Spanish energy company Cepsa and ACE Terminal, based out of the Port of Rotterdam, have signed a memorandum of understanding (MoU) for the supply of renewable ammonia to ACE.
The MoU surrounds Cepsa supplying renewable ammonia to the ACE Terminal in Rotterdam for end-use applications in industry after decomposing of the ammonia back into hydrogen, or for direct use as ammonia.
Cepsa said that the company is developing 2GW of renewable hydrogen production capacity at its two Energy Parks in Andalusia in southern Spain, which represent an investment of €3billion.
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First renewable hydrogen exports are forecast to commence in 2027, Cepsa said, which ties in with the ACE Terminal project timeline, due to be operational in 2026.
Cepsa is set to export the ammonia produced at its San Roque Energy Park near the Bay of Algeciras.
The ACE Terminal (a development between Gasunie, HES International, and VOPAK) will be located in Maasvlakte in the Port of Rotterdam, and is the first MoU for the project.
AMMONIA AS AN IMPORT VECTOR
Ammonia has been proposed by multiple hydrogen market participants as a potential carrier of renewable hydrogen from other global regions into northwest Europe in particular.
Belgium, the Netherlands, and Germany have all said in their hydrogen strategies that imported renewable hydrogen would be in addition to domestic production, with Germany forecasting to import as much as 96TWh by 2030.
Data from ICIS showed that the ammonia-to-hydrogen northwest Europe assessment stood at €6.83/kg on 16 February, its lowest level since late October 2021 but still about €3/kg higher than unabated and low-carbon hydrogen production methods based on front month spot gas and power assessments.
However, ammonia-to-hydrogen has shown to be competitive with domestic production. During summer 2022 amid record European gas prices, production costs for hydrogen derived from spot ammonia volumes were calculated to be lower than domestic production costs. This showed that during periods of commodity tightness in European energy markets, importing ammonia and decomposing to hydrogen was viable on both a project breakeven and a variable cost basis.
Source: ICIS by Gary Hornby, https://www.icis.com/explore/resources/news/2023/02/20/10856714/cepsa-ace-terminal-sign-mou-for-renewable-hydrogen-and-ammonia-imports/
