Refhyne 2 project held up by ITM electrolyser setbacks

Market: Hydrogen
16/03/23

Progress on the German 100MW Refhyne 2 renewable hydrogen project has been held back by UK electrolyser manufacturer ITM's decision to trim down its expansion plans and by persistent regulatory uncertainty, Shell's hydrogen business manager Frank Kiesslich said.

The Shell-led consortium developing the site was close to taking a final investment decision (FID) in September last year, in line with initial plans, Kiesslich said at the World Electrolysis Congress in Dusseldorf. But ITM, which is a consortiums partner and the project's designated electrolyser supplier, scaled down its expansion ambitions and put plans for construction of a 1.5 GW/yr factory on hold. This, along with regulatory uncertainties, led to the decision to postpone the FID which has still not been taken, Kiesslich said.

ITM had cited "geopolitical instability, high inflation and economic uncertainty" as reasons for scaling down its expansion plans. It also said late last year that its production delays could lead to some large-scale hydrogen projects being postponed. The firm in January outlined a 12-month plan to rectify what recently-appointed chief executive Dennis Schulz called "an unacceptable set of results".

Kiesslich said a lack of clarity regarding EU renewable hydrogen regulations has also curbed developers' confidence to take an FID on Refhyne 2. While the European Commission published a delegated act with a legal definition of renewable hydrogen last month, Shell does not see it as "a given" that this will take effect, Kiesslich said. The delegated act could still fall through as there are signs of "resistance" in the European Parliament that, along with the European Council, can still reject it, Kiesslich said.

Parliament in late February prolonged the period during which it can scrutinise the delegated act, giving it until June to approve or reject.

Refhyne 2 is intended to decarbonise processes at Shell's 334,000 b/d Rheinland refinery complex in western Germany and has received EU funding support. The project follows 10MW Refhyne 1, which came on line in 2021.

By Stefan Krumpelmann

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