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Ørsted signs landmark eFuels deal as it enters US Power-to-X market

Denmark-headed energy utility major Ørsted A/S has announced that it has signed a Letter of Intent (LoI) on a "record-breaking" offtake agreement for green fuels in the maritime industry. The LoI entails partnering on a new Power-to-X facility in the United States (US), which can become a landmark project in the green transformation of international deep-water shipping and set the standard for future large-scale production of green maritime fuels.

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Ørsted A/S has signed a Letter of Intent (LoI) with A.P. Moller – Maersk on a “record-breaking” offtake agreement for green fuels in the maritime industry. The landmark eFuels LoI entails partnering on developing a new 675 MW Power-to-X facility on the United States (US) Gulf Coast to produce approximately 300 000 tonnes per annum of e-methanol for use by Maersk as a maritime fuel (photo courtesy Ørsted).

Over the past two decades, greenhouse gas (GHG) emissions from the global maritime industry have risen sharply to account for around 2 percent of global energy-related emissions. As the world races to fight climate change, the maritime sector urgently needs new zero-emission fuels at scale to reduce its climate impact.

Now, A.P. Moller – Maersk, a world-leading integrated container logistics company, and Ørsted, a world leader in renewable energy, have signed a Letter of Intent (LoI) about partnering on developing a new 675 MW Power-to-X facility on the US Gulf Coast.

The facility will have the annual capacity to produce approximately 300 000 tonnes of e-methanol, a so-called electro-fuel (eFuel), which Maersk will offtake for its newly ordered fleet of 12 methanol-powered vessels.

To transition towards decarbonization, we need a significant and timely acceleration in the production of green fuels. Green methanol is the only market-ready and scalable available solution today for shipping. Production must be increased through collaboration across the ecosystem and around the world. That is why these partnerships mark an important milestone to get the transition to green energy underway, said Henriette Hallberg Thygesen, CEO of Fleet & Strategic Brands, A.P. Moller – Maersk.

The facility will be powered by approximately 1.2 GW of renewable energy from new onshore wind and solar PV farms. The biogenic carbon needed to produce e-methanol, will be extracted through carbon capture at one or more large point sources.

The project is targeted to be commissioned in the second half of 2025, making it by far the most ambitious project globally producing e-methanol at scale and a driving force in the decarbonization journey of the maritime sector.

The final investment decision could be made in late 2023.

We commend Maersk’s clear and ambitious action, which has made the company a leader in the difficult task of reducing the climate impact of the maritime industry. Partnerships with large off-takers of green fuels, like Maersk, are an important part of Ørsted’s strategic journey, as we broaden our Power-to-X footprint across the world to become a global leader in renewable hydrogen and green fuels. The project with Maersk is our first in the US, and we look forward to helping accelerate the US Power-to-X market while creating local jobs and economic activity, just as we’ve done in the growing offshore wind industry in the US, said Martin Neubert, Deputy CEO and Chief Commercial Officer at Ørsted.

Largest potential marine eFuel offtake deal to date

The 300 000 tonnes of e-methanol are the largest potential offtake agreement for green fuels in the maritime industry ever announced, and it is a testimony to the action taken to shape green ocean transport by both Ørsted and Maersk.

The agreement also marks Ørsted’s entry into the US Power-to-X market, a new strategic market for the company as it seeks to construct 50 GW of renewable energy capacity by 2030.

The US Gulf States have an abundance of cheap renewable energy resources, both solar and wind, making the region a natural location for large-scale production of green fuels, which we expect there will be a very large demand for in the US going forward. The Power-to-X project with Maersk will expectedly be powered by approximately 1.2 GW of new onshore wind and solar PV, which in itself represent a significant investment in the region, while also helping Ørsted reach its target of 17.5 GW of installed onshore capacity in 2030, Neil O’Donovan CEO of Ørsted Onshore.

Building a significant PtX pipeline

The Power-to-X project in the US Gulf Coast region is the second green fuels collaboration between Ørsted and Maersk after the potentially 1.3 GW Green Fuels for Denmark (GFDK) project in Copenhagen, Denmark, which the two companies are partnering on with other large off-takers.

Ørsted and Maersk will continue to investigate opportunities within green fuels together, as Maersk works towards its 2040 net-zero commitment.

In total, Ørsted’s Power-to-X development pipeline consists of 11 projects, including the 70 MW FlagshipOne project in Sweden, which Ørsted has recently acquired a stake in and is developing together with Liquid Wind.

FlagshipOne is targeted to be commissioned in 2024 and could become one of the world’s first large-scale sustainable e-methanol facilities.

In addition to the project pipeline, Ørsted has entered into several strategic agreements with a variety of partners.

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