As countries expand renewable energy parks and shift away from fossil fuel-fired generation, power grids become cleaner but Latin American operators face an associated challenge of managing the intermittency of wind and solar.
During periods when production from such plants peaks and outstrips demand, this excess output – which is mainly dumped – could be put to good use in another sphere of the energy transition.
US energy transition project developer First Ammonia, which is eyeing Colombia and Chile, proposes using this surplus to produce the clean fuel and fertilizer industry feedstock.
The company is developing in Germany what will likely be the world’s first modular, commercial-scale plant to produce green ammonia from intermittent renewable energy. This maiden unit – expected to be followed by more across the globe – is scheduled to become fully operational in 1Q25 as part of an eventual 5GW fleet. In parallel, affiliate First Ammonia Motors is working to develop the first combustion engine to run on 100% ammonia.
BNamericas speaks to First Ammonia CEO Joel Moser – who is also a professor at Columbia University in New York, where he lectures in international infrastructure – about the projects, Latin America, and more.
BNamericas: What’s the state of play with your projects and how do you tackle the supply-demand conundrum, often cited as a hurdle.
Moser: We started about two years ago. There was no market for green ammonia. There was expectation that this will be a major fuel of the energy transition, and we went about doing a couple of different things.
We secured a supply of the world’s best next-generation electrolyzers, which are the SOEC, or solid oxide electrolyzer cells, which will be produced by industry-leading Danish company Topsoe.
We succeeded in that objective when we announced, about two months ago, our 5GW, multi-year advanced purchase agreement of the electrolyzer cells. We also went about securing sites. We have sites on five continents, so five is the number for us. That’s 5GW, which could produce, at a nameplate capacity, about 5Mt of green ammonia when we have installed it all.
The first two continents likely in the queue are Europe and North America, with sites in northern Germany – two of them – and two sites in the southwest of the US. But we also have sites in South America, Africa and southeast Asia. We need sites that will be the homes eventually to 5GW of production, which is a huge amount of production and that’s all well underway.
You asked, however, about offtake and offtake is, of course, traditionally the typical catalyst for the development of a project, and specifically a project finance-based transaction.
But when we started there was no offtake, there was no market, there was no product and there was no demand. So, we ventured forward, nonetheless, into the unknown. Our original expectation was that we will be the market-maker of green ammonia, ourselves as a self-offtake, which still remains within our long-range plans, but the market started to develop even as we were negotiating our electrolyzer agreement and finalizing our site selections.
There were some early movers: Japanese power utility Jera put out a request for proposal for some early demand, and some others. Small green shoots, if you will, for the green ammonia market. But since we’ve gone public – and we didn’t want to go public with our business until we had something interesting to say, and that interesting thing was the announcement of our electrolyzer agreement – we’ve now been approached by many very significant offtakers around the world, eager to buy our product, not only years before it’s made but years before the factory that will make the SOECs has been completed and our projects are completed.
So there’s now a robust market and a robust amount of demand. I wish I can sell it more than once, but we can only sell what we produce, and we’ll start producing our green ammonia in 2025 and scale-up the level of our production through the decade, probably top out this decade at about 3Mt because we’re not going to produce at full nameplate capacity, which would require 24-hour a day production.
Our business model, and our policy, is to produce green product on an intermittent basis so that our use and demand of renewable power is synergistic with the production of renewable power. So others can use it directly as electricity – that’s its highest and best use. When there is insufficient demand for renewable power generation, the troughs, we will be the offtaker.
BNamericas: So, clearly, you’re planning grid-connected plants, not islands.
Moser: Yes. My colleagues here tell me that, in round numbers, there’s about 100GW of renewable power that goes wasted, not all the time, but much of the time. So there’s lots of room to produce this green fuel before there even is a need, for this product, to develop new renewable generation.
However, we had a study performed for us in Europe, to tell us what would happen if we put a GW of intermittent green ammonia production in Germany. What the study, by a very reputable consultant, found is that every dollar that we spend buying renewable power is a new incremental dollar for the renewable power market, which makes sense because we’re buying what we like to call the unloved electrons. So, we indirectly cause the development of new renewable resources.
We’re synergistic with the further growth of renewable energy. In the right circumstances and in the right geographies, we could be directly connected to renewable resources and we’re looking at some locations where that is going to make sense, but for the moment we think there’s plenty of excess unused renewables out there asking for offtake.
BNamericas: Just to return to offtake, can you provide any color on the type of offtakers interested? You mentioned power generation.
Moser: We as a producer are agnostic for what the offtake use would be. Seventy percent of all the conventional ammonia being used in the world today is used for fertilizer.
If all we ever do is contribute to the decarbonization of agriculture, we’re happy. But all the incremental uses, which are expected to quadruple the demand for ammonia, are in the energy space. Ammonia is a chemical battery, so ammonia can and will be used to store energy produced when there is excess renewables and used as power, as the Japanese power grid operators intend to replace their coal-fired generation with ammonia-fired power generation; the marine industry, the long-haul shippers are preparing carefully and methodically to start to convert ocean-going ships to ammonia fuel.
There are three airplane engine manufacturers who are developing ammonia-fueled engines and Nasa has announced a study, for which I have been asked to be on the peer-review panel, to explore the idea of using ammonia as a commercial airline fuel.
There are also a number of surface transportation applications that are under review, including one that we’re doing ourselves.
Ammonia can be used for anything that any fuel is currently used for. I don’t believe that it will replace every single fuel for every single application, but what we like to say is that we believe ammonia will be the workhorse of the hydrogen economy. Why do we say that? There are only two power-to-x fuels, as they’re called, that are completely carbon free and that is hydrogen and ammonia. There will be roles for other power-to-x fuels such as methanol and synthetic diesel but those actually produce carbon when they’re used as fuel. Only ammonia and hydrogen are carbon free, end to end.
