AN ANALYSIS OF GREEN HYDROGEN TO AMMONIA MARKET OPPORTUNITIES

Abstract

Building off a previous internship with a large renewable energy company, this Masters Project analyzes the additional cost for conversion, transportation, and cracking of hydrogen to ammonia. Previous work for the client analyzed three additional hydrogen conversion and transportation pathways. All four pathways are summarized below. • Hydrogen compression, gaseous trucking, onsite gaseous storage • Hydrogen compression, pipeline transportation, onsite gaseous storage • Hydrogen liquefaction, liquid trucking, onsite liquid storage, vaporization • Hydrogen storage, ammonia generation, liquid ammonia trucking, onsite liquid ammonia storage, ammonia cracking back to hydrogen (analyzed here) This masters project found that the conversion of hydrogen to ammonia as a transportation pathway is never the cheapest option on a dollar per kilogram H2-mile basis. This is because the pathway requires many chemical and thermodynamic conversions, each with their own efficiency losses: generation of renewable electricity, electrolysis to generate hydrogen, the Haber-Bosch process to produce ammonia, ammonia storage, ammonia transportation, and subsequent cracking of ammonia back to hydrogen. In total the pathway analyzed in this MP has a 24% cycle efficiency. In addition to analyzing the ammonia conversion pathway, the client requested an analysis of the existing hydrogen and ammonia markets. Much of this Masters Project is devoted to developing a thorough understand of the many use cases, generation technologies, and transportation pathways for these two crucial molecules. Additionally, the client requested an analysis of the major players in the ammonia-based fertilizer market as a basis for a market entry strategy into this space. Research found that hydrogen can be made from renewable electricity, steam, coal, or almost any other energy source, each with its own level of associated carbon emissions. Hydrogen is used primarily for oil and gas refining, ammonia production, methanol production, steelmaking, transportation, and many other applications. Once made, hydrogen can be transported as a compressed gas in trucks or pipelines, as a liquid in trucks, or converted to ammonia for transportation. Ammonia is made by combining hydrogen with nitrogen using the Haber-Bosch process. The color (grey, green, blue, etc.) of hydrogen that is used is a large determinant of the carbon intensity of the ammonia produced. Ammonia is used primarily for fertilizer production, and to a lesser extent in the refining of oil and gas and the production of specialty chemicals. Once made, ammonia can be transported in gaseous pipelines, or liquefied and transported on trucks, barges, or ships. Most major ammonia producers have committed to decarbonizing their operations. This will require the use of green hydrogen to produce green ammonia as a feedstock. It is estimated that 15% of the global ammonia market will be served by green hydrogen by 2030. This represents a large opportunity for renewable energy companies such as my client. Ammonia manufacturing is also a highly concentrated market, with seven US manufacturers representing 70% of the total production capacity. Strategic analysis of the existing markets found that the two key market advantages for renewable energy companies are location and market growth. Renewable electricity is cheap in the areas where ammonia is currently made. This removes conversion and transportation costs from the Levelized Cost of Hydrogen calculation and allows green hydrogen to be more competitive, although still not at parity with grey hydrogen. Additionally, although currently nascent, the market for green ammonia is expected to reach $500 million by 2025 and $1.5 billion by 2050. As the market grows, renewable energy companies will have ample opportunities to sell electricity to ammonia producers. The two main market entry challenges identified in this analysis are competition from industrial gases manufacturers and the lack of national regulatory support in the form of carbon pricing. Industrial gases manufacturers currently own the customer relationships with ammonia producers and are expected to be very protective and cost competitive. Most the industrial gases companies have short term decarbonization plans that involve the implementation of blue hydrogen, and longer-term plans involving green hydrogen. Additionally, none of the states with high volumes of ammonia production currently have a carbon tax. This results in green hydrogen and ammonia being more expensive than the currently used grey hydrogen and ammonia. The client should begin their ammonia entry by developing small scale hydrogen off-taker agreements with large ammonia manufactures who are interested in green hydrogen. By bringing hydrogen production expertise in-house the client for this MP will be able to reduce the price gap between green and grey hydrogen and become a market leader in this emerging and quickly grown space.