Finnish developer P2X Solutions has signed a five-year renewable power purchase agreement (PPA) with energy firm Fortum for its 20MW Harjavalta green hydrogen project.

The Harjavalta facility, in western Finland, has already been built, although it is still ramping up production.

The site also includes a 3.3MW methanation unit, which P2X will use to produce synthetic methane as well as selling H2 directly.

However, in order for either molecule to be considered a “renewable fuel of non-biological origin” (RFNBO), and therefore eligible to meet EU quotas for use by industry or transport by 2030 and access subsidies, the renewable electricity supply must tick a number of boxes.

The renewable power asset must have been built within three years of the electrolyser and within the same bidding zone of the European power market.

Green hydrogen production and renewable electricity generation are also required to be matched within the same calendar month up until the beginning of 2030, when the two must take place in the same one-hour period for the H2 to be considered an RFNBO.

As such, P2X Solutions joins a number of project developers, such as green steel start-up Stegra and industrial gases firm Air Liquide, signing relatively short PPAs, which would allow new contracts to be signed to maintain compliance after 2029. PPAs usually last between 10 and 20 years for newbuild assets, particularly since these contracts are used by renewable power producers to prove a steady cashflow in order to secure project finance upfront.

As such, short-term PPAs are generally expected to be more expensive for buyers — potentially adding to the cost of hydrogen.

Source:HydrogenInsight