“With PTX, electricity becomes a raw material for decarbonising new sectors”

4 August 2021

If the agriculture and shipping sectors are to achieve their climate targets, green power needs to be refined into climate-neutral fertiliser and fuel. That is why CIP is building Europe’s largest Power-to-X facility in Esbjerg.

Electricity makes up 20 per cent of the world’s energy consumption, with other forms of energy accounting for the rest. And of the 20 per cent made up of electricity, only around a fourth – 28 per cent – currently comes from renewable energy sources. The rest of the world’s electricity consumption comes from sources such as coal, gas and oil. And even though we continue to see the expansion of renewable energy facilities, and as more and more areas become electrified, a very large portion of the world’s energy consumption will require Power-to-X in order to become decarbonised.

That is why Copenhagen Infrastructure Partners (CIP) is now spending DKK 7.5 billion to develop Europe’s largest Power-to-X facility in the city of Esbjerg, Denmark. The purpose of the facility will be to allow electricity from wind turbines in the North Sea (as well as from other sources) to be utilised by more sectors, explains Christian Skakkebæk, Senior Partner at CIP:

“There has been a shift in the way we look at electricity,” he says. “Previously, electricity has been regarded as a product produced by burning coal, gas or oil; something fine and refined created from other raw materials. The large expansion of renewable energy, which has led to electricity rates that, during some periods of the day, are very low and occasionally negative, has turned that way of thinking upside down. With Power-to-X, electricity becomes the ‘raw material’ used in the production of other forms of energy: hydrogen, ammonia, methanol or otherwise. It’s a major shift in our way of thinking,” Skakkebæk says.

Advancing the agenda

If things go as CIP hope, the Power-to-X facility in Esbjerg will be supplied with electricity at the one end and produce refined, CO2-neutral products at the other. It will convert wind power into green ammonia, which can be used for CO2-free fertiliser in agriculture as well as CO2-free fuel for the shipping industry. And that’s not all: The surplus heat generated from the production processes will be used to supply district heating to a third of Esbjerg’s households, without emitting a single particle of CO2.

“There are colossal areas that cannot be decarbonised by electrification,” Skakkebæk says. “Today, ammonia used for artificial fertilisers is primarily produced from coal and gas. The amount of energy used for that process corresponds to about half of Europe’s electricity consumption, and there’s no alternative on the market today. We can provide that through Power-to-X. We can create an alternative for agriculture, the steel and shipping sectors and help advance the agenda of transition underway among many actors in those sectors,” he says.

Pure project development

The Power-to-X facility in Esbjerg will require a lot of development and innovation. Essentially, there are three overarching categories where advances need to be made in relation to the current situation:

• In terms of regulation and legislation, network tariffs, production and consumption settlements, taxation regimes and other aspects need to be adapted to make PtX feasible in Denmark.
• Markets and delivery structures need to be established for the various X’s produced at the facility.
• The supplier chain needs to be scaled up and industrialised to make it possible to operate Power-to-X facilities with a profit at an industrial scale.

“The Power-to-X plant in Esbjerg is among the first of its kind. That’s why it’s important to work closely with those who will potentially be purchasing products from the facility, so that we can better understand their markets. There is a lot we need to develop, including our collaboration with the potential buyers, which is important,” Skakkebæk says.

Close to the buyers

As an example, Skakkebæk mentions the market changes and solutions needed for the industrialisation of electrolysis when the product produced is no longer electricity fed into an electricity grid, but rather ammonia and methanol which must be transported physically, and when the renewable energy that everyone is used to thinking of as electricity transforms into something else and gets a bigger outlet.

These changes are being closely monitored. There are numerous businesses that need CIP to come up with good solutions, and agriculture and maritime sector giants such as DLG, Danish Crown, Arla, Maersk and DFDS are closely involved in the project:
“Danish companies have major ambitions in terms of transitioning to green energy, and working closely with them is important to ensure the project develops optimally,” he says.

Skakkebæk sees the potential for more Power-to-X facilities where they make sense to establish and as a response to different demands. Examples might be facilities producing hydrogen for the steel industry, green methanol for the transport industry or hydrogen that can be mixed into the existing natural gas pipeline system.

“A lot of different areas hold potential, and we are always considering new Power-to-X solutions that might prove interesting. For us, it’s about helping to develop a new pillar in the energy system,” Skakkebæk says. “I’ve been in the energy sector for 20 years, and for all this time, people have been talking about fuel cells and hydrogen without any major breakthroughs being reached. That’s not the situation today. Now’s the time for action, and my hope and belief is that we will see very exciting developments in Power-to-X in the coming years.”

Facts

Copenhagen Infrastructure Partners (CIP) is a fund management company specialised in providing tailor-made investments in energy infrastructure assets globally – especially in the renewable energy and greenfield segment.