Green Ammonia Plants in Chile, Australia, New Zealand

L to R: Pablo Wallach (Enaex), Nils Grobet (ENGIE), Juan Andrés Errázuriz (Enaex), and Mario Savastano (ENGIE). Enaex press release, ENAEX & ENGIE: On the path to a smooth zero carbon transition in the Chilean Mining Sector, July 11, 2019.

Green ammonia plants are being announced quicker than I can report. Here is a summary of four new projects that propose to use electrolyzers, fed by renewable power, to produce hydrogen for ammonia production. These are big companies, operating in regions with excellent renewable resources, making significant investments in their future.

In Chile, it is Enaex, a major ammonium nitrate manufacturer, supplying explosives to the mining industry. In Australia, it is Incitec Pivot, “the second largest supplier of explosives products and services in the world,” and Wesfarmers, “the largest Australian company by revenue,” according to Wikipedia. In New Zealand, it is Ballance-Agri Nutrients, a big farmers’ co-operative and the country’s sole fertilizer producer. Each aims to make its business “future-proof.”

Electrolyzers at industrial (gigawatt) scale

Before summarizing these new projects, I want to highlight progress in the electrolyzer market that drives these green ammonia announcements.

I wrote about the pilot project by Nel Hydrogen and Yara, in August 2019. A primary aim of that project is to achieve efficiencies of scale by building a 5 MW prototype electrolyzer (more than doubling the size of its current 2.2 MW unit) and introducing automation to support volume manufacturing. This increase in unit size and increase in production capacity combine to drive the economics of renewable hydrogen down the cost curve.

Last week, at the Hydrogen Energy Ministerial in Japan, Nel CEO Jon-André Løkke announced plans for Gigawatt-scale production and invited the refining, ammonia, and other industrial hydrogen consumers to “Please, challenge us already now on price and capacity for your project!”

But Nel is not alone in stepping up to the challenge of scale.

When I wrote last month about the UK’s £390 million investment in hydrogen technologies, I did not mention the £500,000 awarded to ITM Power for its “GigaStack” project, with partners Ørsted and Element Energy.

The project aims to dramatically reduce the cost of electrolytic hydrogen through:

  • Development of a new 5MW stack module design to reduce material costs.
  • A new semi-automated manufacturing facility with an electrolyser capacity of up to c. 1GW/year to increase throughput and decrease labour costs.
  • Deployment of very large scale and hence low cost 100MW+ electrolyser systems using multiple 5MW units.
  • Innovations in the siting and operation of these large electrolysers to exploit synergies with large GW scale renewable energy deployments.
ITM Power press release, GIGASTACK FEASIBILITY STUDY WITH ØRSTED, August 29, 2019

From now on, green ammonia projects — feasibility studies and pilot plants — must be seen in this context: laying the foundation for gigawatt-scale deployment of electrolyzers and the foreseeable phase-out of fossil feedstocks at ammonia plants.

How Electrolyzers Improve the Economics of Green Ammonia

Electrolyzer manufacturers are scaling up their manufacturing to deliver big enough units, fast enough. These two drivers, economies of scale and unit cost reductions through volume manufacturing, combine to deliver a capex reduction ($/MW installed) that materially improves the economics of green ammonia.

Opex reduction is an additional factor, and this will continue to improve through energy input cost reductions ($/MWh), for which wind and solar technologies are now famous.

Energy efficiency (MWh/ton) for these mature technologies can still improve with scale, but new technologies may offer even greater opportunities for improvement here. Haldor Topsoe’s solid oxide electrolyzer could produce green ammonia with as little as 7.2 MWh per ton; other technologies are coming around the corner like, as we report this week, a new electrolyzer from the Technion Israel Institute of Technology that boasts “energetic efficiency of 98.7%.”

The capacity utilization factor (% plant uptime) for the electrolyzer and the Haber-Bosch unit is also improving. By stacking resources (using both wind and solar together or, as ITM puts it, “innovations in the siting”), and by appropriately sizing ‘buffer’ storage for when these variable resources are unavailable, the capacity factor and thus profitability of the green ammonia plant can be optimized.

