INTERVIEW: InterContinental sees renewable ammonia cost under $650/mt by 2029

InterContinental Energy expects the cost of renewable ammonia to fall below $650/mt at its 50-GW Western Green Energy Hub (WGEH) project in Western Australia during the targeted first phase starting in 2029, CEO Alexander Tancock and Head of Australia Isaac Hinton told S&P Global Commodity Insights on Dec. 12.

WGEH is the largest renewable hydrogen/ammonia project in Australia. It is being developed in collaboration with CWP Global and Mirning Green Energy in the southeast of the Goldfields region and is designed to produce 3.5 million mt/year of renewable hydrogen for domestic and export markets.

"Through the Australian government's assistance, via Hydrogen Headstart 2.0, the hydrogen production tax credit and other concessional finance offerings, the expected cost of hydrogen from our leading projects like WGEH and AREH is going to drop," Tancock and Hinton said in response to a questionnaire over email.

"With these tailwinds, we see green ammonia from WGEH passing below $650/mt in phase 1, dropping further to be within recent ammonia market price ranges in future phases."

WGEH's phase 1 is expected to reach a final investment decision in 2029, with a commercial operation date anticipated around 2034.

InterContinental's other projects include the 26-GW Australian Renewable Energy Hub (AREH), also in Western Australia, where the firm is aiming to produce 1.6 million mt/year renewable hydrogen in partnership with BP.

At Green Energy Oman, with partners such as Shell and OQ, InterContinental plans to produce 1.8 million mt/year of renewable hydrogen.

Tancock and Hinton said Australia passing the Future Made in Australia Act 2024 in December, designed to unlock investment focusing on clean energy, is "transformational for large-scale renewable hydrogen projects in Australia."

The country's A$2 billion ($1.28 billion) Hydrogen Headstart plan, which aims to support renewable hydrogen projects, is currently in the process of finalizing winners. A new tranche of A$2 billion for the same plan, announced in the 2024-25 budget, is expected to open for bids.

Meanwhile, Australia's hydrogen production tax credit worth $2/kg, also announced in the 2024-25 budget, is being legislated.

"We will look to apply for any support mechanisms," Hinton said. "We think the Future Made in Australia Act provides a significant opportunity for WGEH."

Project expansion

WGEH is preparing for expansion in the distant future. Hinton said that InterContinental has applied for environmental approval to increase the project size to 70 GW.

"The environmental approval process will require a lot of public consultation, so we expect this process to take two years," Hinton said.

"The primary focus is renewable hydrogen. However, there is such vast energy potential, in the future, renewable power or other vectors are possible if the market has a demand for it," he said.

The company has not decided how it will deploy the additional electrolyzer size, as "it is so far into the future, extending beyond 2040," said a spokesperson. Even so, the size allows flexibility to adapt to future energy market demands.

Hinton said the next step in the assessment process is to prepare an environmental scoping document. Following that, the public environmental review will be conducted, including a 10-week public consultation period.

InterContinental plans to build WGEH in phases and has partnered with Korea Electric Power Corporation to conduct feasibility studies for stage 1 of the renewable hydrogen/ammonia project.

2025 progress

InterContinental said the industry expects to make progress with realistic timelines in 2025 after shelving weaker projects in 2024.

"Given clean molecules are needed in large volumes in the coming decades, we should have confidence that larger offtakes will get signed in the coming years," the executives said. "Government policy will become increasingly important, and we are seeing some good momentum in regions where our projects are located."

China, the Middle East, Asia and Australia appear to have more certain policy support and remain open to globally competitive technology solutions, making the company's projects in Australia and Oman increasingly competitive, said the executives.

Commodity Insights' Hydrogen Production Assets database showed 131 projects are in the advanced planning or construction stages, representing 3.57 million mt/year of renewable or low-carbon hydrogen in Asia-Pacific, while 15 have been canceled or are on hold, representing 1.39 million mt/year.

Platts, part of Commodity Insights, assessed Western Australian hydrogen produced via alkaline electrolysis (including capital expenditures) at $4.87/kg on Dec. 12, nearly two times higher than a month ago.

Platts assessed Japanese hydrogen produced via alkaline electrolysis (including capex) at $6.03/kg on Dec. 13, rising 26% month over month.