Industrial

EU approves €158m Polish grant for green hydrogen plant that will partially replace refinery’s grey H2

Electrolyser and PV installation would displace some grey hydrogen production at Gdańsk petrochemicals facility

LOTOS/PKN Orlen refinery in Gdańsk, Poland.
LOTOS/PKN Orlen refinery in Gdańsk, Poland.Photo: LOTOS
  • Rachel Parkes
A Polish refinery is to be given a massive grant to install green hydrogen production that will partially displace the use of fossil-gas-based grey H2, after the EU signed off a request to let the national government provide financial support.

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The Polish government will now grant refiner LOTOS Green H2 €158m ($173m) to install a 100MW electrolyser and 50MW solar PV installation at a Gdańsk refinery owned by its parent company, PKN Orlen.

Hydrogen is typically used in petrochemicals to reduce the sulphur content of fossil fuel, and for this reason many refineries have integrated hydrogen production plants, that use steam methane reformation to make grey hydrogen from unabated fossil gas.

According to the EU, the new installation will produce hydrogen “solely from renewable resources”, although it is not yet clear how LOTOS Green H2 plans to source the remaining 50MW not delivered by the solar plant to the 100MW electrolyser — or how it will comply with EU rules defining green hydrogen in the recently published recently published delegated act (DA).
Crucially, the electrolyser is scheduled to come on line in 2027, shortly before the DA’s additionality clause, requiring green H2 producers to source all renewable power from installations less than three years old, kicks in in 2028.

As a result, it may be possible for the Gdańsk refinery electrolyser to source some power from the grid via a power purchase agreement with an older renewable energy installation.

The plant would also have to match electrolyser operation to renewable power generation, balancing on a monthly basis until at least 2029.

The grant also envisages the installation of a 20MWh battery at the site, which could help the refinery balance intermittent supply from its renewable power source.

Neither the European Commission nor LOTOS Green H2 was unavailable to comment at the time of publication.

Under EU state aid rules, any government wishing to provide financial support to an individual company or project must get clearance from the European Commission’s (EC) competition authorities.

In this case, the EC was satisfied that the investment would not have happened without the subsidy, nor would it distort competition.

“This €158 million measure enables Poland to help LOTOS Green H2 in the deployment of renewable hydrogen production and allows for a partial decarbonisation of refinery activities,” said Margrethe Vestager, Executive Vice-President in charge of competition policy. “This will contribute to the greening of a very energy-intensive sector, in line with our commitment to transition to a net zero economy. At the same time, it ensures that any potential competition distortions are kept to the minimum.”
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Green hydrogenPetrochemicals
Published 12 April 2023, 13:07Updated 13 April 2023, 11:21