Hydrogen Ukraine analyses the Pilot Green Ammonia Auction

The results of the first tender within H2Global have been announced. Hydrogen Ukraine (H2U) has analysed the results in detail and considered the operational mechanism. They aim to explain the opportunities and challenges facing the renewable hydrogen market.

Participants from 65 countries registered on the tender platform. Interested companies, including H2U, made 1393 downloads of the tender documentation. After the qualification stage, 22 projects were selected. However, after several rounds of negotiations in January 2024, only 5 participants were invited to submit indicative proposals.

Details on the Pilot Green Ammonia Auction

In tender proposals, potential suppliers offered an average combination of 145 MW of electrolysis and 295 MW of renewable energy sources. In H2U’s opinion, this combination is the most efficient in achieving the highest number of operating hours for electrolysis with the lowest production cost of hydrogen. This allows for optimising the use of renewable energy and reducing production costs, which is critical for the project’s commercial success.

All presented projects used alkaline electrolysers, with only two participants proposing high-pressure alkaline electrolysers. Interestingly, no one opted for PEM (proton exchange membrane) technology, SOEL (solid oxide electrolysis), or high-temperature electrolysis. This is surprising since these technologies also have their advantages. H2U speculates that the absence of these technologies might be related to implementation costs, specific project requirements, or other technical constraints. However, its potential should be considered in future tenders and project solutions.

Logistics and Selected Project

Among the five projects selected to submit commercial proposals, one project planned delivery to the Port of Antwerp, while the other four planned delivery to the Port of Rotterdam. The total volume ranged from 210 to 475 thousand tons. The receiving port must be able to receive, store, and dispatch ammonia to off-takers. Ports play an important role in ensuring stable and uninterrupted product supply.

The winner was announced in July – the “Egypt Green” project by Fertiglobe. The company is a strategic partnership between ADNOC and OCI Global, registered in Abu Dhabi and listed on the Abu Dhabi Stock Exchange (ADX).

Project Partners and Details

• Fertiglobe PLC: The largest nitrogen fertiliser producer in the MENA region and a global leader in urea and ammonia exports by sea.
• Scatec ASA: a Norwegian company specialising in renewable energy development.
• Orascom Construction: a well-known contractor with extensive construction experience.
• Sovereign Fund of Egypt: the Sovereign Fund of Egypt supports economic projects.
• Egyptian Electricity Transmission Company: an Egyptian company engaged in electricity transmission.

The “Egypt Green” project does not involve greenfield construction, as most of the necessary capacities and infrastructure already exist. Planned technical modernisation includes replacing steam methane reforming with electrolysis, significantly reducing CO2 emissions. A 70 MW solar generation and a 203 MW wind farm are planned to power the 100 MW electrolysis.

The air separation unit is another component of the plant. After preliminary cleaning and compression, the air passes through a series of heat exchangers and distillation columns for further separation of components and obtaining nitrogen. In the synthesis gas production stage, nitrogen and hydrogen are mixed to produce gas used in the Haber-Bosch process for ammonia production. This process uses an iron catalyst and operates at high pressures (150-300 atmospheres) and temperatures (400-500 °C). The exothermic reaction in the ammonia synthesis reactor results in the formation of ammonia.

Green ammonia from the “Egypt Green” project will be transported to the Ein El Sukhna Port storage via an existing 7 km ammonia pipeline. From there it will be shipped to the Port of Rotterdam. The first production year in 2027 is planned to release 20 thousand tons of ammonia. It follows a guaranteed minimum consumption of 40 thousand tons per year. Green ammonia will be sold by Hintco GmbH on the European market in standard lots of 500 tons through annual auctions. These auctions will provide regular and uncorrelated data on market prices, contributing to the development of a functioning renewable ammonia market in Europe.

According to the tender conditions, the price of ammonia is €1282/t. This amount was determined based on the cost of producing green hydrogen and its derivatives conducted by leading associations and industry companies. According to a preliminary market analysis, the average cost of ammonia in 2022 (at the time of the auction launch) was €952/t. The winning project from Fertiglobe offered €811/t (ex-factory), which is the net price excluding additional costs. The total product cost on CIF (Cost Insurance and Freight) terms to the Port of Rotterdam is €1000/t (transportation – €90/t, logistics – €70/t, duties – €30/t).

The “Egypt Green” project ensures a stable renewable ammonia supply to the European market and reduces global greenhouse gas emissions. The project achieves significant greenhouse gas emissions reductions equivalent to the annual emissions of approximately 62,000 cars. Fertiglobe’s emission reduction proposals were carefully verified and confirmed by the international certification organisation TÜV Süd. Additionally, the proposals were checked for compliance with the regulatory requirements established in RED II and Delegated Acts.

The “Egypt Green” project demonstrates decisive steps towards clean energy, contributing to the global energy transition. The project initiates the supply of green ammonia to the European market, motivating our company to work with even greater enthusiasm. H2U wishes Fertiglobe success in implementing the project and congratulates them on this important achievement.