EnabledPower News Insights

Trade Roadblocks hinder EU Solar Progress

The war in Ukraine has precipitated a move away from European oil & gas imports from Russia and as a result more emphasis is being placed on solar power. As reported in an excellent article in the Financial Times this week (authors: Yuan Yang, Alice Hancock and Laura Pitel) – the EU is looking to make solar power the largest energy source in the region by 2030. This will mean increasing solar capacity by three-fold in the EU in just seven years. This gives rise to concerns about dependence on China which supplies around 75% of Europe’s solar power equipment requirements including polysilicon, silicon wafers, PV cells and PV modules. (Yang, Hancock, & Pitel, 2023)

Long story short, the EU is accused of dropping the ball on solar investments for too long and for creating trade disputes with China through imposing anti-dumping laws – and adding 50% onto the price of Chinese solar equipment imports. The resulting price rises made it harder for the EU’s domestic industry to build solar capacity.

The ambition as set in the law passed in mid-March – the “Net Zero Industry Act” (NZIA) sets a goal of the EU meeting at least 40% of its power generation requirements. This has been met with a level of scepticism with the chief executive of Lightsource bp – the EU’s largest solar developers – Kareen Boutonnat, expressing concern that this rush to solar could result in too high a power price, and effectively give the industry a bad name.

The situation typifies a problem – the West doesn’t want to import goods that are in any way tainted by human rights abuses (much polysilicon is produced in Xingjiang), and we are concerned about Chinese dominance – however the EU countries cannot build fast enough to meet legislated targets without continuing to rely on the world’s solar giant. The global economy has been built over decades and it is not easy to make an about turn in the space of a few years.

bp Reveals Plans to Evaluate Expansion of Germany’s Green Energy Port with a New Hydrogen Hub

bp has announced evaluation of a new hydrogen hub in Wilhelmshaven, Germany incorporating an ammonia cracker capable of converting green ammonia – back into green hydrogen. The unit will have a capacity of 130,000 tons per year and would come online from 2028. Ammonia cracking is an enabling technology for large scale hydrogen because it is preferable to ship hydrogen in the form of ammonia between the point of production to the point of use. Typically, hydrogen is produced in places with access to cheap renewable energy such as solar PV and major production hubs are coming online in the Middle East, Africa and Australia.

The project would leverage the Nord-West Oelleitung (NWO) terminal at Wilhelmshaven, where bp is a participating shareholder and would utilise its current oil & gas pipelines to transport hydrogen which could then be transported to customers in the local Ruhr region. (bp, 2023)

Ammonia cracking is not a new technology – it has been around for many decades to provide on-purpose hydrogen in industrial processes. It requires a catalyst bed which in commodity units is generally a commodity nickel on alumina. Newer catalysts include ruthenium-based materials and the Siemen’s system which is part of the ammonia demonstrator project at the Rutherford-Appleton Laboratory in Oxfordshire UK uses a novel lithium amide-imide catalyst.

Electrocatalytic processes are also an option. For instance the Danish company Topsoe, which is a long-established supplier of both conventional ammonia synthesis and ammonia cracking catalysts, has developed its high temperature solid oxide electrolyser (SOEC) which can be used to generate nitrogen/hydrogen feed gas for ammonia synthesis. When the SOEC is run in fuel cell mode (SOFC) it can crack ammonia and the hydrogen produced is then combusted in a catalytic burner. (See Figure 1 below). The system runs with 8 x 50 kW SOEC units. (Hansen, 2018)

Source: bp 18/01/23

bp. (2023, January 18). Retrieved from bp: https://www.bp.com/en/global/corporate/news-and-insights/press-releases/bp-reveals-plans-to-evaluate-expansion-of-germany-green-energy-port-with-new-hydrogen-hub.html
Hansen, J. B. (2018, December 9). Topsoe’s Road Map to All Electric Ammonia Plants. New York: AiChE. Retrieved June 11, 2021

The Inflation Reduction Act – Not Everyone’s Cup of Tea

The US Inflation Reduction Act is a far reaching piece of legislation intended to accelerate the USA battery and EV industry and supply chain. It offers a $7,500 tax credit for new EVs which is split into two halves. The first half requires the EV to have at least 40% locally sourced minerals i.e., they must originate from the US or a country with which the US has a free-trade agreement (FTA). In addition, there are restrictions on the proportion of materials & components that can come from China. 40% before January 2024, rising to 50% in 2024, 60% in 2025, 70% in 2026 and to 80% in 2027. The restrictions mean that DRC sourced cobalt and Indonesian nickel would also not qualify.

The other half of the tax credit comes from having an increasing proportion of the battery electrodes made or assembled in North America starting at 50% and rising to 80% by 2028 and 100% by 2029.

The legislation is great news for US-based EV OEMs and cell makers. In particular Tesla which has already stated that it expects to meet the terms of the IRA. This would give them a $35/kWh and $10/kWh tax incentive for each battery cell and pack produced respectively – a huge economic boost to its business given that it is planning to build over 1 terawatt hour (Twh) of capacity, and it will raise the profit margin for its planned low cost EV’s

The IRA also provides a 10% production cost tax
rebate for production of critical minerals and electrode materials – great for the battery materials suppliers provided they can get their minerals from an IRA compliant source. Potentially also significant for production of LFP materials in the US – which increasingly can provide vehicles with an acceptable range.

However not everyone is happy. CATL has cited it as a reason not to build a battery plant in the USA and South Korea has gone as far as banning its cathode material producer L&F from building there, citing intellectual property leakage concerns. Meanwhile the Natural Resources Minister of Canada – Jonathan Wilkinson, reportedly told the White House that the IRA prevents a level playing field between the US and Canada. Ultimately Canada may now need to respond by increasing the amount of support to its own domestic battery supply chain even though as it argues it has nurtured an environment attractive for the battery supply chain due to factors such as availability of clean renewable energy, a competent labour force and local mineral supplies.

Regardless of these concerns, the US which has 23 gigafactories in the pipeline, urgently needs its own upstream battery supply chain, and if the IRA manages to alienate companies who might otherwise have located in the USA, it could prove counterproductive.