie Heide, the company that owns the Heide refinery as well as a nearby “tank farm and oil port”.
“A couple of years ago, I was strategising with my management team about our future as a refinery and how does business look like for us in 10, 20, 30 years, given that the amount of fossil fuel is dropping,” Raffinerie Heide chief executive Jürgen Wollschläger tells Recharge.
The company realised that their site was located in the wind capital of Germany, and that about 40% of the local wind energy generated was not allowed onto the grid, resulting in €500m of taxpayer money being paid to wind producers for curtailed power.
“So we were thinking, ‘there must be something we can do with this electricity’. As a refinery, we are a hydrogen consumer… and actually operating a hydrogen pipeline, which connects with our hydrogen source, which is a Linde steam-methane-reforming plant, some 30km away from the refinery,” explains Wollschläger.
“So we have experience with hydrogen and we have the excess of wind energy, so we were wondering as well, having decarbonisation in mind, whether embarking on green hydrogen isn't one of our future [business] avenues. And we explored and looked into it and realised that our ultimate goal is to turn the refinery into what I would call a green refinery.”
Details of the plan
The ten-year Westküste plan is split into two five-year stages.
The first is to scale up to 30MW of electrolysis capacity by 2025 — which would supply enough green hydrogen to meet the needs of the site’s refinery. (NB: The world’s largest existing green hydrogen production facility is 5MW, with a 10MW electrolysis plant currently being built by Shell in Cologne.)
“Obviously in that 30MW step, there are a number of aspects we want to learn,” says Wollschläger. “What are the scaling effects, the learning curves to best optimize the system, the cost digressions that are obviously needed and required for scaling up?
“I'm pretty sure that once we're working on it, there will be solutions and aspects we have never even thought about, they will just come to light in the moment you work on them.”
After the lessons have been learned from the five-year 30MW pilot project, “the vision is to build a 700MW electrolysis unit”, he explains.
“Orsted, one of the partners in the consortium actually has licenses to build the equivalent offshore wind park next door. And that's actually why they're invested and interested. They want to monetize on that license, which they currently can't do as the electricity grid is so congested.”
So would this be a dedicated offshore wind farm that only supplies energy to the electrolysers, rather than the grid?
“Yeah, it could very well be,” says Wollschläger.
Orsted did not seem so confident that this would be possible. "In Germany the offshore wind build-out is strictly regulated and such a project is not part of the current federal build-out plan. Unfortunately, we do not see any signs that the government intends to revise their approach," the company said in a statement.
Orsted vice-president for hydrogen, Anders Christian Nordstrom, told Recharge: “While it’s still early days for renewable hydrogen, we do see that it has significant potential to help decarbonizing sectors such as heavy industry, shipping and heavy road transportation. Large-scale renewable power from offshore wind is ideal for production of renewable hydrogen, and which makes it a natural fit for Orsted.”
How would the 700MW of green hydrogen be used?
Wollschläger explains that the project partners could sell the green hydrogen to local industries, including chemicals producers, for which there is about 1GW of demand within a 30-40km radius around the refinery.
“That's one avenue you could follow. Our idea is actually a slightly different one,” says Wollschläger. “We want to scale up to 700MW, we want to take that hydrogen and take the CO2 from the cement factory and turn it into synthetic fuels.
“And there’s obviously two reasons for this. One is obviously that then we are back in our core business in the sense of we are working with hydrocarbons, just that in this case, hydrocarbons are not coming from crude oil but from other sources and we can supply our existing customers.
“Now I acknowledge that a number of those customers, most likely in 10 years time will have moved to different applications and solutions for their specific problems. But there are a couple of areas and sectors which are very difficult to decarbonize. And for them, synthetic fuels I would argue are a solution. And those sectors are definitely aviation, and most likely heavy-duty trucks and deep-sea shipping.”
Wollschläger also acknowledges that if the latter two sectors shift towards using green hydrogen as their fuel, the refinery would be able to meet that demand.
Utilising excess wind power
Wollschläger explains that he would like the price of the project’s green hydrogen to be cost-competitive with the grey hydrogen that Raffinerie Heide is currently buying from Linde.
He says this will only be possible if regulations are changed enable them to buy cheaper wind energy.
In the current German system, wind farms are paid a set amount for the power they generate, regardless of whether that electricity is allowed onto the grid. And unlike other markets, the local electricity price does not fall when the supply of wind power is high, meaning there is no incentive for consumers to buy that excess wind energy. Instead, it is simply curtailed, costing the German government about €500m annually.
“If we're already currently paying half a billion euros a year for not producing electricity, why can't I have a different price for electricity? Because my current price for electricity is what everyone has to pay. I'm in a location where we have this curtailment regime and this excess electricity. It costs the German taxpayer money — I have a solution for a better usage for it and yet I have to pay market prices for it.
“You could make an argument that we should get [the excess electricity] for free. I'm not even going that far, but I'm just saying, I want to have a price that makes the technology we are looking into more competitive.”
The post-2025 market for green hydrogen
Wollschläger believes that the five-year pilot project will break even, when including the injection of government funding, which is due to be finalised over the next six to eight months. The second-phase from 2025-30, he believes, will pay for itself.
“Our expectation is that at that point in time, the economics will work out much better,” says Wollschläger. “You have the learning curve and the cost digression on the electrolysis unit, I would argue, which simply will come out of the project. You obviously are five years further in, which means you will have different levels of crude [oil] price, natural gas price, CO2 ticket price [within the EU Emissions Trading System]. And my expectation would be that the regulatory environment, as well as all the pricing, would point to an effect where if you go carbon neutral, you have a positive business case. So in other words, everything which is emitting CO 2 will be penalized.
“It could be, as well, that there will be a forced introduction of certain green-hydrogen-based products. We've seen this with biofuels. Biofuels have been brought into the market despite the fact that they are more expensive than diesel or gasoline. But there was a political will and that's why it has been done.
“Given the need for decarbonization, given that we should expect different levels of CO2 ticket prices, that we should expect different legislation and regulatory aspects coming into play. I'm pretty sure that this will work out.
“If we currently think it's smart to pay half a billion euros to not produce electricity, there must be a way to use this half a billion better and create a sensible business case for [green hydrogen].”