Electrolysers

Why is Fortescue importing green hydrogen electrolysers from the US to Australia when it has its own factory nearby?

Plug Power set to ship 550MW of machines from the US to a Fortescue green hydrogen project in Queensland, even though the latter owns an electrolyser factory in the state

Projection of Fortescue's Gladstone electrolyser factory.
Projection of Fortescue's Gladstone electrolyser factory.Photo: Fortescue
In January, when US electrolyser maker Plug Power pulled out of its joint venture with green hydrogen developer Fortescue to build a 2GW electrolyser gigafactory in Australia, the team led by Fortescue’s billionaire founder and chairman Andrew Forrest was typically bullish.

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“Bring it on”, the company’s green energy CEO Mark Hutchinson said at the time, making the following commitment: Fortescue would move forward, regardless of Plug’s departure, and design and build its own electrolyser at the planned Queensland factory.

But now, even though Fortescue says that the factory is still on track to deliver its first own-brand machines later this year, the company has surprised observers by declaring that its preferred electrolyser supplier for its Gibson Island green hydrogen project in Brisbane, Queensland, is actually Plug Power, which would supply the full 550MW capacity from its factory in New York state.

It’s a remarkable decision for Fortescue to import PEM electrolysers halfway around the world — about 10,000 nautical miles (18,500km) — for one of its first green hydrogen projects, when the bullish company’s own 2GW electrolyser factory in Gladstone, Queensland, will soon be up and running about 550km up the coast.

It begs the question of whether Fortescue’s factory is indeed as ready or scaleable as the company claims — or whether the deal has been made because banks were not prepared to finance Gibson Island using newly designed electrolysers that have not been tested in the field for any length of time.

However, Fortescue has told Hydrogen Insight that the decision to make Plug the preferred supplier for Gibson Island — on which Fortescue is expected to reach final investment decision (FID) in the coming weeks — is a reflection of an impending supply squeeze on electrolysers, which has compelled it to partner with other manufacturers.

“Right now, there are not enough electrolysers in the world to support the amount of green hydrogen we are set to produce,” a Fortescue spokesman explained.

“That is why we are partnering with other world leaders in this space to secure our green energy supply chain, and we’re excited to secure capacity with Plug to help us achieve our goals.

“Fortescue has always said we are technologically agnostic and will always use the best solutions at the best price for shareholders for each of our projects.”

Hutchinson said in April that the first electrolysers would come off the Gladstone production line this year, while Fortescue’s annual report a few days later suggested that the facility would open its doors in early 2024.

But in a statement to Hydrogen Insight yesterday, Fortescue was crystal clear.

“The fit out and construction of the 2GW Gladstone electrolyser facility is continuing, on track, on time and under budget, and will be completed this financial year,” a spokesperson for Fortescue said. “The first electrolysers will also be produced from the facility on an automated production line this year.”

When Plug pulled out of its joint venture with Fortescue, the US company's chief financial officer, Paul Middleton, told an investor call: “We decided that we didn’t want to build a factory with them [FFI] because we saw the economics, we could do better. So we really didn’t think that was worthwhile.”

Hutchinson responded to Plug’s departure by saying: “I believe we can get the best economics out of our electrolyser facility, [Plug CEO] Andy [Marsh] has a different view, that is fine, so bring it on.”

But there has clearly been no animosity. If anything, Plug’s decision has resulted in a deeper partnership between the two green hydrogen pioneers.

In addition to the “preferred supplier” status, they have signed a memorandum of understanding (MoU) to “evaluate co-investment opportunities in green hydrogen production projects in North America”, and for Plug to “evaluate the potential supply” of electrolysers, liquefiers, tank trailers and stationary storage tanks for Fortescue’s green hydrogen projects in North America, including its 80MW Phoenix Hydrogen Hub in Arizona, which it acquired from cash-strapped truckmaker Nikola for $24m in July.
On top of this, the two companies have also “started the initial diligence process” for Plug to take up to a 25% equity stake in the Phoenix project, and for Fortescue to take an up-to-40% equity stake in the US company's 120MW Texas H2 plant.

Fortescue has committed to take FID on five green hydrogen projects by the end of the year, in Australia, the US, Norway, Kenya and Brazil.

And in August, Plug was in the final stages of commissioning a 15 tonnes-per-day green hydrogen production and liquefaction plant in Georgia, expected to reach full capacity within this quarter. And it has a further three projects in New York, Texas and Louisiana due to be completed next year.

“The proposed 550 MW electrolyser deal reinforces Plug’s established leadership position in deploying electrolyzer solutions at a global scale,” said Marsh. “Today, we have taken a meaningful positive step forward in our ongoing relationship with Fortescue, opening up many opportunities to build the green hydrogen economy together in the future.”

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FortescueGreen H2PEM electrolysersPlug PowerAustralia
Published 12 October 2023, 06:53Updated 12 October 2023, 06:53