MNB's green ammonia project already has a massive advantage over other green ammonia projects with a supply agreement that has an average cost of green electricity at 1.1c/kwh over 25 years. Even very large wind and solar projects have a cost of around 4-5 times that price. However there is another advantage that a hydro electricity supplied green ammonia project like MNB's has over wind and solar. It has to do with declining efficiency of electrolysers that are not supplied with close to their full rated capacity around the clock. MNB's 200MW initial project will be supplied by 100% green hydro power with a stable, reliable base load supply around the clock.
"Why the minimum working load of electrolysis systems is crucial to the levelised cost of renewable H2"
To produce green hydrogen, electrolysers need to be supplied with renewable energy. And most green hydrogen projects are set to be powered by wind and/or solar power — energy sources that are highly variable, being dependent on the weather and the time of day. Electrolysers must therefore be highly flexible — able to produce hydrogen when the electricity input is high or low, and be able to ramp up or down accordingly. And of course, the more hours an electrolyser is in operation, the lower the levelised cost of green H2 (ie, over the course of a project’s lifetime). “Historically, electrolyzers were designed to work with stable electricity from the grid,” she explains. “When switching to green hydrogen production, the electricity must be sourced from renewables, either virtually in a grid-connected system, or physically in an off-grid system. Even for grid-connected solutions, regulations such as those in the EU and US may mandate time-matching between power generation and power consumption. “Electrolysis systems must thus have considerable flexibility — meaning they can start quickly, ramp up/down quickly, and function within a wide working range — to make the most use of fluctuating renewable power to produce hydrogen. That’s a feature for which test protocols have yet to emerge.”An electrolyser’s working range is of fundamental importance to green hydrogen developers. Essentially, the working range means the amount of electricity input required for the system to safely produce H2, measured as a percentage of an electrolyser’s nameplate capacity.Assuming electrolysis efficiency does not vary as input power changes, if a 10MW electrolyser can only produce hydrogen safely when the electricity input is equal or greater than 1MW it would have a minimum working load of 10%, and therefore an operational range of 10-100%. In short, it can only safely operate when being supplied with 10-100% of its nameplate capacity.“Although most manufacturers promise minimum working loads in the 10-30% range, commissioned green hydrogen projects suggest the actual products could underperform,” Wang writes. As Hydrogen Insight has previously reported, all the electrolysers supplied to the world’s largest operational green H2 project — Sinopec’s 260MW Kuqa facility in northwest China — turned out to have more limited working ranges than expected by the manufacturers. Cockerill Jingli, Longi and Peric had all promised minimum working loads of 30%, but the actual figures proved to be higher than 50%.“For off-grid electrolyzers with a narrower working range, renewable electricity would be wasted,” Wang explains in her analyst note. “A developer can introduce batteries to avoid or reduce power wasting, but in either scenario, green hydrogen production becomes more expensive.” When using BNEF’s in-house Hydrogen Electrolyzer Optimization Model, an electrolysis system in California that can only operate with a 60-100% working range would produce a levelized cost of hydrogen that is 15% more expensive than a same-sized system with a 10-100% working range, with their power solutions separately optimised.
If the 60-100% system was designed to have the same power solution as the 10-100% case, assuming the design is based on overoptimistic assumptions, the premium would be even more.
While MNB will have already have ample local demand for all of its green ammonia from its initial 200MW project, these researchers are estimating a massive amount of capital will be invested to green ammonia infrastructure to supply global shipping.
Infrastructure investment of $2.25trn will be required around the world if 90% of the global shipping fleet were to use green ammonia as its only fuel in 2050, according to a new Oxford University study. Demand for the chemical from maritime fuel alone would be up to four times higher than the current annual production of grey ammonia (made from hydrogen derived from unabated natural gas or coal) of about 180 million tonnes. The study calculates the weighted average levelised cost of green ammonia — including production and electricity costs, pipeline construction, port storage, and fuel transportation costs — at $237 per tonne. Due to its lower energy density by volume compared to the heavy fuel oil (HFO) used today, this would be equivalent to an HFO price of $490-540/tonne, which it says is “similar as the cost of very low sulphur fuel oil at present”.
There should be high demand for well placed green ammonia projects. I doubt that Minbos will have any trouble locking in partners and then progressing a green ammonia project that is miles ahead of competing projects in terms of its economics and reliability of green electricity supply as well as not needing the large infrastructure cost of building a large enough wind and/or solar farm with battery back up. Too many retail investors focus on time frames in the weeks and months and are missing the big picture. Potentially a very big picture for MNB.
MNB Price at posting:
8.4¢ Sentiment: Buy Disclosure: Held
