About eight big international companies abandoned substantial green hydrogen projects between July and October 2024.
Origin Energy abandoned its Hunter Valley Hydrogen Hub project early this month, citing uncertainty in the market for green hydrogen.
Origin Energy announced plans for a potential hydrogen hub on Kooragang Island in early 2022, with the hydrogen produced intended to progressively displace natural gas as a feedstock in nearby ammonia manufacturing and activate mobility and other use cases. Origin entered a joint development agreement with Orica in July 2023 to progress through front-end engineering and design, received government planning approval, and targeted a final investment decision.
The project was shortlisted under the Australian Government’s Hydrogen Headstart program, having previously secured Commonwealth and New South Wales grant funding program commitments.
Origin Energy partnered with Orica on the Hunter Valley hydrogen hub in 2023 to produce 5,500 tons of hydrogen each year and create about 100 jobs.
The Australian federal government committed A$70 million to the project, whose site was at Kooragang Island near the Port of Newcastle.
The project’s construction was supposed to have begun in 2025, with operations expected to commence in 2026.
A statement on Origin Energy’s website dated October 3, 2024, says the decision to exit Hunter Valley Hydrogen Hub (HVHH) is consistent with the company’s strategy and reflects uncertainty around the pace and timing of development of the hydrogen market and the risks associated with developing capital-intensive projects of this nature.
Origin CEO Frank Calabria said they worked hard to evaluate the investment case for hydrogen and are grateful for the strong government support.
Calabria said although they believe hydrogen could play a role in the future energy mix, it has become clear that the hydrogen market is developing more slowly than anticipated.
“There remain risks, input costs, and technological advancements to overcome. Combining these factors means we cannot see a current pathway to make a final investment decision on the project.
“The decision to exit reflects the prioritisation of capital expenditure towards opportunities closely aligned to Origin’s strategy.
“Ultimately, we believe investments focused on renewables and storage can best support the decarbonisation of the energy supply and underpin energy security over the near term.
“Origin has been closely following the global development of hydrogen technology and markets over the past four years, and we have evaluated a range of options across several jurisdictions,” Calabria said.
On October 1, 2024, Hy Stor Energy cancelled a 1 GW electrolyser order with Nel.
Hy Stor Energy is developing the Mississippi Clean Hydrogen Hub (MCHH), a fully integrated renewable hydrogen ecosystem for producing, storing, and delivering zero-carbon renewable hydrogen.
The MCHH is touted to be the largest zero-carbon, off-grid hydrogen production and salt cavern storage hub in the US, with vast storage and expansion capacity.
The project is positioned to capitalise on the growing domestic and global hydrogen economy and accelerate renewable hydrogen adoption at scale.
Hy Stor Energy and Nel signed a partnership agreement on April 26, 2024, whereby Nel would provide alkaline and PEM technology at scale and contribute with its hydrogen expertise and experience.
The parties signed a front-end engineering design contract in December 2023.
Hy Stor Energy had a capacity reservation agreement with Nel to secure more than 1 gigawatt of alkaline electrolyser capacity for the project.
Pending the final investment decision, electrode production at Nel’s state-of-the-art plant in Herøya, Norway, would run through 2025, 2026, and the first part of 2027.
In a media statement, Hy Stor’s controlling shareholder company, Connor, Clark & Lunn Infrastructure, said the green hydrogen market has faced a series of headwinds, taking longer than anticipated to bring the lead project to fruition.
The shareholder’s managing director, Eric Reidel, said it did not make sense to make the upcoming capacity reservation payments that would have been due under the Nel agreement.
“In spite of the difficult market environment, we remain optimistic about the long-term potential of Hy Stor’s unique base of assets,” Reidel said.
The company did not give revised timelines for the hydrogen hub.
Nel did not say much on its website besides referring to Hy Stor’s press release.
However, Nel said in line with its accounting standards, the capacity reservation was not considered order intake; hence, the cancellation would not impact the order backlog.
“Nel will retain the non-refundable capacity reservation fee,” the company said.
The other mega hydrogen project on hold is the Aukra Hydrogen Hub in Norway, with a capacity of 2.5 GW and meant to produce 1,200 metric tons of blue hydrogen per day by 2030.
Shell joined Norwegian engineering firm Aker Horizons and Norwegian energy infrastructure firm CapeOmega on the project in July 2021.
The plan was to produce blue hydrogen using gas from Shell’s terminal at Nyhamna, in Aukra, where production was from the Shell-operated offshore Ormen Lange field.
The blue hydrogen would then be used as a marine fuel by ships operating locally and exported elsewhere in Europe.
