Questions and answers from the launch event

We want to thank you for asking many questions during the launch of Nordic Hydrogen Route. As we didn’t have time to answer them all in the event, here you can find the questions and answers. If you still have something you would like to as, please contact us here.

 

ABOUT NORDIC HYDROGEN ROUTE

In what order could the investments be articulated, i.e., wind power, electrolysis, hydrogen use, pipeline construction? How could the pipeline investment proceed? Would it be built at once or in pieces?

Investments are likely to proceed at a slightly different pace. The development of wind power projects is in an active phase and investments are being made all the time. The development of hydrogen projects is also very active at the moment. For its part, the development of hydrogen infrastructure can enable more investments to be made in different parts of the value chain.

As the Nordic Hydrogen Route is 1000 km long, it is likely that the pipeline would be built in sections. Some sections of the pipeline could be built before others, to connect early customers to the network before linking all of the pipelines into the complete Nordic Hydrogen Route.

What could be the average cost of 1 km of hydrogen pipeline to be installed in Finland in near future?

Our current high-level estimate of the investment cost of the pipeline alone is in the range of 2-3 M€/km or 21-31 MSEK/km. The cost estimates will become more accurate in later stages of the work.

What do you consider as the biggest risks in the project?

The opportunities, risks, and conditions for progress of the project will be assessed both during the transition from one stage to another, but also more continuously as the results of the different work packages of the project get ready. The most significant risks to the progress of the project are related to the timely implementation in relation to the development rate of the hydrogen economy in the region. Too early development can lead to additional costs, but on the other hand a much more significant risk is that the infrastructure and the market will not be developed in a sufficiently rapid time frame to meet the needs of customers and the market.

How well is this Bothnian Bay project applicable to emerging economies where emissions are only increasing?

Hydrogen transmission and hydrogen value chains benefit from clean electricity resources, reliable infrastructure, and early funding opportunities. We hope that the market becomes decentralized, and that many regions like Bothnian Bay are recognized and made into regional hydrogen clusters. This will enable new industrial activity and green industrialization in these regions.

 

ABOUT HYDROGEN MARKET, PRODUCTION AND USAGE

How do you see the future production and consumption balance between the two countries? Will it generate a healthy industrial race to be first to utilize the unique possibilities of a hydrogen grid?

There is significant potential in both Finland and Sweden for hydrogen production and consumption. As the industry development is at an early stage, the eventual balance is not yet clear. We expect there to be a healthy competition between potential market operators in the area to utilize, as you say, the unique possibilities of a hydrogen grid.

Where will the H2 be produced – onshore or offshore? How big portion of the upcoming green electricity production needed for the hydrogen production in the northern region do you estimate to be based on offshore wind?

The Nordic Hydrogen Route aims to create a platform for hydrogen transmission and trading for many different use cases. Offshore hydrogen production may be especially competitive for large wind power parks that are optimized for industrial hydrogen production.

Is the idea to start producing hydrogen even before the pipe is ready?

Because large-scale transmission infrastructure takes several years to develop and build, it is expected that some hydrogen projects will be initiated before the transmission infrastructure exists. We are in active dialogue with stakeholders to make sure companies in the area know about the possibility of joining a larger hydrogen market in the future, even if operations begin earlier.

The significance of offshore wind production is increasing in the whole Europe. We foresee this trend also for Bothnian Bay, while for now onshore wind power is the dominant alternative.

How do you see the competitiveness of Nordic piped green hydrogen vs. hydrogen imported to Continental Europe from e.g., Middle East as ammonia?

We believe the significant and economical wind power resource of the Nordic countries can be a highly competitive source of hydrogen and hydrogen products to the wider European market. The eventual energy flows will of course depend on many factors, including domestic industry development and the upcoming global hydrogen market.

Would it be good to work on connecting the Nordic Hydrogen Route to the European market at the same time as the route is being constructed?

We are closely following the hydrogen industry in Finland, Sweden and in other regions. Potentially connecting the Nordic Hydrogen Route infrastructure with a larger pan-European hydrogen infrastructure and market, could enable creation of a liquid hydrogen market, access to storage facilities and balancing the volatility of the market. We have chosen a proactive development approach, and this includes also detailed evaluation of the right timing for further and potential connections and expansions of the networks. The infrastructure development is based on market and customer needs.

Which are the main industries using H2?

We currently expect the steel, e-fuel, and fertilizer value chains to start up the early hydrogen market in the Bothnian Bay area. Utilization of byproduct heat from electrolysis process for district heat production in additional competitiveness factor that can support decarbonization of district heating in different communities in the region and therefore also support the heating sector.

Is hydrogen a final product or rather a raw material for further processing, i.e., the production of methane, methanol, and ammonium compounds?

The Nordic Hydrogen Route aims to enable an open hydrogen market. It is likely that we will see a wide variety of end products, including but not limited to hydrogen itself and different chemical derivatives such as methanol and ammonia in addition to use as fuel/raw material of industrial processes.

How well can electrolysers be controlled with wind power, i.e., what is the peak operating time for profitable production?

