10 reasons why Germans are investing in the hydrogen industry in Kristiinankaupunki

The new plant in Kristiinankaupunki on the west coast of Finland will produce hydrogen by electrolysis of water. The hydrogen is further processed into synthetic methane by reacting hydrogen with carbon dioxide. The biogenic carbon dioxide needed for the new plant will come from different sources within a radius of about 150 km from Kristiinankaupunki. Negotiations on the carbon dioxide for the Kristiinankaupunki plant are still ongoing. 

The plant can sell both hydrogen and methane, but the current intention is to sell the entire production as methane for heavy transport fuel. As natural gas is mainly methane, there is an immediate and massive market for methane, and a large infrastructure for its transport and storage is already in place around the world. 

The project is not dependent on fluctuations in electricity market prices, as wind and solar farms generate electricity for the plant under a long-term power purchase agreement. CPC Finland and Prime Capital will generate around 80% of the electricity needed for the plant themselves. 200 MW wind turbines will be completed for the Kristiinankaupunki plant by the end of this year. In addition, a 600 MW array of other wind and solar power plants is awaiting approval. 

A contract for the lease of the land for the hydrogen plant has been signed. The permitting process is currently underway. Before the plant can be built, the company still needs a zoning amendment, an environmental impact assessment (EIA), an environmental permit and a chemical permit. A water permit for the site already exists. The permitting process is expected to take one and a half years. Once the permits have been obtained, the financing will be finalised, and a final investment decision will be taken. Construction of the plant is expected to start in the second half of 2024, with production beginning in 2025. 

Once completed, the plant will directly employ around 30 people. The plant will also employ more people indirectly, for example, in the ports. During the construction phase, the employment impact of the plant will be much higher. 

Prime Capital of Germany, involved in the Kristiinankaupunki project, has also financed a zero-emission hydrogen production plant by P2X Solutions in Harjavalta, Finland. Similarly, CPC Finland already has several wind power projects in Finland. 

The investment comes as a result of several factors falling into place.  

1. There is a demand for products made in Finland. There is currently not enough synthetic methane on the market. There is already a buyer for the production of the new Kristiinankaupunki plant in Germany. This reflects a new situation: in energy products, Europe is dividing into three zones. Southern and northern Europe produce energy products, and the middle zone now buys as much as can be offered. 

2. There is a lot of cheap, emission-free energy on offer, and the location of the new plant is also well connected to the electricity transmission grid. In Finland, we still need more electricity generation for other projects. We also need an ever-expanding grid to connect the growing electricity production to new industrial facilities. 

3. In Kristiinankaupunki, the existing zoning makes it easy to find a site for a plant. In many respects, Finland is losing out to northern Sweden as an attractor of hydrogen investment, but licensing and planning as a whole are easier in Finland than in Sweden. This needs to be further streamlined. 

4. Kristiinankaupunki has a deepwater port and another option is to use Gasum's LNG terminal in Pori. The buyer can then pick up the LNG by ship. A ready-built, functioning infrastructure is taken for granted in Finland, but globally it is not. It is cheaper to produce hydrogen and hydrogen products on the equator than in the Nordics. Still, if the entire infrastructure, including the port, has to be built at the production site first, the profitability calculations change. 

5. In Finland, carbon dioxide can be obtained from the top of the smokestack of a forestry factory. Carbon dioxide is needed to process hydrogen into fuels that can be used without modification in all engines that currently use fuels made from mineral oil or natural gas.  

6. The key is the biogenicity of carbon dioxide, i.e., it is produced by burning wood or other organic matter. In a forest, wood would naturally decay, releasing carbon into the cycle. When the carbon in the fuel is from wood that would otherwise rot, rather than being dug out of the ground, no new carbon is released into the atmosphere. 

7. The availability of a skilled workforce in Finland is also essential for investment decisions. However, this is where the limits suddenly come into play. We need more hydrogen experts. More education and training are needed quickly. Taking on foreign labour from anywhere in the world should be a matter of notification to the authorities. 

8. Another reason the city of Kristiinankaupunki received the investment is that the municipality, the regional development company and the industrial zone have competent people to answer companies' questions. Investors need answers to their questions, or no investments will come. 

9. Companies need entire business ecosystems. Because of this, companies prefer to invest where there are other companies to serve as customers, and partners to provide the products and services they need. This is another ecosystem we have to take care of. 

10. A final advantage: Finland is politically downright boringly safe, and there is virtually no corruption. Investors prefer to bring their money to a country where the prime minister's dance video is the talk of the town rather than bomb attacks. 

Original article published on LinkedIn: https://www.linkedin.com/pulse/10-syyt%25C3%25A4-miksi-saksalaiset-sijoittavat-suomen-vetyyn-visa-noronen