Danish electrolyser and emission reduction technology manufacturer Topsoe is “optimistic” about its plans to expand its green hydrogen and ammonia business in the US following Donald Trump’s election victory.

The Copenhagen-based firm is progressing plans to develop a $400m-plus solid oxide electrolyser cells (SOEC) production base in Virginia, having already received an allocation of nearly $136m in tax credits under the Inflation Reduction Act (IRA) for the project, Kim Hedegaard, the firm’s CEO of power-to-x, told Hydrogen Economist.

“We have a bought a piece of land in Virginia and we are ready to set up shop,” he said. “We are doing the design and engineering so that everything is set up so we can press the button as soon as our customers do,” Hedegaard said in an interview during the recent ADIPEC event in Abu Dhabi.

“We have a bought a piece of land in Virginia and we are ready to set up shop” Hedegaard, Topsoe

Topsoe also recently signed an order to supply 100MW of SOEC systems to US developer First Ammonia for deployment at the large-scale Port of Victoria green ammonia plant in Texas.

However, the wider hydrogen sector faces uncertainty over the future direction of US policy under president-elect Donald Trump, with speculation the Biden administration’s Inflation Reduction Act (IRA) could be modified or even repealed, potentially challenging the investment case for hundreds of hydrogen projects.

“We are optimistic. We believe that at least the first round of the IRA is bipartisan,” Hedegaard said.  “What is important is that we get clarification on the regulations of the IRA’s first round.”

The priority for Topsoe and the wider clean hydrogen sector in the US is clarification of the regulation governing the 45V tax credit, uncertainty over which had chilled the investment climate even before November’s election. Topsoe has received some “solid indications” that the clarification will come very soon, potentially before the end of this year, Hedegaard said.

Clarity around the tax credit will allow Topsoe to forge ahead with its plans to produce SOEC stacks at its planned facility at Chesterfield, Virginia. The plant is designed to have a capacity of more than 1GW/yr, with startup provisionally scheduled for 2028, pending FID.

In its home market, Topsoe is about to hit a major milestone in its development with the startup of its first production plant. The 500MW/yr SOEC plant at Herning in central Jutland is scheduled to start up by the end of the year. “We have a factory starting up in Denmark as we speak,” Hedegaard said. The plant has received €94m ($99.4m) in grants from the EU’s Innovation Fund.

Reality check

Hedegaard said the wider clean hydrogen sector has undergone a “reality check” this year, which has been good for the sector. Some developers had overpromised and been forced to roll back their plans, resulting in the cancellation of some high-profile projects, including FlagshipONE in Sweden, Europe’s largest synthetic methanol project, for which Topsoe was a technology partner.

In August, Topsoe said inflation and high interest rates had contributed to “a general slowdown” in Europe during the first half of the year.

“Our primary focus is to help solve the climate crisis” Hedegaard, Topsoe

However, the medium-term outlook for the industry remains bright. “If I look at medium term, the sentiment has not changed. Everybody agrees that we need to do something on renewable fuels for the hard-to-abate sectors,” Hedegaard said.

“We will get there. There will be progress. We have confidence and hope that there will be projects reaching FID by the end of this year and in the first quarter.”

Sweet spot

A noticeable trend in the green hydrogen sector is that projects are getting smaller, Hedegaard said. Many developers have decided that trying to deploy 1GW of capacity from scratch is too risky. A range of 50–250MW is becoming more popular. “That range seems to the sweet spot in terms of of scaling up to do something that is competitive and makes a meaningful amount of molecules, but at the same time having a risk that  [developers] can stomach,” he said.

One of the key drivers pushing developers to deploy large-scale projects has been the pressure to reduce production costs through economies of scale. However, the clean hydrogen industry should not be judged purely on costs at this stage of its development, Hedegaard said.

“We as an industry are still being compared to oil. So the most frequent question I get is when are you going to be quite price competitive with grey [hydrogen] with solutions,” he said. “Our primary focus is to help solve the climate crisis.”

He compared hydrogen to the wind power industry, which has taken two decades to evolve.  “I'm not saying that we need a couple of decades, but we need more than one or two projects in order to get us to price competitiveness.”

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Author: Stuart Penson