We wrote about this optimization strategy most recently in May 2019, reporting on a study written by IEA analysts that modeled NH3 Economics from Variable Energy Resources. That study was focused on green ammonia production in Argentina and Chile, and it may come as no surprise that, in July 2019, a Chilean project moved forward to become what could be the first industrial-scale ammonia plant to be built in two generations without any fossil inputs.

Green Ammonia in Chile

Enaex, the explosives manufacturer, announced a “strategic partnership” with ENGIE, the global energy and services group, for a “a feasibility study of a pilot plant that is expected to be finalized at the end of the year [2019].”

ENAEX is the Latin-American most important rock fragmentation service supplier as well as one of the largest producers of ammonium nitrate (AN), an essential chemical used in the blasting process in the mining industry …

The concept will be to produce renewable hydrogen based on zero-carbon solar electricity, that will feed a new ammonia production plant. This green ammonia will feed the existing ammonium nitrate (AN) production plant, Prillex, owned and operated by ENAEX and located in Mejillones, Northern Chile …

“The mining sector is facing tough challenges that must be addressed in a timely manner by integrating new technologies. More than ever, mining companies and their suppliers need to join forces to ensure the sustainability of the industry. We are convinced that we have an unique opportunity considering that our country does not have gas reserves, but we do have the best solar resource in the world and an existing demand market for ammonia,” said Juan Andrés Errázuriz, of ENAEX

Enaex press release, ENAEX & ENGIE: On the path to a smooth zero carbon transition in the Chilean Mining Sector, July 11, 2019

This will not be the first green ammonia project for either of these companies.

In February 2019, ENGIE announced a feasibility study to incorporate renewable hydrogen at Yara’s ammonia plant in Pilbara. (ENGIE is also working on R&D for ammonia cracking in the UK, at the opposite end of the green ammonia value chain).

In June 2018, Enaex acquired a majority stake in the Cachimayo ammonium nitrate production facility. This plant, built in 1962 in Cusco, Peru, is notable for being the last remaining industrial ammonia plant still operating on electrolytic hydrogen. Hydroelectricity powers an Uhde (now thyssenkrupp) electrolyzer, feeding renewable hydrogen to the Haber-Bosch unit. While these renewable ammonia plants were once commonplace, every similar plant around the world has closed (most recently, the KIMA plant in Egypt, which was replaced with the natural gas-fed KIMA 2 earlier in 2019).

Green Ammonia in Australia

This week, in Australia, two more green ammonia projects were announced. Like Enaex in Chile, both of these projects belong to a major ammonium nitrate manufacturer studying the feasibility of adding green ammonia to its existing process.

Last month, we wrote about the Australian Renewable Energy Agency (ARENA) and its new investment plan, saying that it is “ARENA’s hope that Australia’s existing ammonia industry will help overcome the ‘chicken-and-egg challenge of matching infrastructure development with demand.'” These two projects are the direct outcome of this hope: AU$3 million in federal grants to deliver feasibility studies at two ammonia plants in Moranbah and Moura, both in Queensland.

The world’s largest green ammonia plant powered by renewable hydrogen could be built in Queensland, thanks to support from the Australian Renewable Energy Agency (ARENA).

On behalf of the Australian Government, ARENA today announced $980,000 for Dyno Nobel Moranbah Pty Ltd (Dyno Nobel), a business of Incitec Pivot Limited, to conduct and assess the feasibility of building a renewable ammonia facility at its existing Moranbah ammonia plant …

If feasible, the proposed green ammonia facility would include up to a 160 MW electrolyser and 210 MW solar farm co-located at Moranbah.

ARENA press release, Renewable hydrogen could power Moranbah ammonia facility, September 30, 2019

Incitec Pivot, the owner of Dyno Nobel, is also the 50/50 owner, with Wesfarmers (one of Australia’s largest companies), of the joint venture Queensland Nitrates.

On behalf of the Australian Government, the Australian Renewable Energy Agency (ARENA) has today provided $1.9 million in funding to Queensland Nitrates Pty Ltd (QNP) to assess the feasibility of the construction and operation of a renewable ammonia plant at its existing facility near Moura in Central Queensland.

