Finland Gets its Largest Hydrogen Plant to Date and Biden, Jokowi Unveil USD 20 Billion Deal to End Coal in Indonesia

Biden, Jokowi Unveil USD 20bn Deal to End Coal in Indonesia

Market Impact Factor: High

Shahzain Ahmed?| Junior Analyst – Power Grid

As part of the Just Energy Transition Partnership (JET-P), Indonesia has obtained at least USD 20bn in funding commitments to help the country increase its use of renewable energy and reduce its reliance on coal, to speed up its clean energy transition and move forward its net zero carbon pledge by 10 years. (2060 to 2050).

Participating governments, the United States, Japan, Canada, Denmark, the European Union, France, Germany, Italy, Norway, and the United Kingdom, are to provide a total of about $10 billion in concessionary lending, grants, and equity, while major private global financial institutions that earlier pledged to support climate investment will arrange the rest.

The partnership aims to help Indonesia reach its total power sector emissions peak by 2030, seven years earlier than currently projected, and cap carbon dioxide emissions at 290 megatonnes by that year, which would be down from a baseline value of 357 megatonnes. JET-P also seeks to accelerate the deployment of renewable energy so it will make up 34% of Indonesia's total power generation by 2030 (from the current share of 11%). The financing support is expected to help Indonesia reach its net zero emissions target by 2050, a decade earlier than the 2060 goal. The Indonesian deal is the biggest so far, reflecting the nation’s heavy reliance on coal. Indonesia is the world’s third-largest producer of coal and the average age of its coal power plants is only 12 or 13 years old. (generally, run for 45 years)

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Two Projects of 32 MWh Energy Storage Capacity Receive Debt Financing

Market Impact Factor: Medium

Siddiqa Batool?| Junior Analyst – Energy Storage

Two energy storage sites are under construction in Saxony and Saxony-Anhalt having a total energy storage capacity of 32 MWh. These facilities have together obtained a grid connection of 27.6 MW. The projects have received debt financing from Munich-based Berenberg Bank. Berenberg has financed these projects through its Green Energy Junior Debt Funds. Though the developer of these projects was not disclosed it has been mentioned that this battery storage system will provide services in the primary control reserve market and become operational in 2022. The primary control reserve market of Germany is around 562 MW capacity and has mostly become saturated by the installation of BESS projects. However, the operators of BESS are still planning to generate their revenues from the PCR market as over the past year the prices in the PCR market have been higher than average due to increased volatility in the electricity market.

German energy storage market was at a stall after 2018, in which it had installed around 190 MW of battery energy storage projects. The reasons for slow development were regulations, surcharges, subsidy costs, and unprofitable business cases. The current scenario shows that the German ESS market is gradually coming back on track in 2022, as it had already installed around 60 MW of BESS projects and has around 140 MW of BESS projects in construction which are set to be operational by the end of 2022. Two of the biggest projects of 2022 are from RWE and SmartPower.

In the current scenario, there are opportunities for BESS to generate profitable revenues due to the increase in prices of the PCR market. Also in 2021, the Secondary Control Reserve market was introduced in Germany, which now provides a business case for BESS. Other than that energy shifting market also is profitable for generating revenues due to the higher prices of electricity and is expected to remain for the next two to three years. In Germany, DSO also provides fees for avoided network use to energy storage operators, however, this regulation is to be abolished at the end of December 2022.

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Finland’s Largest Hydrogen Plant Planned in Kokkola

Market Impact Factor: High

Jannat Wasif | Junior Analyst – Hydrogen

The Aland-based firm Flexens and KIP Infra have signed a Letter of Intent (LoI) regarding a land lease agreement in the Kokkola Industrial Park, where they plan to build a 300 MW facility for hydrogen production. Green hydrogen will be produced through electrolysis and will also be converted into ammonia to be used in the chemical and agricultural industries.

The interesting aspect of this news is that the announced facility will be Finland's largest hydrogen production plant when it comes into operation in 2027. The project developer, Flexens, states that the estimated cost of the plant is 500 million euros and there are ongoing negotiations to feed waste heat from the plant into Kokkola's municipal heating network.

Finland published its hydrogen strategy in 2020 and aims to install at least 1,000 MW of dedicated renewable capacity for green hydrogen production. The country has the potential to produce 45% of Europe's clean hydrogen. However, Finland's hydrogen market is still in its infancy. There are currently around 20 hydrogen plants in Finland. However, these plants are small, 20 to 40 MW, and are not specifically designed around clean energy.

Only one hydrogen plant is currently under construction in the country which is a 20 MW hydrogen plant in Harjavalta being built by Power2X Solutions. Moreover, another ~200 MW hydrogen plant is also planned in the Kristinestad area. Therefore, PTR concludes that Flexens' announced 300 MW facility could act as a game-changer for the country's hydrogen market as it would alone fulfill a third of Finland's domestic capacity target.

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