Shell has signalled its readiness to invest at scale in renewable hydrogen by taking FID on the 100MW REFHYNE II electrolyser project at its Rheinland refining complex near Cologne in Germany.

The move comes amid scrutiny of Shell’s wider transition strategy after it recently paused a major biofuels project in Rotterdam, incurring a charge of up to $1b. The company has also said it expects significant losses in its renewables and energy solutions business in the near term.

The oil major’s FID on REFHYNE II puts the proton-exchange membrane (PEM) electrolyser on track to start up in 2027. Its output of 44,000kg/d of green hydrogen will be used in production of road fuels and other products, helping to reduce Scope One and Scope Two emissions at the Rheinland complex. The green hydrogen could also be supplied to the wider market as industrial demand in the region evolves, Shell said.

“Investing in REFHYNE II is a visible demonstration of our commitment to the hydrogen economy, which will play an important role in helping to decarbonise Shell’s operations and customer products,” said the firm’s downstream, renewables and energy solutions director, Huibert Vigeveno. “Our decision to invest illustrates what can be achieved with the right enabling conditions to deliver competitive projects.”

44,000kg/d – REFHYNE II output

Shell said REFHYNE II has been enabled by supportive policies, including the EU’s binding targets for the use of renewable hydrogen, and the German federal government’s regulatory framework. The project has also received funding from the EU’s Horizon 2020 research and innovation programme. The project “exceeds” the internal rate of return threshold set for its Renewables & Energy Solutions business, Shell said.

It added that the project will benefit from the experience Shell and its partners—UK electrolyser manufacturer ITM Power and industrial gases company Linde—have in developing, constructing and operating other renewable hydrogen projects in Europe. REFHYNE II follows the startup in 2021 of a 10MW PEM electrolyser at the Cologne complex. Since 2021, preparations have been underway to deliver the detailed engineering plans for REFHYNE II, complete onsite groundworks, and connect to existing infrastructure, Shell said.

On track in Rotterdam

Elsewhere in Europe, Shell is installing a 200MW electrolyser at its refining complex on the Tweede Maasvlakte in the Port of Rotterdam. The plant, the largest green hydrogen project in Europe, is scheduled start up in 2025 with an output of 60,000kg/d. The renewable power for the electrolyser will come from the offshore windfarm Hollandse Kust (Noord), which is partly owned by Shell.

Shell’s progress to FID on two large-scale developments comes as the number of projects reaching this stage remains low. Shell has advantages as an integrated player able to deploy hydrogen within its existing refining facilities, rather than acting as a merchant producer trying to secure offtake from third-party industrial consumers.

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Author: Stuart Penson