The consortium, led by QNP and partners Neoen and Worley, proposes to produce 20,000 tonnes per year of ammonia from 3,600 tonnes of renewable hydrogen. The new plant would provide up to 20 per cent of Queensland Nitrates’ current ammonia requirements, which is presently manufactured from natural gas. The renewable hydrogen would also fill an ammonia production gap that QNP currently procures from third party suppliers.

The aim of the study is to determine the technical and economic feasibility of producing renewable ammonia at a commercial scale, helping to further progress the commercialisation of renewable hydrogen production for both domestic and international use.

ARENA press release, Queensland green ammonia plant could use renewable hydrogen, September 30, 2019

As Incitec Pivot explained in its announcement this week:

If implemented, the project is expected to accelerate the development of industrial-scale electrolysis equipment, helping to drive down the cost of renewable hydrogen production.

The feasibility study will be completed in early 2020.

Incitec Pivot press release, Dyno Nobel conducts feasibility studies to assess renewable hydrogen at Moranbah facility, September 30, 2019

Green Ammonia in New Zealand

In June 2019, Ballance Agri-Nutrients, New Zealand’s fertilizer producer, announced a Joint Development Agreement with Hiringa Energy on a far larger scale that those feasibility studies.

The “$50 million showcase project” (roughly US$30 million) will be at the Kapuni plant, in Taranaki, where Ballance currently makes ammonia from natural gas feedstock and upgrades it to urea fertilizer. This project is intended to be “a catalyst for the development of a sustainable green hydrogen market in New Zealand to fuel heavy transport.”

Ballance Agri-Nutrients CEO, Mark Wynne, says “this flagship green hydrogen project is a collaboration of national significance … Working with Hiringa we have a truly unique opportunity to create a hydrogen ecosystem at Kapuni – powered by renewable energy – that we can grow and develop as a template for New Zealand’s leadership in what is an exciting space globally.”

Andrew Clennett, CEO of Hiringa Energy, [said] “This will create a foundation for a hydrogen market in New Zealand so that we can start more aggressively taking carbon and other pollutants out of heavy transport, and develop other high-value uses for green hydrogen in our economy as part of our low-emissions future.”

Ballance Agri-Nutrients press release, Kapuni ‘green’ hydrogen project seen as catalyst for NZ market, June 20, 2019

This hydrogen will be produced using electrolyzers powered by four wind turbines with a total capacity of 16 MW. (By my estimate, this would allow the Kapuni ammonia plant to decarbonize around 2% of its output, which is an excellent start.) The project has a “completion date” of 2021.

The announcement represents this project as a way to “future-proof a large employer,” using Ballance as an anchor customer to develop the technology and infrastructure for deeper cross-sector decarbonization.

While the hydrogen fuel-cell market develops, the supply [of renewable hydrogen] can be fully utilised in the Kapuni Ammonia-Urea plant to manufacture ‘green’ nitrogen fertilisers that will have an extremely low emissions profile. Mr Wynne says, “We’ll be able to offer a new choice of nitrogen fertiliser for New Zealand farmers who have sustainability front-of-mind”.

Ballance Agri-Nutrients press release, Kapuni ‘green’ hydrogen project seen as catalyst for NZ market, June 20, 2019

The time has come to deploy

In the words of Michèle Azalbert, head of the ENGIE hydrogen division:

As far as renewable hydrogen is concerned, the time has come to deploy large-scale solutions to bring the cost of infrastructure down and make it accessible to everyone. It is no longer a question of whether they are technically feasible, but instead of whether they are economically viable.

Michèle Azalbert, CEO ENGIE Hydrogen Division, Renewable hydrogen is an opportunity to decarbonise industrial processes on a large scale, published in Europe parlementaire N° 38, Spring 2019

Green ammonia is not economically viable everywhere, yet. But as these projects demonstrate, it is fast becoming viable in regions with the best renewable resources. As industrial-scale electrolyzer deployments increase, causing the costs of electrolyzers to decrease, green ammonia is only becoming more competitive.

The transition from fossil ammonia to renewable ammonia is underway.

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