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Provaris Energy powers forward with its European Hydrogen Strategy


Work is progressing in Norway on a prototype compressed hydrogen storage tank developed by an Australian company, Provaris Energy, promising to revolutionise regional hydrogen marine transport from the Nordics to Europe and offer low-cost storage solutions for hydrogen along the value chain.

 

In Europe there is an almost universal acceptance by Industry that low-carbon and renewable hydrogen will be an essential component of any strategy to reach NetZero by 2050, with the focus on what can get started before 2030.

 

And for Europe to meet its decarbonisation and NetZero targets significant collaboration and investment will be required from hydrogen producing countries such as Norway as well as companies along the value chain in hydrogen production, transport, and storage solutions such as Provaris Energy.

 

There are many industries in Europe where direct electrification is not always feasible and cost efficient and these are the ones where clean hydrogen is expected to have the greatest impact. These include refineries, steel, chemicals and cement, heavy vehicle transportation and the power sector. The refinery and steel sector signal their offtake ambitions with RFPs in the market for hydrogen supply by 2028.

 

In recent weeks there has been the emergence of German utility Uniper announcing an MOU for an initial 20ktpa supply to Salzgitter from their domestic supply hub at Wilhelshaven, which will need 10x the capacity from imports. This was followed up with 100ktpa import MOU with CiP from Denmark which will be subject to the Danish pipeline to Germany.

 

The European Commission has implemented a clean hydrogen regulatory framework and has committed to major investment goals with a vision to produce domestically ten million tonnes of green hydrogen by 2030 whilst an ambitious a further ten million tonnes, also reinforced by Germany’s import requirement of 45-90 TWh of hydrogen import (equivalent 1.5 to 3Mtpa H2), representing up to 70% of its electricity demand by 2030. This is on the back of a recent requirement that 42% of industrial hydrogen must be from green sources by 2030.

 

Repower EU - the EU’s plan to end its reliance on Russian fossil fuels - has proposed investment of €27 billion for green hydrogen infrastructure to 2030. This signals major investment in not just infrastructure but also associated industries such as transport and storage.

 

The first EU hydrogen bank auction with a budget of €800 million closed in April 2024 and was massively oversubscribed. The projects should have the capacity to generate 600 MW of renewable hydrogen projects with a second auction of more than €2 billion to be held later in 2024.

 

One of the key pillars of an effective clean hydrogen supply chain is transport and storage.

 

According to global consultancy firm Roland Berger, “[…] hydrogen faces numerous challenges in becoming a widespread sustainable energy solution, with transport among the biggest. […] transportation is crucial for reducing the cost of hydrogen as an energy solution and ensuring a stable supply […]”.

 

Transport by pipeline over long distances is generally preferable for long maritime and land distances in terms of cost, efficiency, and volume however it does have major drawbacks including high up front capital investment, long approval and construction process, and complicated cross-border co-ordination and legalities. Shipping offers flexibility and you only need to observe the growth of LNG carriers to over 600 operating today, and some 200 on order.

 

For shorter maritime distances, its likely compression will play a vital role, and this is where Provaris Energy brings a first mover advantage which now has the focus of three German utilities under MOU, including Uniper.

 

Provaris Energy is an Australian Stock Exchange listed company (ASX: PV1; FSE: WS90) developing a portfolio of integrated green hydrogen projects with a focus on transport and storage in Europe and the Nordics.

 

The Company’s competitive advantage is the intellectual property developed for hydrogen storage and transport of compressed green hydrogen using the proven technology of compression. This includes the proprietary design of bulk-scale hydrogen carriers (H2Neo & H2Max) and barge storage solutions (H2Leo).

 

The Provaris solution compresses hydrogen to 250 bar before storing and transporting in gaseous form in a proprietary cargo containment system at ambient temperature, and a closed system eliminating boil-off. Decompression and scavenging pressure are required at the destination with hydrogen pipeline distribution generally at a lower pressure of 40-70 bar.

 

Provaris has published last year a report titled “2023 Hydrogen Marine Transport Commission Report” comparing the cost of three hydrogen vectors – compression, liquification and ammonia when integrated with the variable renewable energy profile to produce hydrogen.

 

The report found energy use and losses across the entire supply chain (generation, production, and delivery) associated with liquification and ammonia exceed 40% while compression remains below 20%. It also found costs for a compression solution were the cheapest overall at voyage lengths of up to 2,000 nautical miles using a full-sized vessel (H2 Max) and even better at a shorter voyage length using a small vessel (H2 Neo).

 

The report concluded compression is the most cost-effective option for regional transport distances from 500 to 4000 nautical miles with volumes up to 500,000 tonnes per annum.

 

Given that compression is a compelling solution for regional hydrogen trade – in particular, between the Nordics and Europe - it is no surprise to see Provaris steadily building relationships and agreements in Europe.

 

In December 2023, European energy giant Uniper signed a MOU with Provaris to evaluate the supply of green hydrogen into Germany using Provaris’s compressed hydrogen carriers. Under the MOU Provaris and Uniper will collaborate to qualify the technical, operational, and economic benefits of Provaris compressed hydrogen carriers and storage solutions. Two other MOUs have been signed with utilities in Germany that are still to be disclosed.

 

In early 2024 the Company commenced work on the construction of the world’s first prototype scale compressed hydrogen tank in Norway with Prodtex AS – a Norwegian company specialising in development of modern design and production processes.

 

The tanks use a layered design of carbon steel for safety factors and a stainless-steel liner to mitigate embrittlement when hydrogen is in contact with steel. The welding utilises a high-performance robotic laser welding process from the German leader in high-tech lasers, Trumpf.

