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INTERVIEW: Atome targets 350 MW of green H2 in Iceland, Paraguay

Highlights

250 MW of hydrogen from hydro dam in Paraguay

Green ammonia projects profitable without subsidy

Targets offtake agreements for 2022, production 2023

President Energy spin-off Atome is targeting 350 MW of renewable hydrogen production in Iceland and Paraguay, using surplus existing hydro and geothermal energy in a model it says will place it among the world's cheapest producers.

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Atome will utilize baseload renewable generation capacity to power electrolyzers in both locations, initially using alkaline technology, though the company has its eye on solid oxide electrolyzer cells (SOECs) for future phases.

"We have baseload renewable power available in both locations, which is a distinct advantage for our projects," Director Mary Rose de Valladares told S&P Global Platts in an interview Nov. 19.

In Paraguay, Atome plans to use hydropower from the Itaipu hydroelectric dam on the Parana River it shares with Brazil to generate an initial 50 MW of hydrogen by 2024, rising to 250 MW, Atome CEO Olivier Mussat told Platts, with more power available.

Landlocked Paraguay uses less than 30% of its allocation of one of the largest hydroelectric dams in the world, yet is a major importer of energy and fertilizer, Mussat said.

Atome has a memorandum of understanding with the Itaipu Technology Park for its planned green hydrogen and ammonia production plant around 1 km from the dam, next to water and with transport access, the company said.

And in Iceland, Atome's subsidiary Green Fuel is targeting geothermal-powered hydrogen production of 30 MW in late 2023 or early 2024, ramping up to 100 MW. Green Fuel hopes to take a final investment decision by the end of 2022.

'Extremely aggressive'

Atome is lining up offtake agreements and financing for 2022, and aims to start construction by the end of the year.

"That is obviously extremely aggressive, but not completely impossible," said Mussat, who was previously Chief Investment Officer for Global Energy at the World Bank's International Finance Corporation.

The company plans an initial public offering in London in December.

"We are very project focused, where the idea of the listing is to bring these projects from the MOU stage to the FID stage and then to production seamlessly with an infrastructure in place which can accommodate growth," Mussat said.

Competitive without subsidy

The green ammonia Atome plans to produce from hydrogen will be profitable without a subsidy in the current market environment, Mussat said.

"At present we do not even need a green premium to be competitive," Mussat said. "The market is over $800/mt at the moment, and we would be very happy with $500/mt."

Platts assessed ammonia prices in the demand centers of Europe and the US at $950/mt on a CFR basis on Nov. 22, while exporting regions the Black Sea and the Middle East were assessed at $850/mt and $790/mt, respectively, FOB.

Mussat said Atome's planned production costs were already among the lowest globally.

"Today, the headline hydrogen production cost is about $5/kg. We are already under that," he said. "We have very competitively-priced electricity on already amortized power assets, which are producing on known quantities."

The company would be able to capture high operating rates and is looking at power purchase agreements "amongst the most competitive in the world for green energy, on a baseload basis".

Demand potential

Mussat saw ready demand for ammonia and hydrogen.

Green ammonia could displace some of Paraguay's fertilizer imports of around $400 million per year, and 15% of the country's barge fleet switching to ammonia fuel would provide a market for the project.

Paraguay's Green Hydrogen Roadmap, published in June 2021, sees potential need for 600 MW of hydrogen production capacity by 2030, producing 90,000 mt/year to replace fossil fuels in the transport sector.

In Iceland, meanwhile, Atome is eying the agricultural sector, the fishing fleet and the potential for exports.

It has signed MOUs with ports in Germany and the Netherlands to supply hydrogen and ammonia, and has received interest from international trading companies too.

Phased development

Atome plans to develop its projects in phases, in part to capture advances in technology and efficiency, including SOEC cells that could increase efficiency by 30%, Mussat said.

Those and other measures could put production costs in the $1-$2/kg range, said Mussat.

De Valladares said Atome expected considerable cost reduction and efficiency improvements across all electrolyzer technologies within the next five years, with developments in membranes, electrodes and catalysts.

"The urgency is such that scale is important, but at this stage, you do not want to build these white elephants early when you know that every single year, similarly to what we have seen in the solar sector, costs are going to go down by up to 20%," Mussat said.

"You do not want to get ahead of the market with the most expensive kit around that will become completely uneconomical compared to the newer projects. In my World Bank experience, we really saw that on the solar side, where prices came down much more rapidly than expected," he said.