Canadian wind-hydrogen project delayed one year in race to first European exports

ABO Energy GmbH & Co KgaA

04/12/2023 17:34

By Rod Nickel
       WINNIPEG, Manitoba, Dec 4 (Reuters) - One of Canada's
first projects to produce emissions-free hydrogen with wind
energy has delayed its start by one year because operator World
Energy GH2's European customers need more time to develop
special infrastructure to handle the product, the company said.
    The delays illustrate the difficulties companies face in
introducing a nascent product to replace high-emitting forms of
fuel for transport, industry and homes.
    Half a dozen companies are advancing projects in the gusty
Atlantic provinces of Newfoundland and Labrador and Nova Scotia
to harness winds to power production of Canada's first exports
of emissions-free hydrogen. Canada signed a non-binding
agreement in 2022 to ship green hydrogen to Germany starting in
2025. 
    But World Energy GH2, an affiliate of Boston-based renewable
fuels producer World Energy, won't make that timeline, managing
director Sean Leet told Reuters. 
    "The offtakers are not going to be ready to accept product
within 2025, actually not until 2027," Leet said, referring to
buyers who would pre-purchase some of the project's hydrogen.
    The challenges for prospective buyers involve developing new
technology to ship, further process and transport the hydrogen
by pipeline at its last destination, Leet said.
    World Energy GH2 now hopes to start production in late 2026,
he said. It requires approval from Newfoundland's environmental
department and strong pre-purchase interest to attract financing
before starting production.
    Those buyer commitments hinge on the Canadian government
finalising details of a tax credit for up to 40% of the capital
cost of building hydrogen plants, Leet said.
    The company intends to build three onshore wind farms in
Newfoundland to power production of 250,000 metric tons per year
of hydrogen, at a total cost of $12 billion.
    Advocacy group EnviroWatch NL, however, questions the
efficiency of building wind turbines in Canada to produce
hydrogen that will ultimately generate power for Europe
thousands of kilometers away.
    EverWind Fuels is on track to start production in Nova
Scotia in 2025, said CEO Trent Vichie.
    Its plant, a converted fuel storage facility, would
eventually produce 1 million metric tons annually of ammonia, a
compound that is a practical form of transporting hydrogen.  
    EverWind, which declined to disclose the project's capital
budget, expects to strike firm buyer agreements in the first
half of 2024, a spokesperson said, and has memorandums of
understanding to sell hydrogen to German power companies Uniper
 UN01.DE  and E.ON  EON.UL . 
    The Canadian government agreed in November to loan EverWind
$125 million to build its project, which still requires
provincial approval of its wind farms. EverWind's hydrogen plant
has already received environmental approval.
    Germany-based ABO Wind  AB9.DE  is applying for permits and
land for a Newfoundland onshore wind farm that will provide
electricity to produce hydrogen for Braya Renewable Fuels'
refinery as early as 2027, Robin Reese, director of development
for ABO Wind Canada said.  
    Newfoundland selected EverWind, World Energy GH2, ABO and
Exploits Valley Renewable Energy Corp in August to proceed with
their wind-hydrogen projects on government land. 
    U.S.-based Pattern Energy plans to secure European buying
agreements in mid-2024 and start construction in 2025 for its
wind-hydrogen project on private land in Newfoundland, Canada
country head Frank Davis said.

 (Reporting by Rod Nickel in Winnipeg, Manitoba; editing by
Grant McCool)
 ((rod.nickel@tr.com; X: @RodNickel_Rtrs;))