October 19, 2020

Incitec Pivot: Exploring Renewable Hydrogen to make Ammonia

In 2019 IPL conducted a $2.7 million feasibility study, supported by the Australian Renewable Energy Agency, to assess the potential to use renewable hydrogen to increase ammonia production at our manufacturing facility at Moranbah, Queensland.

Achievements

  • $2.7 million renewable ammonia feasibility study, supported by ARENA with $0.9m from the Advancing Renewables Program on producing up to 45,000 tonnes of renewable ammonia per annum

Case Study Type

  • Abatement Project R&D
Case Study Image

Problem being solved

Fertilisers are essential to provide the yields required to feed a growing population, and explosives are essential to unlock the metals and minerals we need to rebuild infrastructure and address other challenges associated with climate change.

Ammonia (NH3), the base chemical required for these applications, is highly energy intensive to produce, with the hydrogen required to make it produced exclusively from natural gas in Australia. Globally, ammonia manufacture contributes more than 1% of the world’s GHG emissions.

Due to the chemical processes involved, ammonia production is a ‘hard to abate’ industry and IPL recognise that novel solutions will be required to achieve deep decarbonisation. Producing ammonia using renewable hydrogen is one of the few technically-ready paths to deep decarbonisation, but the technology is yet to be scaled up to industrial size applications.

To achieve Australia’s ambition to become a clean hydrogen exporter at scale by 2030, the technical and commercial feasibility of large-scale clean hydrogen production must be demonstrated. With the nascent hydrogen mobility market, new at-scale renewable hydrogen development is constrained by lack of demand and offtake certainty.

There are currently no industrial scale benchmarks for capital and operating costs for renewable hydrogen facilities in Australia, and the viability of operating an ammonia plant which must be run continuously (24/7) from a variable renewable energy supply such as solar PV is yet to be demonstrated.

Solution

The use of renewable electricity to split water into hydrogen and oxygen provides an alternative chemical reaction for making the hydrogen feedstock required to synthesise ammonia, displacing natural gas consumption and significantly lowering GHG emissions. The aim of the IPL Moranbah renewable ammonia feasibility study was to determine whether renewable hydrogen can be made at an industrial scale at a commercially competitive price to supply IPL’s Moranbah ammonium nitrate (AN) facility.

Instead of purchasing natural-gas-based ammonia to make AN, the study assessed the feasibility of IPL committing to a long-term renewable hydrogen offtake agreement and installing additional ammonia production capacity. The offtake agreement would underpin and make ‘bankable’ the investment in the renewable hydrogen production facility.

The construction of an industrial scale renewable hydrogen manufacturing facility would accelerate the development of the Australian hydrogen industry, providing a key domestic benchmark in scale-up capital and operating cost.

The scale of the development would accelerate electrolysis equipment scale-up and cost reduction, while de-risking investment by others in equipment requiring hydrogen supply (e.g., for mobility). The behind-the-meter solar power source investigated during the study provides a highly-scalable operating model underpinning future industry growth in Australia.

Outcomes

The feasibility study found that:

  • Industrial scale ammonia production from renewable hydrogen is technically feasible: during the study, a plant was designed that could provide continuous ammonia production from a dedicated solar PV energy supply using existing technology;
  • Currently, solar hydrogen production for making ammonia in Australia is not competitive with natural gas based ammonia production, with costs ~2x higher than purchasing ammonia;
  • Solar hydrogen could be produced at ~$4/kg with a ~5% return on investment, while natural gas based hydrogen is currently produced at significantly less than $2/kg;
  • Despite lower capacity factors, behind-the-meter solar electricity is more cost effective than grid-connected renewable power due to costs associated with grid delivery;
  • Renewable power prices need to be less than ~$25/MWh for renewable hydrogen to become commercially viable for ammonia feedstock and displace natural gas-based ammonia;
  • Large scale renewable hydrogen production requires very large capital investment, with a 24 tonne-per-day facility estimated at more than $650m (including a dedicated 230MW solar farm);
  • The emission reduction from the 24tpd facility would be ~80,000 tonnes of CO2e per annum;
  • One or a combination of the following is required for renewable ammonia to become commercially feasible:
    1. Customer acceptance of a premium price for “clean” ammonia-based products;
    2. Costs for renewable electricity decrease significantly; and/or
    3. Grant support for development increases significantly



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