Ørsted halts green hydrogen to methanol project in Sweden

Ørsted halts green hydrogen to methanol project in Sweden

Danish utility firm Ørsted has put a stop to its pioneering e-methanol project, which is under construction in northern Sweden, due to poor market growth and difficulty in securing long-term offtake contracts.

Ørsted assumed full ownership and took a final investment decision on the project called FlagshipONE in late 2022 – originally developed by Liquid Wind and touted at the time as the largest FID green e-methanol project in Europe.

It was the company’s first commercial-scale Power-to-X facility described as an important stepping stone towards Ørsted’s ambition of establishing itself as a top player in green fuels for shipping.

“While we were aware of the substantial uncertainties and risks associated with the development of a pioneering and immature liquid e-fuel project and market at the time of the FID, it was a strategic choice to take a leading position in shaping the industry,” Ørsted said in its earnings statement.

Methanol has become the most popular alternative fuel in the global newbuild orderbook alongside LNG, but its high cost has kept operators from signing up for the fuel in the long term.

Ørsted said the industrialisation of the technology as well as the commercial development of the offtake market have progressed significantly slower than expected.

“The business case has deteriorated during maturation due to the inability to sign long-term offtake contracts at sustainable pricing and significantly higher project costs,” Ørsted noted, adding that moving forward it would de-prioritise its efforts within the liquid e-fuel market.

Located in Örnsköldsvik, the facility was expected to start up by 2025 and produce around 50,000 tonnes/year of e-methanol.