VINACHEM

InterContinental Energy (ICE), developer of the world’s largest planned hydrogen project, could cut the premium of renewable ammonia over carbon-price-adjusted grey ammonia by more than 50%, ICIS data shows.

Speaking to ICIS at the World Hydrogen Summit 2025 in Rotterdam, the Netherlands, ICE co-founder and chief executive officer Alexander Tancock explained to ICIS that the company’s large-scale hydrogen projects could produce hydrogen at $3/kg or ammonia at $650/ton.

ICE projects are some of the largest renewable energy and hydrogen projects on earth. The company is developing three projects, two in Australia – Australian Renewable Energy Hub (AREH) and Western Green Energy Hub (WGEH) – and one in Oman called Green Energy Oman (GEO).

The combined potential hydrogen output from all three projects, once built, would be 8.4 million tons of hydrogen per annum (MTPA), 0.5MTPA more than total hydrogen consumption combined across the EU 27, the UK, Iceland, Liechtenstein, Norway and Switzerland in 2023, according to the Clean Hydrogen Observatory.

CUTTING THE GREEN PREMIUM WITH LOW-COST AMMONIA

Taking into account freight costs for Australia to Germany of $155/ton, sourced by ICIS on 28 May, ICE $650/ton renewable ammonia could theoretically land in Europe with a delivered cost of $805/ton.

Comparatively, ICIS assessed its carbon-adjusted ammonia (the emissions from grey ammonia are covered by the carbon price) into north-west Europe price at $524/ton on 22 May. The resultant premium of the renewable ammonia production from ICE’s future projects over carbon-adjusted ammonia based on today’s spot market would be $281/ton.

Tancock told ICIS that the company intends to produce first molecules by 2032, meaning the premium is likely to change over the next seven years as the ammonia sector adapts to the energy transition – and the EU carbon price potentially rises.

However, considering ICE’s renewable ammonia against alternative sources already discussed in the market, the company’s projections offer market participants a new look at the premium sustainable projects could hold as the market develops.

Comparatively, in July 2024 H2Global announced the winner of its pilot auction, where Fertiglobe bid a delivered price of renewable ammonia of €1000/ton ($1130/ton).

The German H2Global program procures international volumes of hydrogen or hydrogen derivatives with the ambition of re-selling them on the European market.

Hintco, the coordinator of H2Global, noted at the time that it anticipates prices to be lower in the future due to supply-chain efficiencies and scaling of the hydrogen market.

Fertiglobe deliveries are guaranteed from 2028, around four years ahead of when ICE could produce its first molecules.

ACHIEVING LOW COSTS

Although Tancock explained that the ammonia production would likely serve the Asian market, the market information is nonetheless a sign of potential cost reductions.

Tancock explained several key components behind the projects that ICE is developing which supports lower-cost hydrogen and ammonia.

When selecting a location, Tancock said that it would ideally have “lots of wind, lots of sun…ideally wind at night, sunny during the day, because that would then give you a much higher capacity factor… We looked for political stability, a track record of delivering huge infrastructure projects, finance, proximity to markets…the Middle East and Australia [are] markets where all of that comes together”. He said that there are other locations where these things come together, but ICE chose to focus on Australia and the Middle East.

“If you look [at] how long it takes to permit a project in Australia, it’s five-to-seven years…Europe, it can be even longer, US as well.”

Timing is another key element to reducing costs. “Any large project takes a really long time because of permitting process, design process. The other thing is, there’s a real decline in the cost curve right now of equipment, whether it’s wind, solar or electrolysers.”

Tancock believes that the cost curve is slowing for wind and in solar, but that “it’s still quite steep in electrolysers”. Therefore “the ideal time to start bringing on really large projects will be the 2030s, because if you bring them on too early, you’re sort of locked in quite a high cost base”.

ICE aims to bring its electricity-generating capacity online ahead of its electrolysers. Tancock explained that ICE will try to sell electricity to local offtakers and that “there should be some announcements later this year about [selling the projects’ power supply]” as two of them are located near to industry, providing energy-intensive offtakers.

