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INTERVIEW: TES focused on accelerating bankable hydrogen-ready terminals in Europe

Highlights

'The best opportunity I've seen'

Shortage of bankable projects

Full gas transition 'before 2043'

Entrepreneurial startups, working with Europe's incumbent utilities, hold the key to fast-tracking the delivery of a hydrogen economy, described as "the best business opportunity I've ever seen" by Marco Alverà of Tree Energy Solutions.

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TES is developing a green energy hub in the German port of Wilhelmshaven, comprising a green hydrogen import terminal (of up to 20 million mt), storage facilities and an oxy-fuel combustion power plant. LNG imports will transition to synthetic methane made from renewable hydrogen over time.

The company has plans for similar hubs in other European ports and will develop renewable hydrogen production in solar-rich countries.

"I've never seen anything like this as an opportunity. We've got to get our sleeves rolled up and get the projects going," Alverà told S&P Global Commodity Insights.

TES has just launched Open Season to assess customer's interest in gas import capacity at Wilhelmshaven. Its commercial case attracted over 25 interested parties, with a majority interested in fully transitioning to green gas imports before 2043.

While a new startup, TES founders Marcel van Poecke and Paul van Poecke will be familiar to the investment community, as will Alverà.

Marcel van Poecke founded AtlasInvest and manages Carlyle's international energy fund while Paul set up the Dragon LNG terminal in Milford Haven in the UK.

Alverà began his career at Goldman Sachs before moving to Italy's Enel, then Eni for over 10 years before a six-year stint as CEO of Snam, one of Europe's largest energy infrastructure companies.

All this experience had led to tightly-defined, bankable plans, Alverà said.

"I stepped down from Snam and joined TES in order to fast track the projects and solutions to get to net zero on time to limit warming to 1.5 degrees," he said.

"Old companies" would get there eventually, but not quickly enough to align with Paris Agreement goals, Alverà said.

"The same way Tesla broke the mold and delivered EVs to the world, so we need companies like TES to break the mold and deliver green hydrogen projects as soon as possible," he said.

Synthetic methane

TES' Wilhelmshaven terminal plan comprises six ship berths and 2 million cu m of onshore storage capacity using 10 on-site tanks (six during the first stage).

The terminal will offer access to the gas network, including salt caverns at Etzel and proximity to Groningen's gas grid infrastructure.

TES will then build carbon export facilities at the site, which will be connected to OGE's CO2 transportation network.

The carbon would be exported abroad and combined with solar-based renewable hydrogen to make synthetic methane, for shipping back to Europe.

WILHEMSHAVEN: TES FACTBOX

Infrastructure:
▪ TES has land purchase option from Exxon
▪ Triple pipeline access: CH4, CO2, hydrogen grids
▪ Phase 1 2025 FID due Q4 2023
▪ 15.5 meter deep water port with six Suez max berths
Potential for:
▪ 250 TWh/24 Bcm green gas arrivals/year
▪ 5.5 million mt H2/year
▪ 43 million mt CO2 reduction/year
Source: TES

Closed loop

CO2 policy needed to be crystal clear for the project to thrive, Alverà said.

"We will be taking CO2 out of Germany from Wilhelmshaven, bringing it into Texas, merging it with hydrogen, and bringing it back to Germany [as synthetic methane] in a closed loop," he said.

There would be no CO2 leakage "because we are going to account for the CO2 we absorb and bring back. Think of us as a hydrogen carrier, using CO2 to squeeze the hydrogen [in the form of synthetic methane]," he said.

This synthetic methane would then be blended into fossil methane, "allowing our customers to say I have 10%, 30%, 100% decarbonized energy solutions over time. We can deliver that using their infrastructure, their storage," Alverà said.

"We offer sunny places somewhere to export their sun, turning it into synthetic methane through hydrogen. The project is so big it can really shape the way Europe thinks about its energy security and climate change," he said.

Speedy execution

While there was no shortage of political ambition or demand for green products, Alverà said there was a shortage of bankable hydrogen projects with which to close Europe's ambition-to-action gap.

A delegated act defining standards for renewable hydrogen would help.

"We need to define what green hydrogen is right now. We can do green or blue hydrogen converted to methane, we will follow the rules and benefit from the incentives that will come," he said.

Hydrogen's primary energy market share is projected to be between 15%, and 35% by 2050 assuming a fully decarbonized energy system by then, Alverà noted.

"Oil is just below 30% today, so at a minimum, hydrogen has to get to half the size of the global oil market and potentially bigger, and we have to build that in the next 25 years. It is trillions of dollars of CAPEX. We don't see private finance fully recognizing this opportunity yet," he said.

Current fossil fuel costs twinned with geopolitical risk made hydrogen "a no brainer," with a route to $1/kg green H2 seen as viable in the best locations.

"70% of the world's cheapest gas reserves are concentrated in three countries -- Russia, Iran, Qatar. Hydrogen is much more evenly spread. Africa, Australia, Suez, North Africa, Mexico, USA -- the sun belt. My motto is PPWS: Put the panels where it's sunny," he said.

Platts' Hydrogen Price Wall shows the world's cheapest electrolysis-based hydrogen as assessed by S&P Global Commodity Insights derives from the US and the Middle East, with Qatar (alkaline electrolysis) the cheapest at $2.59/kg for May 2022.