Russian hydropower giant En+ may push ahead with a notional green hydrogen project as shareholders may find investments favorable over dividends, Sova Capital analysts Matvey Tats and Maria Kleimenova said in research this week.
The energy and metals group is considering hydrogen production via electrolysis using hydroelectric power from existing and new plants, according to Russian news daily Kommersant. One reason for this decision may be that under a sanctions agreement with the U.S. Office of Foreign Assets Control, one key En+ shareholder is currently barred from receiving dividends from the concern, Sova wrote.
The plan would entail using 228 MW of currently available capacity at EN+’s hydropower plants and to build a new one with 1 GW fully dedicated to hydrogen production. Estimated hydrogen output would be 133kt per year, including 18kt from existing generation capacity and 115.6kt from new generation.
En+ is considering building the Motyginskaya HPP on the Angara River in East Siberia, with a capacity of 1.1GW and a construction cost of around $1.3 billion over nine years.
Exploration into the possibilities for hydrogen from one of the larger corporates in Russia, an oil and gas powerhouse, is not as surprising as it may sound. En+ is a leader in hydropower and especially in the vast reaches of Eastern Siberia. The long running problem with the abundance of East Siberian hydro has been how to get it to market. It is simply too far away. Soviet-era planners brought a market in the form of aluminum smelters to the power source. Things have changed since then.
Hydrogen and ammonia have drawn large support for development globally as potential clean burning fuels that help to cut carbon emissions and battle climate change. That has apparently given En+ something to think about, according to reports.
En+ targets a cost of electricity generation at $42.4/MWh with the expected cost of hydrogen production at $2.9/kg and liquid hydrogen at $4.4/kg (including $0.6/kg transportation cost) and ammonia at $4.9/kg.
The controlling shareholder of Russian aluminum giant Rusal, En+, is also considering the production of aluminum tank containers for the transportation of hydrogen and ammonia. En+ estimates demand for tank containers with a volume of 43.5 m3 each at 13.4-47k until 2035. En+ aims to start production of containers in 2024.
The project remains tentative and is in a very early stage of conception, reported Kommersant, citing a company spokesperson.
That said, if the project can be made to work, it would tick a number of boxes. It gains access to a growing demand for green energy sources, as more and more corporates specifically choose clean sources for power. Hydrogen could be a means to deliver the vast untapped power capacity from East Siberian rivers long distances to markets, which can’t be serviced by a power cord. The endeavor could be a way to return value to shareholders other than a simple pay out.