Future hydrogen supply in Stenungsund - Pre-study of a SOEC pilot plant and analysis of large-scale integration of SOEC and ammonia cracking plants

Rapport, 2024

To enable the chemical industries in Stenungsund achieve climate neutrality, large amounts of fossil-free hydrogen will be required. Producing all hydrogen through electrolysis will demand large amounts of electric power, but the current grid capacity in Stenungsund is limited, making less electricity-intensive hydrogen production solutions essential. This study investigates the technical and commercial prerequisites for a Solid Oxide Electrolysis Cell (SOEC) pilot plant in Stenungsund. It also analyzes various scenarios to understand how SOEC and ammonia cracking can complement each other from a techno-economic perspective and enhance security of supply.

The interviews that were conducted to gather insights from relevant stakeholders showed that they anticipate a significant increase in future hydrogen demand, highlighting the need for scalable and cost-effective production methods. There is strong interest within the industry cluster to learn more about SOEC technology and gain practical experience through the establishment of a pilot plant.

A concept for a SOEC pilot plant has been outlined in the current study including a description of the possible integration with existing infrastructure in Stenungsund. The intention with such a pilot plant is to test and gain experience from commercially available equipment of a size that is relevant for large scale hydrogen production projects. Two different plant sizes were considered, corresponding to approximately 5 MW (case 1) and 10 MW (case 2) electric power demand. There is a clear scale benefit for the larger plant which makes it the preferred choice, but the investigation showed that the CAPEX for the SOEC pilot plant is higher than initially expected. To proceed with a project, a viable business case needs to be presented.

This study also examines the technical and economic synergies between SOEC and ammonia cracking, focusing on cost optimization and operational flexibility to meet the hydrogen demand of existing Borealis steam cracker plant at the site. The analysis points to that the integration of both technologies enhances security of supply and reduces costs assuming favorable long-term low-carbon ammonia supply contracts and favourable Power Purchase Agreements (PPAs). Comparing the levelized cost of hydrogen (LCOH), the study finds that SOEC offers a lower LCOH than ammonia cracking under the assumed input costs (400 €/tNH3), provided competitive PPAs are secured (45 €/MWh). The integrated system’s LCOH ranges from 3.7 to 6.5 €/kg, depending on ammonia and electricity prices, with flexible operation potentially reducing costs to 3.7–4.5 €/kg by leveraging spot market prices.

Current EU regulations mandate temporal and geographical correlation for PPAs used in renewable fuel production, which complicates flexible operation aligned with the electricity market. Full-load, year-round operation achieves the lowest LCOH, though it limits peak demand response. The sensitivity analysis suggests that exporting excess hydrogen to the industrial cluster could offset costs in low full-load scenarios. In the near term, ammonia cracking can mitigate grid constraints, while future expansion of SOEC capacity, as grid capacity grows, promises further cost reductions and enhanced operational flexibility.