E-fuel manufacturer: "We wanted to do something when there was just talk."

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Fuels are currently produced almost exclusively from crude oil, but there is no alternative. There are various processes that can be used to produce fuels by other means. However, they all have one thing in common: they are niche solutions that are unlikely to achieve significant market shares. There are various reasons for this, which we will examine in this series of articles.

The dominance of electrically generated e-fuels in public discourse stems from a peculiarity of renewable generation: To make it last in difficult weather (especially in winter), the generation capacity must be large enough to generate too much electricity on the vast majority of days. This excess power should be used in the best possible way to somewhat mitigate the already high costs of such a power grid.

All processes that are not time-critical, i.e. that can wait for better weather or at least the next day with PV input, are suitable for use. Seawater desalination is one example. Electric fuel production is another. In addition, there are many locations with very favorable inputs from sunshine or wind where grid connection would be disproportionately expensive. Desertec already failed because of a complex of problems about which one could quite well write "delusions of grandeur," and the planned power line network was a big part of that. E-fuels, on the other hand, can very well be produced off-grid.

When the project partners Siemens Energy and Porsche, among others, began to promote this form of energy storage, they always emphasized the expected load hours of the plants and the wider environment: There are many locations around the world for both PV and wind power that are so significantly more favorable that they are worthwhile despite the fuel transport to us that would then be necessary. The choice for the pilot project fell on windy Patagonia, where a wind turbine is utilized by wind 74 percent of the time, compared to 19 to 24 percent in Germany onshore (depending on the height of the turbine). PV plants with e-fuels generation are thought to be similar, and tend to be planned toward the equator. The price for end customers thus depends to a large extent on the location.

HIF and Haru Oni

The capital company of the first major e-fuel project is called Highly Innovative Fuels (HIF) Global LLC (limited liability company), in which Porsche has a 12 percent stake with $75 million (74 percent of the shares belong to Andes Mining and Energy, AME). Perhaps Porsche's bigger stake, however, is in external communications, with the use of the fuel in brand cups and the Porsche Experience event centers, and the sports car maker's demonstrative overall roadmap: in 2025, half of the model range sold is to be BEV or PHEV; in 2030, it is to be 80 percent BEV.

The rest will mainly be 911s, which will continue to be powered by a six-cylinder boxer engine. There are no simple bread-and-butter cars at Porsche, so the customer cost structures look very different. Those looking for a granturismo car, for example, can choose between the Panamera and the Taycan, of which the battery-electric model is even the slightly less expensive.

We have taken a technical look at the e-fuels plant in Patagonia here following discussions with Siemens Energy. In summary: It consists of modular components for electrolysis, eMethanol production, the "eMethanol to eBenzine" building block, and a CO₂ separation plant (DAC). The DAC plant has shifted to use CO₂ from biogenic fermentation processes in the meantime (note the tank trailer with CO₂ behind the Panameras in the picture). If such plants pay off, eMethanol could be one of several building blocks that can replace petroleum products - both directly in propulsion systems for ships or aircraft, and as a feedstock for fuels or petrochemicals. "We have to somehow put wind energy into a can for use," Thorsten Herdan, CEO at HIF EMEA (Europe, Middle East, Africa), said in an interview. "That can is currently hydrocarbons, so methanol and gasoline."

Like synthetic fuels from other methods, e-fuels are more expensive than fossil fuels. So to make a business out of it, investors first need to find niches (e.g., gasoline for Porsche's Experience Centers) and, in the next step, rely on these fuels being regulated according to their actual CO₂ balance. In concrete terms, this means above all: for them to become interesting across the board, the CO₂ pricing of emissions trading for e-fuels would have to be abolished, for example.

Drop by drop

The production volumes at the Haru Oni demo plant have little to do with large-scale industrial quantities at first, of course, but are intended to show that the process works. The wind power generator has an output of 3.4 MWp, and the planned DAC plant is expected to capture 150 kg of CO₂ per hour from the ambient air. The electrolysis plant produces 20.5 kg of hydrogen gas per hour. In the end, the current expansion stage is expected to produce 350 t of eMethanol and around 130,000 l of eBenzine per year. Financially, the plant is initially planned to run for 25 years, but there is little to be said against extending the service life of many plant components once the demonstration plant has become an economical plant over time.

Of course, the quantities of this one production facility have no influence on the global energy market, just as a single wind turbine has none. Because of good market prospects, HIF is therefore already planning further plants, each a good scoop bigger. "We were already as fast as possible in building Haru Oni," says Thorsten Herdan. "We wanted to show that such projects can be realized, while everywhere there was only talk about it. And that's how we want to continue to proceed with the following projects: We keep moving forward, we accept the risks, we want to be pioneers."

The first real production plant is being built not so far away from Haru Oni, also in Chile. It is to produce 66 million liters of fuel per year from an associated wind farm with 300 MWp capacity. The project is still in the planning phase and will produce fuel for Europe. Another plant is to be built in Texas (county: Matagorda) starting next year (2024), where it may produce fuel for around 1 million vehicles, 700 million liters per year (mainly for California), as early as 2026. The supplying wind farms could contribute an additional 15 GWp to Texas electricity generation.

A similar plant with 250 MW electrolysis capacity is to be built on the Australian island of Tasmania near the small town of Hampshire, producing up to 100 million liters per year for the Asian market. Unlike in Chile, the power generation facilities do not belong to the project, but to third-party suppliers. These mainly build wind turbines, for which there are favorable regulatory and physical conditions in Texas and Tasmania, but not a sufficient power grid at the site to bring the full output to consumers. As a result, operators enter into long-term power contracts with HIF as the bulk buyer, which makes the plants worthwhile. Yes, that means the plants would not otherwise be built due to lack of opportunities to sell electricity. Similar projects are under discussion in sunny areas of the Middle East that are poorly served by transmission lines.

They are already serious about it.

Based on the plans, which are already quite advanced, it is clear that HIF is quite serious about e-fuels production. The company sees a market. The goal for from 2030 is to decarbonize over 5 million passenger cars in the fleet in the sense of: The carbon cycle of this fuel would be a reasonably closed one. The current stock of passenger cars is just under 1.3 billion worldwide, with projections for 2030 to over 2 billion, mainly due to rising affluence in China and India. So we are talking about a few per mille of the stock in HIF's plans for 2030, to put e-fuels once again in their frame of reference.

They are one piece of the puzzle among many. Within this frame of reference, however, they have a good chance of becoming an integral part of future energy management. If, as called for, the CO₂ pricing on e-fuels were removed, depending on the behavior of the certificate market, a price could eventually emerge that can compete with fossil fuels. But this is more likely by 2050 than by 2030. If you fill up in 7 years, fossil fuel will probably (certificate trading from 2027!) still be cheaper than the rare e-fuels.

(cgl)