 

The proven application of robotic-laser welding is key to lower the capex for the tanks and by removing a significant amount of labour cost, it enables up to 80% to 85% of costs to be related to materials, providing increased certainty of future margins.

 

Testing is likely to be completed mid-2024 with the receipt of final class approvals for the H2Neo carrier from DNV and ABS. For the shipping business these approvals will allow Provaris to enter shipbuilding contracts for the H2Neo and H2Leo aligned with a hydrogen supply project FID.

 

In addition to shipping, the compressed hydrogen tanks are expected to deliver new products in demand for small-scale industrial storage requirements, providing the company with a revenue and cash flow business in 2024. Provaris tanks would compete favourably against the higher-pressure and high cost carbon-fibre solutions available in the market today.

 

Longspur Research recently noted “we estimate that Provaris can deliver a hydrogen storage solution at a cheaper cost per kilo of hydrogen than most other designs…we estimate a levalised cost of hydrogen storage of between US $0.17/kg and US$0.19/kg

 

A recent strategic move for the company was to conclude a MOU with Global Energy Storage (GES) to conduct a comprehensive pre-feasibility study to assess the technical and economic viability of establishing a berthing and unloading terminal for Provaris H2Neo compressed hydrogen ships at the GES site in the Port of Rotterdam. The site is connected to the HyNetwork grid in the port which is already under construction by Gasunie.

 

This initiative aims to position the Rotterdam facility as a pivotal import location and offtake hub for Provaris’ hydrogen projects in Norway and Finland, strategically placing the company in the heart of the European hydrogen market.



GES Terminal Site at the Port of Rotterdam


Longspur Capital emphasizes the significance of the Rotterdam project in Provaris’ expansion strategy “By creating a central offtake centre for its Norwegian projects, Provaris aims to enhance its presence in the European hydrogen distribution network. The Rotterdam facility offers various distribution options, including barges, rail, and truck trailers, while also facilitating early connection to the HyNetwork pipeline […]"

 

The CEO of Provaris Energy, Martin Carolan, said “[…] we are exploring how compressed hydrogen can contribute to the large import requirement of Northwest European ports. Our goal remains to offer the most cost-effective compressed hydrogen supply for regional volumes […]”.

 

Norway is set to become a key player in the supply of green hydrogen into Europe. The country already covers over 90% of its electricity requirements from renewable energy (hydropower) and is investing heavily into green hydrogen projects and infrastructure.

 

Provaris Energy’s collaboration partner, Norwegian Hydrogen is building a deep value chain from production to infrastructure across the Nordics. Norwegian Hydrogen projects include a site in Finland and green hydrogen hub in Northwestern Norway to start producing 1.3 tonnes of hydrogen per day from 2024.

 

The Provaris solution is increasingly recognised as critical to the success of Norwegian - German transport corridor. Dr. Ulrich Bünger, hydrogen advisor (Germany), Norwegian Energy Partners (NORWEP) says “Provaris’ technology is a robust missing link almost to tap into Norway’s remote renewable sources, which cannot be opened up by a pipeline business. 

 

Norwegian Hydrogen has attracted strong investor interest with Fortescue – a global green energy, metals and technology company investing ~€9 million to become a 12.5% shareholder.

 

Provaris Energy sees enormous potential in their relationship with Norwegian Hydrogen to deliver significant shareholder value. This was reinforced in April with the announcement of a new collaboration agreement to jointly progress the identification and development of several sites in the Nordic region for the large-scale production and export of hydrogen to European markets.

 

The projects will utilize locally available renewable energy to produce hydrogen for shipment to European ports. This assists energy-intensive industries in their decarbonization plans and targets a scale and level of innovation that aligns with various European Union (EU) funding schemes.

 

New projects will be strategically located in areas with robust grid connections and power supplies with sites that will facilitate the construction of high-tech electrolysers and hydrogen compression facilities linked to export jetties.

 

Provaris’ H2Neo carriers will transport the hydrogen, while the H2Leo barge will serve for storage. The initiatives will also foster circular economies by utilizing by-products like clean oxygen and waste heat in local industries and district heating systems.

 

In 2024, the partnership will select sites for further pre-feasibility studies, focusing on hydrogen production and export logistics, including safety, environmental, and regulatory aspects.

 

The CEO of Norwegian Hydrogen, Jens Berge, commented “While we develop a comprehensive network of production sites and distribution infrastructure across the entire Nordic region, to reduce emissions in the Nordics, we have also identified several sites with significant export potential and Provaris technology makes it possible to bring hydrogen in gaseous form all the way from production in the Nordics to the customers in continental Europe.”



H2Leo Gaseous Hydrogen floating storage concept


Provaris Energy’s CEO, Martin Carolan, said “this new collaboration with Norwegian Hydrogen for greenfield sites in the Nordics builds on the success of our work together in 2023 and the platform they have developed in the Nordics as a producer of hydrogen. This partnership can accelerate development sites that will leverage Provaris’ downstream activities for supply of green hydrogen to German utilities who are seeking regional volumes of green hydrogen […]”.

 

Provaris Energy should continue to build on its first mover advantage as the prototype tank is completed and tested in 2024. The developing European relationships such as with Norwegian Hydrogen, Uniper, and Global Energy Storage provide strong third-party endorsement of the company’s European strategy.


The market opportunities for near term cash flow from hydrogen storage solutions represent a significant value inflection for the Company.

 

Provaris Energy looks likely to attract strong interest from Germany and European investors in 2024 and beyond.


 

 Provaris Energy May Investor Presentation


Provaris Energy - Investor Update - May 2024
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