Hydrogen is 30 times more expensive to store and use than ammonia. When hydrogen is made, it will be transported as ammonia and we think, ultimately, the world will come around to using it as a direct fuel as opposed to thinking of it just as a transportation mechanism.
BNamericas: What can you tell us about the importance of Latin America for your company?
Moser: Latin America is high on our list. We have two sites under review in Colombia. We’re working very closely with the government so that our development is synergistic with their plans to build out both renewable generation and transmission. We’re very excited about our friendships and development partners in Colombia.
We’re new to Chile but we’re looking very hard at Chile. We have a team on the ground. We know that Chile will be one of the world’s greatest energy exporters, having many, many times more potential to generate renewable power than the country itself will use and that power will export as ammonia. So we’re quite confident that we will be having sites and projects in Chile as well.
BNamericas: Are you looking at the south or the north, or is it too early to say?
Moser: In terms of size, our early projects will be 100MW but they will scale up. Our plan is to be installing gigawatt-sized projects.
Very early-stage review of Chile, but my sense is that we’re likely to develop at least our first project in Chile in the north, where the logic of unused grid-connected power prevails. My understanding is that while there are tremendous potential energy resources in the south, that’s going to require new power generation infrastructure, which is not something that is our first choice, but we could easily be in both areas over time.
BNamericas: Will your construction projects trigger investment in other areas, for example, nitrogen production or haulage?
Moser: Absolutely. First of all, when we put in a plant, we’re essentially, indirectly catalyzing the further development of more renewable power.
Even on a more micro level, we produce oxygen which we can’t use, so we often might seek to co-locate in an industrial park where there is an oxygen offtaker. We can either produce our own nitrogen with air separation or we can buy nitrogen over the fence from somebody who wants to make it and sell it to us, or has excess from whatever their chemical process is.
Our product needs to be moved around, by rail, or more likely, by ship. Some of the sites we’re looking at in Colombia specifically and elsewhere in the world are excellent opportunities for bunkering hubs. And when the shipping industry moves to ammonia as a fuel, there’ll need to be an entire new infrastructure for fueling. So development of the site can catalyze the development of a bunkering hub. There’s tremendous opportunity for ancillary economic development around the production of our site.
BNamericas: In South America, would you set up a subsidiary or partner with a local firm?
Moser: In addition to being CEO of First Ammonia, I am a professor at Columbia University, at the School of International and Public Affairs, where I teach international infrastructure. One of thing I always tell my students is that if you cross the border, you need a partner; if you’re not local, you need someone who’s local. Almost certainly in every place that we go, we will be working with a local partner.
We have a sister company which actually has a presence in Colombia, so that may, or may not be, our local partner. But, yes, we’ll be developing business relationships with local partners; whether they are developers or people in the energy industry, going to be driven by the opportunity and the circumstances, site by site, country by country.
BNamericas: What’s the target market of your ammonia-fueled engine under development?
Moser: We wanted to challenge the conventional wisdom that ammonia is best for planes, ships and large trucks and buses, but not for passenger cars.
We examined that, and we came to understand that the thesis around that was based upon two issues: one is an incorrect, generalized view that ammonia was not safe for handling because it’s a toxic gas, notwithstanding the fact that there are studies that basically demonstrate that it is no more dangerous for people to be fueling vehicles with ammonia than with petrol, gasoline. There are lots of ways to handle ammonia safely.
The more challenging question was that the way that ammonia burns, which is slowly, means that, as a pure fuel, it’s not a good source of stop and start combustion in a car, the way we drive around in cars. The uses to date of ammonia as an automotive fuel, always used a co-fuel, like propane or some synthetic diesel, which meant that it would require co-fueling.
We looked at ammonia and said, ‘well, look, how about we use the ammonia as its own co-fuel?’ That may sound totally illogical, but ammonia is a hydrogen carrier, ammonia can be cracked back into hydrogen, so we have developed, and have already patented, an onboard cracking technology so we can have an automotive engine which runs on a mixture of ammonia and hydrogen. We can fuel cars, if you will, with ammonia and we have several different systems on board that will crack some of that ammonia back into hydrogen, so we have a hydrogen-enriched ammonia fuel mix which essentially functions the same as petrol, gasoline.
So that’s what we’re doing. Whether we end up starting a car company or having some lower profile role, we’re very excited about that technology. We have an automotive shop and lab in North Carolina that is studying this and that’s happening on an entirely separate track to the green ammonia production.
BNamericas: The automotive market is huge, much bigger than the power generation market.
Moser: Transportation is such a huge part of the energy market, such a huge part of greenhouse gas emissions, and the transportation market needs to be decarbonized.
We believe that electrification is going to have a limit, there’s going to be a ceiling for the electrification of transportation, particularly in countries where there’s inadequate grid capacity. Many places in the world don’t have, and may not have for decades and decades, the kind of grid capacity to support plug-in electrified vehicles. There needs to be a fuel, and we think ammonia will be one of those fuels.
BNamericas: Any final comments?
Moser: A few years ago, when the Paris accords were held, the big news story out of Paris was that we don’t have the technology or science to decarbonize our society, that we need to do more research.
The news today is that we know the way to do this. The science is there, it’s been there for a long time; basic engineering has actually been there for a long time as well, but the engineering has improved. The policymakers and industry have come to understand there’s a way forward, and that way forward is the continued extensive buildout of renewable power generation to the greatest extent possible and the production of power-to-x fuels such as ammonia, among others but we believe primarily ammonia, which is scalable, inexpensive to produce, easy to transport, to decarbonize those elements of the economy which can’t be easily electrified.
So the news is actually quite bright. We can do this, we can get there by 2050 and we know the way to do it.