Canadian Wind-Hydrogen Project Delayed One Year in Race to First European Exports

(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 finalizing 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 and E.ON.

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 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. 

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