Another key component of lower-cost hydrogen and ammonia supply is the ICE patented P2(H2)Node system. The ICE nodes operate on the basis of co-locating electrolysis plants with wind and solar, removing the need to either connect to or build electricity transmission lines, and also through removing any losses that come as a result of using high-voltage lines.

Reduced infrastructure due to co-location and reduced need for electricity transmission systems account for a 10% reduction in capital expenditure and a 10% increase in efficiency.

READY DEMAND AND OFFTAKE STRUCTURES

ICE intends to deliver its first electrons before the end of the decade and first molecules potentially in 2032, Tancock said.

Supporting such timelines is the clear identification of demand and offtakers. For its ammonia, ICE is considering selling from its WGEH project into markets such as Korea, Japan, Singapore and China, where Tancock noted shipping as a potential offtake sector.

However, some of the primary offtake will be local to the projects themselves.

“If you look at our two projects in Australia, the northern project is sitting in the Pilbara, which is the world’s biggest iron ore producer. And just to put statistics on that, 800 million tons a year come out of the Pilbara. If we turned all 26GW [of our project’s capacity] into green iron, we would [cover] 4-5% of that…You would need about 600GW to decarbonize the Pilbara.”

Similarly, for ICE’s project in Oman, Tancock explained the proximity to Europe as a benefit, but expanded to say that “Oman is currently…a trans-shipment location for iron ore. So, they import iron ore and turn [it] into pellets, which then get exported,” he said. Oman is currently seeking to decarbonize its export iron pellets, which the ICE GEO project could support and sell into.

Nonetheless, Tancock noted that offtake is still the key issue for the development of projects. “The technical aspects all bring challenges, but they’re solvable. In that sense, it’s really questions about offtake,” he said.

“So it’s about bringing the costs of our energy down, and then discussing with strategic offtakers who are looking to offtake in the 2030s and beyond.”

ICE is currently in discussion with potential offtakers, Tancock explained, stating that on the molecule side “we’ll be signing those in 2027, 2028, so we’re working towards those offtakes at the moment”.

Project developers speaking to ICIS regularly consider both the duration of offtake agreements and the total percentage of the project’s output that they would sign under a long-term deal.

For ICE, Tancock stated that its projects’ output would need to be entirely contracted.

“In the moment, I can’t see us doing much merchant. Now, you know, some people will say ‘oh we could do 80% contracted, 20% merchant,’ [but] all [of] that [is] to be seen…But I would anticipate it’ll be 100% allocated.”

When discussing duration, Tancock said that the ideal would be “very long term” but that it’s unlikely to be achievable at the moment, although “those are conversations that are ongoing”.

Reflecting on contracting, Tancock explained that he believed there is a role for governments to support. “You will see governments come in a little bit to help facilitate some of these earlier offtakers.”

“They did it for LNG, they did it for [nuclear power]. They’ve done it for renewables. They’ve done it for oil and gas. So I think you will see that,” he said.

“The first LNG shipments were all backed by very long-term offtakes…20-year offtakes.”

GOVERNMENT MANDATES

Expanding on the role of governments, Tancock highlighted that obligations for renewable or sustainable products were the right direction for the market to go. Discussing renewable energy, Tancock said that this was driven by government demand, penalties etc.

However, Tancock noted that “the harder part we have with molecules is molecules tend to be traded a lot…The molecules come from here and they’re there. So that’s the trickier part we’re facing now when we’re trying to introduce green molecules…how do you, on an intra-regional and intercontinental level, manage that flow? Because if the benefits are flowing through to Oman, why would the German taxpayer keep paying?”

As a solution, Tancock drew from recent successes with the International Maritime Organisation (IMO), stating “this [the IMO] is a global regulator who’s now put a global tax [on its stakeholders]”, meaning “no country pays, and no country suffers more than anyone else”.

For hydrogen and ammonia, “things are happening,” Tancock said, such as the development of green corridors between different countries. “Until we get that, it’s very difficult to see sustained demand in some sectors…IMO is game changing. I think the IMO will show, is showing, that it can be done, but it will take now coordination,” Tancock said.  

– Source: ICIS