The companies had plans to use an existing gas pipeline to export to Easington in the UK and to the EU through a dedicated new pipeline.
A pilot was supposed to have been completed as early as 2024, full-scale operations by 2027, and a shift to green hydrogen beyond 2035.
Blue hydrogen is decarbonised hydrogen manufactured by reforming natural gas, carbon capture, and storage.
The main processes used are the Shell Blue Hydrogen Process, steam methane reforming, and autothermal reforming.
By capturing and storing the carbon dioxide generated as a by-product, the carbon intensity of hydrogen produced in these ways can be mitigated substantially; the Shell Blue Hydrogen Process can capture up to 99% of the carbon dioxide, for example.
The partnership agreement expired in June 2024 and has yet to be renewed.
Shell’s director of communications in Norway, Jan Soppeland, told Energi of Klima that it was not cost-effective to proceed with the project.
“The market for blue hydrogen is not there, nor are there any signs that the market is on its way to maturing. Green hydrogen is clearly favoured,” Soppeland said.
According to Soppeland, there was no long-term policy and regulatory framework compared to green hydrogen, and potential customers had little reason to commit.
In January 2023, Equinor and RWE AG partnered to supply blue and green hydrogen from Norway to Germany.
The plan was to source blue and green hydrogen from Equinor in Norway and transport it to Germany via a hydrogen pipeline. RWE will burn the fuel in hydrogen-ready, gas-fired power plants to produce electricity.
The parties wanted to build 3 GW of hydrogen-ready gas-fired power plants by 2030.
The intention was that, by 2038, up to 10 gigawatts of blue hydrogen would be produced in Norway and transported via a pipeline to Germany.
Additionally, the partners planned to jointly develop offshore wind farms along the pipeline to produce renewable hydrogen for power and other industrial clients.
On September 26, 2024, Equinor ASA decided not to participate in an early-stage project due to high costs and lack of demand.
Equinor spokesperson Magnus Frantzen Eidsvold said in a statement that the hydrogen pipeline hasn’t proved viable.
FlagshipONE is Europe’s largest FID’ed green e-methanol facility, which was expected to start operations in 2025.
The project in Örnsköldsvik in Northern Sweden aimed to produce around 50,000 tons of e-methanol each year.
Ørsted acquired a 45% stake in the project from the developer, Liquid Wind, in January 2022.
The other 55% was acquired in December 2022, when the Ørsted Board of Directors took the final investment decision on the FlagshipONE e-methanol project.
In May 2023, Ørsted conducted a groundbreaking ceremony and announced that over 110 e-methanol vessels had been ordered or are in operation, up from 80 vessels at the end of 2022.
A consortium of the private sector and governments called Breakthrough Energy Catalyst said it would acquire a 15% equity interest in FlagshipOne and provide a grant for the project.
Ørsted said with the funding supporting the project, it will seek to sign long-term offtake agreements to create a new model for the shipping industry to purchase fuel.
Ørsted expected a grant from Horizon Europe and a quasi-equity investment from EIB through InvestEU.
EU funding for the partnership was expected from Horizon Europe and the EU Innovation Fund within the framework of InvestEU according to the established governance procedures.
In August 2024, Ørsted announced in its 2024 first-year interim report that it was abandoning the project.
The Ørsted Group CEO, Mads Nipper, said the liquid e-fuel market in Europe is developing slower than expected.
“We have taken the strategic decision to de-prioritise our efforts within the market and cease the development of FlagshipONE.
“We will continue our focus and development efforts within renewable hydrogen, essential for decarbonising critical European industries closer to our core business.
“We maintain a strong focus on de-risking project execution and prioritising growth options with the highest potential for value creation,” Nipper said.
The company incurred impairment losses of DKK 3.2 billion. DKK 1.5 billion was mainly driven by the decision to cease execution of FlagshipONE.
Nipper added that they would still want to invest in hydrogen projects elsewhere.
pv Magazine reported in November 2023 that
Fortescue had abandoned plans to build a 5.4 GW solar, wind and battery energy storage project to provide renewable energy to power its iron ore mining operations in Western Australia.
The magazine said Fortescue had planned to build a renewable energy hub comprising a 3.33 GW solar farm and 2.04 GW wind farm backed by 9.1 GWh of battery energy storage on a 10,000-hectare site approximately 120 kilometres south of the coastal town of Onslow.
“Fortescue lodged environmental documents with the EPA early last year, but the authority has confirmed that the company terminated the approval process midway,” the magazine said.
In July 2024, Fortescue Ltd announced that it was scaling down on plans to produce 15 million tons of green hydrogen by 2030.
