Atome’s 75 percent owned Icelandic subsidiary, Green Fuel ehf (Green Fuel), has entered into a non-binding term sheet with HS Orka, a leading producer of renewable energy in Iceland, for the supply of up to 40 MW from geothermal and hydroelectric power with the intention for both parties to enter a binding Power Purchase Agreement (PPA), subject to conditions, prior to year-end 2023. The power is due to be delivered for the start of Green Fuel’s commercial operation, scheduled in 2026.
In addition to the 40 MW from HS Orka, Green Fuel has also signed a Letter of Intent with ON Power, another company generating power from the same sources in the country, for the supply of up to 20 MW of renewable power which is expected to be available from 2027.
Green Fuel’s green ammonia facility will be one of the earliest large-scale green ammonia projects in Europe at the time of its start-up targeted by the end of 2026.
Iceland is a prime location for green hydrogen and ammonia production, through its 100 percent green electricity grid from baseload geothermal and hydro sources, with a strong focus on decarbonising its domestic shipping and transport sectors. Green Fuel’s project is in full alignment with the country’s domestic needs.
Green Fuel’s green products have the potential to significantly decarbonise the maritime sector as a substitute for marine fuel. To this end, Green Fuel has signed a Memorandum of Understanding (MoU) with Samherji, one of the largest fishing companies in Iceland, to collaborate on the development of ammonia-powered fishing vessels. A working committee has been established with both parties making early progress on realising the zero-emission opportunities in the sector.
In Iceland, the maritime sector accounts for around 30 percent of the country’s GDP and is a significant contributor to the country’s emissions. Maritime transport represents approximately 4 percent (144 million tonnes p.a.) of the European Union’s CO2 emissions. By 2050, green ammonia is projected to make up 25 percent of all global marine fuel.
One of the principal drivers in the expected uptake of alternative fuels for shipping (including green ammonia) has been the strengthening of emission regulations from the International Maritime Organisation (IMO) and the EU.
The IMO regulations cover energy efficiency, carbon intensity and sulphur emissions while the EU’s Green Deal and Fit for 55 programmes have brought in controls for greenhouse gas emissions from all shipping travelling within and to and from EU ports. The overall aim of the Fit for 55 programme is to deliver a 55 percent reduction in carbon emissions by 2030. It is proposed under the Green Deal that shipping be included in the EU’s Emissions Trading Scheme from as early as 2024, providing the financial framework for shipping companies to be able to commit to long term alternative fuel offtake agreements.
As one the largest producers and exporters of green aluminium, Iceland already has valuable experience in leveraging its green electricity for growing industries. Green Fuel’s project location also presents strong export opportunities to the EU as demand grows for the decarbonisation of the EU’s energy-intensive industrial sectors. Green Fuel is collaborating on such export opportunities, including under the MoU signed in 2021 with the Port of Groningen, in the Netherlands. Furthermore, as a member of the European Economic Area (EEA), Iceland qualifies for a number of EU grants and subsidies such as the EU 95.5 billion euro Horizon Europe Research and Innovation funding programme.
“Since our IPO in December 2021, we have made significant progress in Paraguay, and with our move into Central America through our newly created business, the National Ammonia Corporation, we have expanded our near-term pipeline of projects to over 500MW+” said Olivier Mussat, CEO of Atome Energy. “Today’s announcement is a reflection of the work done over the past couple of years in putting in place the building blocks required to generate value for shareholders through Green Fuel in Iceland.”
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