FFI intends to secure Forrest’s green hydrogen deals with billion dollar budget

Fortescue Future Industries, Andrew Forrest’s massive green hydrogen play, is armed with a billion-dollar budget in 2022/23 as it seeks to secure a series of key partnerships that can build the basis for the company’s extremely ambitious 2030 aspirations.

Forrest has committed to a stretch goal of creating 15 million tonnes of green hydrogen annually by 2030 using a technology that has been hardly utilized on a global scale to date. And despite a multitude of memorandums of understanding, project plans, and announcements, little has been established.

The most concrete asset is the hydrogen electrolyser factory being constructed in Gladstone, Queensland, in conjunction with the U.S.-based Plug Power; it represents both the group’s lofty aspirations and its uncertainty.

When it reaches its maximum capacity of 2GW per year, it will effectively treble worldwide production, making it the largest factory of its kind in the world. As with the vast majority of the green hydrogen industry, no contracts have been signed; nevertheless, Fortescue is projected to be a key customer as it brings its other projects to fruition.

Elizabeth Gaines, the chief executive officer of FFI’s parent company Fortescue Metals, a gigantic and very lucrative iron ore producer, stated that building of the electrolyser facility at the Green Energy Manufacturing Centre in Gladstone could be finished by the end of the year.

“I think there’s going to be a relatively steady ramp (of production), it might be probably about 25 to 40% of that of that ultimate capacity, and there is demand for electrolysers,” she told media in response to a question from RenewEconomy on Thursday.

“They haven’t actually locked in the marketing of those electrolyzers yet, but as you know, we’ve already got seeing strong demand for renewable energy and green hydrogen as evidenced by the MOU with E.ON in Germany, and ultimately Fortescue will be a customer as we build out and develop those projects.”

The E.ON arrangement may be the most significant FFI announcement to far, as it aims to deliver five million tons of green hydrogen to Germany, which is desperate for alternatives to the Russian gas on which it previously relied.

“The chief operating officer from E.OM was here recently and the message from E.ON is ‘can we do this quicker’. So there’s strong demand for green energy, and green hydrogen and the team are working hard to identify and advance those projects.”

Fortescue also disclosed that FFI will have a budget of $US600 million to $US700 million ($A1 billion) for this purpose in 2022/23. This budget will be primarily comprised of operating expenditure (up to $US600 million), which includes wages and project analysis, and capital expenditure (up to $US100 million).

The group is currently led by the former president of GE Europe, Mark Hutchinson, with former RBA deputy governor Guy Debelle serving as chief financial officer (CFO) and AGL’s Andy Vesey serving in another major executive post.

Fortescue is also working on other significant projects, such as a potential 200MW electrolyser facility in Tasmania’s Bell Bay, where other players, such as Origin and Grange Resources, are also evaluating project opportunities.

At addition, work continues on the Pilbara Energy Connected project, which comprises transmission infrastructure, a new 60 MW solar plant in Chichester, battery storage, and gas generation.

Gaines stated that 78 million litres of diesel have been saved since the Chichester solar farm went online in the previous fiscal year.