According to our most recent knowledge, the capacity factor of Finnish wind power is 33%. The utilization rate of electrolysers connected to wind power is a question of complex optimization and depends on the total business case of the installation. We find it likely that early electrolyser installations will run at a high utilization rate, and needed flexibility is achieved through the power markets. As capital costs of electrolysis plants start to decline as electrolysis manufacturing plants are scaled up, there may be more room for flexibility.

 

ABOUT STAKEHOLDERS

Considering high cost of producing green hydrogen compared to other alternatives, how do you see acceptance from various industries?

Our perception is that industries see the development of large-scale hydrogen infrastructure as positive, as it brings about new growth and opportunities to connect several suppliers and users to an open market. The benefits of ready infrastructure have significant potential to bring down costs and risks to individual companies.

Hydrogen production with electrolysis is also one of the most promising, scalable technologies for production of alternatives for fossil fuels. It’s also likely that as the technologies for hydrogen production continue to develop and electrolyser manufacturing capacity is being scaled up, the CAPEX of electrolysis plants will decline. This in turn affects the economic feasibility of hydrogen production and price-levels that hydrogen can be produced.

How will you integrate stakeholders and upstream downstream companies as you move forward?

One key objective of the first phase of the Nordic Hydrogen Route is open collaboration with the stakeholders, including companies both upstream and downstream in the hydrogen value chains. The infrastructure and market will be proactively developed to serve market and customer needs, so the discussions with the stakeholders are extremely important.

Have new opportunities been discussed with energy companies in the northern municipalities to expand district heating networks?

We aim to bring up the potential of the region and identify ways to improve the profitability of projects through cross-industrial cooperation. Utilizing the waste heat generated in the electrolysis process as an alternative to district heating production can be a cost-effective solution for municipalities and energy companies in the region. At the same time, it can improve the profitability of hydrogen production when additional revenue streams can be obtained from the sale of heat. In the Nordic Hydrogen Route project, we are happy to have an open discussion with various actors to promote the presentation of opportunities.

 

ABOUT EUROPEAN COOPERATION

What collaboration aspects you will foresee with Estonia and other Baltic states?

Nordic Hydrogen Route – Bothnian Bay, is the first step of executing the joint European Hydrogen Backbone Vision in the Nordics. Nordic Hydrogen Route could later on develop to connect other regions in Finland and Sweden to the planned Bothnian Bay infrastructure or even to other countries. We anticipate and welcome the steep rise in renewable energy production all over the Nordic and Baltic states.

Additional wind power available in the Baltic region may enable hydrogen production and creation of a hydrogen market around the Baltic Sea.

 

ABOUT FUNDING

Do you plan to use EU grants to fund your project?

We want to build infrastructure that provides value to customers and is financially sustainable. In the short-term, in order to be proactive and build up the infrastructure quickly to enable Nordic participation in the growing hydrogen industries, we do plan to evaluate the possibility to utilize external funding, such as EU funding opportunities. The need for funding and investments by Gasgrid Finland and Nordion Energi will be evaluated during the first phase of the project in detail.

Is it possible that Finnish and Swedish governments will give funding together to the investments in the Nordic Hydrogen Route even if the grid serves two countries?

One of the key objectives of Nordic Hydrogen Route project, in phase 1, is to evaluate different funding and financing possibilities. This includes also national funding opportunities and different options will be thoroughly evaluated and open discussion organized with the key stakeholders such as regulators and policy makers.

How much government investment grants are needed to implement the project?

In the first phase of the Nordic Hydrogen Route project, various financing options for further development will be explored in detail. In the early stages of the development of the hydrogen economy, public support is particularly important for the first projects.

 

OTHER

Have you settled on design codes to follow? Present pipeline codes are in many aspects very conservative, which might influence the business case.

The pipeline will be designed and built according to industry best practices, with safety and reliability as top priorities. As gas TSOs, Gasgrid Finland and Nordion Energi have vast experience in this field with other gases, which will in many ways benefit the building of hydrogen infrastructure.

Is the NIMBY (Not in My Backyard) effect an issue in Finland in case the offshore wind parks are considered?

The NIMBY effect is familiar to many renewable project developers in Finland also. We hope that the communities around Bothnian Bay will welcome the new investments and the possibilities that they bring, such as new regional jobs, communal taxes, and an increased livelihood of towns and cities.

There is not enough competitively priced renewable electricity in Central Europe. In the Nordics there is. Which one in the Nordic countries is worth focusing on: attracting more and more electricity and hydrogen-based industries, or exporting electricity and hydrogen to industries in Central Europe?

The vision of the Nordic Hydrogen Route is that it will drive decarbonization, support economic development and enable an independent energy future. The Nordic Hydrogen Route mission is that by building-up a cross-border hydrogen infrastructure in Bothnian Bay Region and an open hydrogen market by 2030, Nordic Hydrogen Route will accelerate the creation of hydrogen economy and new investments to support European energy transition and increase the access to green and competitive domestic energy. As the renewable energy resources are significant in the region, both creation of new industries as well as potential export of hydrogen and hydrogen derivatives may be an opportunity for the region and the countries.