Neste has withdrawn from investing into a 120 MW electrolyser project to produce renewable hydrogen at its Porvoo refinery in Finland.
The decision follows the completion of the basic engineering phase, which started in May 2023.
Neste attributed the decision to challenging market conditions and financial performance.
“Evaluation of this project has been impacted by the tight limitations on the use of renewable hydrogen in the refinery’s processes in fulfilling the Finnish national distribution obligation,” according to a statement.
“These limitations prevent the full economic utilisation of electrolyser of this size.”
Markku Korvenranta, Executive Vice-President for Oil Products business unit at Neste, said while it is discontinuing the initial renewable hydrogen project, it is actively evaluating alternative pathways for securing renewable hydrogen in Porvoo. Finland aims to produce 10% of all green hydrogen within the EU by 2030.
“Our ambition remains to utilise renewable hydrogen at the Porvoo refinery, contributing also to fulfilment of the Finnish renewable fuels of non-biological origin (RFNBO) distribution obligation,” he said.
“Together with our partners, we continue the work to develop hydrogen ecosystems connected to our Porvoo refinery.”
Yesterday (October 23rd) Neste reached an agreement with Braskem, producer of thermoplastic resins in the Americas, for the supply of renewable and recycled feedstocks for polymers and chemicals production.
The green hydrogen project withdrawal is another blow to the hydrogen sector as it continues to wrestle with financing and supply issues.
Alongside other clean energy industries, hydrogen is facing a set of macroeconomic headwinds, varying from increased inflation and interest rates to turbulence in global energy markets following the geopolitical crises, supply chain constraints, and higher than anticipated renewable electricity prices, according to the Hydrogen Council.
A key sector-specific challenge is uncertainty with regulatory frameworks which impedes project bankability. Coupled with cost increases for renewable power and electrolysers, this has led to delays and cancellations of projects, particularly renewable ones.
While the industry has seen a seven-fold increase in hydrogen capacity reaching FID globally over the past four years, the pace and scale of deployment has not been sufficient to remain on track with climate commitments.
To accelerate decarbonisation, an eight-fold increase of investments is required until 2030, compared with the current investment of $75bn past FID.
