Atome Energy is forging ahead with the expansion of its flagship Villeta green ammonia project in Paraguay to include production of fertiliser for local and export markets.

The UK-based firm’s expansion of the development’s first phase to include production of green calcium ammonium nitrate (CAN) will not alter its target of FID in the fourth quarter of 2023 and commissioning in 2025, CEO Olivier Mussat tells Hydrogen Economist in an interview.

Talks with potential offtakers in the agriculture and fertiliser industries convinced Atome to move into CAN production, building on its original plan to be a pure-play green ammonia supplier.

“As we matured Feed and discussed with offtakers it became clear that, although we could export ammonia and we could use ammonia in the region, actually the demand would be a lot higher and a green premium clearer if we went one step further into CAN production,” Mussat says. “That extra step further would significantly lower the cost of logistics and significantly increase the attractiveness of what we were producing without needing extra power.”

Villeta will produce green CAN for local demand and for export, with Europe and the South American Mercosur trading bloc of Argentina, Brazil, Paraguay and Uruguay as high priority markets. The company’s contact with those agriculture and fertiliser sectors was boosted by the hiring of Terje Bakken, former head of supply and trade at Yara and head of sales and marketing at Eurochem—two of the world’s largest fertiliser producers.

Analysts expect the move into CAN production at Villeta—phase one of which is sited on the River Paraguay within an industrial complex 35km from the capital city Asuncion—to increase capex by about $165mn, on top of the original estimate of around $180mn.

Mussat says Atome, which was listed in London in late 2021 via an IPO, received “a great vote of confidence” in its strategy recently when US oilfield services company Baker Hughes became a strategic investor with the acquisition of c.6.6pc of the company.

Green premium

A green premium is emerging in the fertiliser market, and this will increase with the emergence of tax regimes such as the EU’s carbon adjustment border mechanism, which starts in 2026, Mussat says.

“Most hydrogen players come from the energy or infrastructure world, as do we, but we identified at the outset in our strategy that the biggest market existing today for hydrogen was ammonia, and that the biggest market today for ammonia was the agricultural sector,” he says. “Over 95pc of ammonia and derivatives used in the agricultural sector come from hydrocarbons, representing nearly 2pc of global CO₂ emissions.  The agricultural sector is now focused on decarbonising, they are moving fast and trying to figure out how can they play a role.”

“The agricultural sector is now focused on decarbonising and they are moving fast and trying to figure out how can they play a role” Mussat, Atome

Availability of competitively priced baseload power for its alkaline electrolysers underpins the Villeta project. Atome has signed a 120MW power-purchase agreement with national power company Ande at the lowest available industrial tariff, which is in the low $30/MWh. Paraguay’s power supply is 100pc renewable, with 90c provided by the 14GW Itaipu hydroelectric dam, the second-largest in the world.

Villeta is among the lowest-cost projects of its type globally as it leverages existing infrastructure, baseload power supply and logistics in order to mimimise capex and opex, according to Mussat.

“My opex for power is of course high, but it is very competitive and is baseload so I do not have to overcomplicate the engineering of our project. I do not need battery storage, or to build additional sources of renewable power,” he says.

Access to baseload power also allows Atome to use cheaper alkaline electrolysers rather the proton-exchange-membrane technology, which is better at coping with intermittent wind and solar power supply.

Phase two

Despite the firm focus on CAN for phase one of Villeta, Atome is undecided on its strategy for a planned 300MW second phase to be deployed at Yguazu in the Alto Parana department. That decision will be based on discussions with the market, Mussat says.

Atome is also pursuing green ammonia projects in Iceland and Costa Rice. The Iceland project will use geothermal baseload power to make green hydrogen and ammonia for export and for the domestic marine sector.

However, progress has slowed recently. “Following the conflict in Ukraine and its consequences for the EU power sector, Iceland’s major utility Landsvirkjun has been revisiting its entire power strategy and slowing down its ambitions in hydrogen activity,” Mussat says.

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Author: Stuart Penson