Germany’s H2Global fund: Abu Dhabi company wins first green ammonia auction

H2Global, a German fund for financing hydrogen and other low-emission technologies, has announced the results of its green ammonia auction. According to Euractiv, a company linked to the United Arab Emirates will begin supplying the commodity to Germany in 2027.

Fertilizer producer Fertiglobe – a joint venture between fertilizer group OCI and Abu Dhabi state oil company ADNOC – was the sole winner of the first of three tenders that made up the first auction funded exclusively by the German government. According to Euractiv, the joint venture won the auction for green ammonia, a hydrogen derivative.

As the winner, Fertiglobe, based in Abu Dhabi and the largest nitrogen fertilizer producer in the MENA region and a pioneer in sustainable ammonia, is set to receive 397 million euros from H2Global for its proposal to produce green ammonia and import it to European ports.

No other winners were announced.

Decarbonisation with hydrogen

The German government’s H2Global fund, worth 5 billion euros, was established in 2021 to facilitate the growth of hydrogen markets around the world. It buys hydrogen and then sells it at a discount to industrial customers, for example in the chemicals, fertilizer and copper industries.

“German industry needs large quantities of green hydrogen and its derivatives to decarbonise, which requires imports from abroad and Europe as well as domestic production,” said German Economy Minister Robert Habeck.

According to the economy ministry, the economic calculations put the cost at 4.5 euros per kilogram of hydrogen, which is cheaper than the projected cost of hydrogen produced in the EU, where, according to data from the International Council on Clean Transportation, hydrogen could be produced for around 65 cents more.

“Imports of green hydrogen products make a decisive contribution to the growth of the hydrogen market in Germany,” Habeck said in a statement.

Production in Egypt

According to Hydrogen Insight, the ammonia will be produced in Ain Sokhna, Egypt, using green hydrogen from a 100 MW green hydrogen plant in Egypt that is still awaiting a final investment decision (FID). Fertiglobe is a partner in the plant alongside Scatec, Orascom and the Egyptian government.

Germany’s environment ministry added that 273 MW of renewable energy capacity will be installed in Egypt to produce green ammonia. A total of 259 thousand tonnes of ammonia is expected to be exported to Germany between 2027 and 2033..

Unlike hydrogen, which is considered more challenging to transport by ship, ammonia is expected to be transported around the world on a large scale, from regions with strong renewable energy production to areas with high energy needs.

Competition

The German government-backed auction, launched at the end of 2022, received bids from 22 companies and consortia across five continents, H2Global said. The auction process then narrowed the field to a shortlist of five, from which Fertiglobe emerged as the sole winner.

Bidders submitted hydrogen projects with average electrolyser capacity of 145 MW and 295 MW of renewable energy capacity. The projects guaranteed contracted volumes of renewable ammonia ranging from 210 to 475 thousand tonnes, plus additional volumes outside the contracts. All but one bidder proposed deliveries to the Dutch port of Rotterdam, while the sole exception proposed imports via Antwerp in Belgium.