Renewable hydrogen and ammonia for Iberian, European and global markets

In our November episode of Project Features, Rogaciano Rebelo from MadoquaPower2X and Alberto Litta Modignani from NextChem joined us to discuss the MadoquaPower2X renewable ammonia project in Sines, southern Portugal. The recording is available on the AEA’s website, and you can also download the speaker presentations.

The MadoquaPower2X Project

The MadoquaPower2X project is a consortium between Copenhagen Infrastructure Partners (through their Energy Transition Fund I), Madoqua Renewables and Power2X. Project development started in mid 2022. Located in Southern Portugal, Sines has a deepwater port able to bring oceangoing vessels, and has all the basic infrastructure required for a chemical plant. Land is available (59 hectares secured), recycled wastewater can be used (2 million m³ per year is available for the project), and power connections are available.

The first phase of the project will produce renewable hydrogen and ammonia from 1.1 GW of solar and wind power, feeding 500 MW of electrolyzer capacity. Starting from the end of 2028, around 300,000 tons of renewable ammonia will be produced annually. An investment of around €1.3 billion is required for the first phase, excluding the electricity supply. FID (Final Investment Decision) is planned for the second half of 2025. In the second phase, around 700 MW of electrolysis capacity will be added.

KBR is the ammonia licensor for the MadoquaPower2X project, with a plant production capacity of around 1,200 tons of ammonia per day. Hydrogen storage is planned to account for variability of low-emission electricity supply, and to ensure production of hydrogen compliant with RFNBO (Renewable Fuel of Non-Biological Origin) rules.

Electricity represents about 80% of the operating cost for the renewable ammonia project. At full load basis, around 3+ TWh is annually required for the project’s first phase. Combined with the second phase of the project, about 6.5 TWh would be required annually (continuous operations). For comparison, the electricity consumption for the entirety of Portugal was 49.4 TWh in 2022. The first phase would represent close to 6% of the current electricity consumption in Portugal, underscoring the scale of the development challenge. The MadoquaPower2X project will develop its own renewable assets to add to the national grid, but will also source PPAs (Power Purchase Agreements) from the market.

When the Portuguese grid achieves above 90% renewable electricity generation, other rules for RFNBO compliance do not need to be checked, and the RFNBO compliance certification is valid for the upcoming 5 years. However, electricity supply limitations and demand side price fluctuations will still make hydrogen storage relevant from time to time.

Recently, the project was among the winners of the first subsidy auction from the European Hydrogen Bank, at a bid of €0.48/kg electrolytic hydrogen produced over ten years. The project has been designated as a project of national interest in Portugal, representing a significant contribution to Portugal’s electrolyzer strategy. This allows the project to access public entities and faster licensing processes. About 115 highly skilled jobs will be created in Sines during the first phase of the MadoquaPower2X project, as well as 3,000 indirect jobs.

The project targets the maritime fuel market and fertilizer market in Europe, with a focus on export to the Port of Rotterdam (the Netherlands), and the Port of Duisburg (Germany). To enable FID for production in the second half of the 2020s, market makers and demand-side incentives will be required to bridge the production cost and the willingness to pay on the demand side. Examples include the H2Global mechanism and the second European Hydrogen Market auction including the maritime sector.

Maire Tecnimont: The industrial conglomerate perspective

Maire Tecnimont is an industrial conglomerate with more than 100 years of history. It traces back its roots to Giancomo Fauser, responsible for some of the first renewable ammonia plants in Italy in the 1920s. The core businesses of Maire Tecnimont goes beyond nitrogen conversions to ammonia and fertilizers, with other focuses on hydrogen and circular carbon, fuels and chemicals, and a polymer business.

Maire Tecnimont’s subsidiary NextChem is typically involved in earlier phases of projects, with activities in the feasibility and pre-FEED stages. Another Maire Tecnimont subsidiary – MET Development – aids in project development activities, including co-financing and co-investment in strategic projects, feedstock sourcing, offtake project structuring, funding and grants acquisition, among other activities. As well as its engineering capabilities, NextChem invests in technologies that are in TRL (Technology Readiness Level) 4-6, helping push them to industrial use.

NextChem has executed the pre-FEED of the MadoquaPower2X project, and the project is currently in the FEED phase (which will be carried out by Maire Tecnimont). Maire Tecnimont is also part of the FertigHy project, which aims to produce low-carbon fertilizers in France and Spain. FertigHy also includes the offtaker Heineken in its consortium.

The involvement of an industrial conglomerate in a renewable ammonia project allows for an integrated solution, rather than just an engineering or technology licensor perspective. This derisks the project, improving the bankability.