The energy transition puzzle has not a single solution

ONE’s Partner Jakob Bendixen on the Danish GreenLab, that recently signed a 10 yr PPA for direct RES consumption and hydrogen production in an industrial park

Just because oil has been a single answer to the energy problem for so long, it doesn’t mean we must find a single substitute to it. We have to bear this in mind approaching pioneer projects like the Danish industrial park, GreenLab, integrating renewables, green hydrogen, e-fuel production in an industrial park with its own infrastructure.

In the view of ONE’s Partner Jakob Bendixen, who helped structuring a recently announced 10-year PPA on 84 MW of wind and solar directly connected to the industries of the site, including an upcoming Power- to-X plant, complexity is of course the nr. 1 feeling. But also, Jakob adds, a strong sense is emerging that work on non-mature technologies like hydrogen and synthetic fuels is now maturing much further than it appeared possible just few years ago.

“Of course costs are still an issue but when it comes to decarbonization, you don’t have to compare green hydrogen to grey hydrogen but to other green fuels, like biodiesel. If you have decided to go green, don’t compare green to black, but instead compare the different green solutions. If you manage to keep the total energy costs low, by using PPAs, direct lines, adding revenues from ancillary services, recovering waste products, etc., like in this case, then the total “cost of green” is actually quite reasonable”, he says. “There must be no single solution for the oil problem, it’s better to have many to avoid dependencies”.

GreenLab is a green and circular industrial park in northern Jutland, with an ambition to host industries that produce both energy products like sustainable liquid and gaseous fuels, but also non-energy products like construction boards and marine proteins. They also work with utilising energy in all its forms – by making one industry’s waste another industry’s resource.

The corporate power purchase agreement just signed with Eurowind Energy is the first of its kind in Denmark, involving 54 MW of wind and 30,8 MW of solar feeding directly into GreenLab’s internal energy infrastructure. The RES capacity will power businesses inside the industrial park, including the 6MW Power-to-X production, which is already being tested inside the park.

GreenLab is designated as an official regulatory energy test zone in Denmark. This enables the green companies within the industrial park to share each other’s surplus energy, which so far have encountered barriers under the current electricity regulations. By balancing energy production with industrial consumption, new industrial parks, like GreenLab, can be established without negatively affecting the existing collective energy network. This contributes to reduced grid fees, and thereby lower energy costs, which is especially critical for technologies like green hydrogen. Ideally, GreenLab’s test zone will be a proof of concept which can be replicated to other industry parks globally.

The cost of making hydrogen depends for 2/3 on the cost of electricity and for 1/3 on everything else. With reduced grid fees, a reduction of up to 40% on the cost of power can be achieved, cutting down the overall costs dramatically.

There obviously is still a large difference between building a complex business case for PtX integrated with PV and wind, and for the simple stand-alone RES generation project. “With ready to build PV or wind projects, the risk for the developer is low. But with integrated PtX projects you cannot have all the numbers in advance and some faith is needed that the whole thing will work. But we are learning at every step and I feel we moved a lot further than we were only a few years ago. Going forward we expect to see capture rates increase on stand-alone RES projects, and therefore more companies will be interested in projects with some level of integrated PtX solutions”, Jakob concludes.

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