Hydrogen race: Pattern Energy pulls ahead of the pack, inks deal for private land in Argentia

As the government of Newfoundland and Labrador weighs the merits of19 different green hydrogen projects on Crown land, one company has jumped out toa head start by going the private route.

U.S.-based Pattern Energy has inked a deal with the Port of Argentiato use 6,000 acres of industrial and forest land owned by the port. The two sides announced their "binding agreement" on Monday morning, following talks that lasted several months.

"This agreement sets the stage for Pattern Energy to continue development on this exciting project," said former premier Dwight Ball, now the chair ofArgentia Capital Inc., a joint venture between the port and Torrent Capital.

Pattern Energy is one of the companies awaiting a decision from the provincial government on whether they can use Crown land to build windmills. What sets Pattern Energyapart, however, is the access to Argentia's private land even if the companydoesn't get the province's approval, it can still move ahead pending an environmental assessment.

That gives them a leg upin what's become an increasingly competitive market.

Pattern's proposal is alsosmaller than some of the others, with Stage 1 using all private land to operate a 300-megawatt wind energy facility. The windmills would power an electrolyzer, which produces hydrogen to be converted into ammonia. The ammonia would then be shipped from the port to foreign markets.

Pattern Energy also sets itself apart by emphasizing the end product as ammonia, rather than hydrogen. While other companies have talked about the potential in converting the ammonia back into hydrogen to fill Europe's energy demands,Pattern Energy believes there's a big market for ammonia in things like fertilizer.

"When I talk about hydrogen, people talk about this thing that's way far out in the future, and I think in some ways it is," said Pattern Energy's Erika Taugher, notingchallenges with storage, transport and scaling production. "When I think through uses today, and ways that we can really impact and reduce carbon emissions today,that is the ammonia market."

The ammonia market has existed since the early 1900sbut was rarely a topic of mainstream discussionuntil the Russian invasion of Ukraine. Global food prices began to rise due in large part to rising costs of farming inputs, with one of the steepest increases being in fertilizer. That's because Russia is one of the world's largest producers of ammonia.

Taugher said Pattern Energy sees an opportunityin stabilizing the ammonia market, which is heavily dependent on a few countries for the bulk of the world's production. And, she says, the firststage of the project can succeed without access to Crown land.

"That project alone is going to produce 400 tonnes per day of green ammonia, about 80 tonnesaday of green hydrogen, and that is absolutely a sizable amount for us to take on, especially in Phase 1," she said. "When we think through the off-take challenges, that Phase 1 sizing is really a sweet spot for us."

Benefits for Argentia

It's also a sweet spot for thePort of Argentia, which expects "significant wealth, business opportunities and employment for our region for decades," according to the port's board chairperson Genny Picco.

While the terms of the agreement were not made public, the port said in a press release that they include land lease rates, priority berthing charges, royalties on ammonia sales,and a wind royalty on any electricity sales from the wind farm. The agreementalso allowsArgentiaCapital Inc. to co-invest as a limited partner in the project.

The project is expected to require 250-300 jobs in the construction phase, including heavy equipment operators, electricians, labourers and more. If it moves to the second phase, the project could ramp up toas much as 1.2 gigawatts of wind energy more than the capacity of the Muskrat Falls megaproject in Labrador. The total cost? A whopping $5.4 billion.

Pattern Energy has 38 renewable energy facilities in the United States, Canada, Japan and Mexico, with an operating capacity of 6,000 megawatts. Argentia is the company's first foray into the emerging sector of green hydrogen and green ammonia.

There are currently no green hydrogen facilitiesin the world producing at the scale being proposed by the companies bidding in Newfoundland and Labrador.

The provincial government is expected to announce which projects, if any, will receive final approval to use Crown lands by early July.

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