July 20, 2023
By Polly Martin

Billionaire Andrew Forrest's Fortescue buys its first US green hydrogen project from cash-strapped Nikola Motors

A rendering of the proposed Phoenix Hydrogen Hub.Photo: Fortescue

The Australian company says the Phoenix Hydrogen Hub could be brought to FID this year

Fortescue had announced in January this year that it had signed a wide-ranging memorandum of understanding with Nikola to co-develop large green H2 projects, with a particular focus on the Phoenix Hydrogen Hub.

The Australian developer says that the project, for which Nikola had already purchased 920 acres of undeveloped land through a subsidiary, is currently going through the final stages of permitting and is already in the process of procuring long-lead equipment.

As such, Fortescue plans to bring the project to its board this year for final investment decision (FID) — the first it will take in the US.

“This is an exciting opportunity to work towards a fast-moving project that will lead the way in the US, creating new green industrial jobs for Americans, while also helping to reduce emissions once production begins,” said Mark Hutchinson, CEO of FFI.

“The US is now one of the best places in the world to do this, with the Inflation Reduction Act making it an ideal place to invest in green energy,” he added.

“This investment by FFI will greatly strengthen one of the country’s first and most important hydrogen ecosystems and it is a significant milestone in creating the all-important local connective infrastructure to accelerate the use of green hydrogen.”

While its previous owner had previously estimated the project would produce up to 150 tonnes per day, Fortescue has clarified that the first phase will use a 80MW electrolyser to produce 12,000 tonnes of liquid green H2 annually — closer to 32.8 tonnes per day, assuming year-round utilization.

However, the Australian developer also says the hub will have capacity to scale up in future.

Nikola had in December announced that the hub had been invited by the US Department of Energy (DOE)’s Loan Programs Office to progress to the second stage of an application for $1.3bn.

The company confirms to Hydrogen Insight that the application is still being progressed, with FFI supporting the continuation of this process.

Nikola is also a member of the Southwest Clean Hydrogen Innovation Network (SHINe), a consortium that had submitted a concept paper as the first-stage application for the federal Regional Clean Hydrogen Hubs programme which plans to spend up to $7bn on between six and ten hubs.

However, it is unknown whether this consortium was one of the 33 that the DOE invited to proceed to a full application.

Cash injection
Nikola’s primary focus is zero-emissions heavy-duty vehicles. Following major losses and an accumulation of $2bn of debt, the company announced last month it would scale back its other operations — particularly in the European market — and focus on getting its Class 8 fuel-cell electric trucks to market by this autumn, while keeping cash spend to below $400m by 2024.

As such, while the truck company had previously floated that it would aim to take final investment decision (FID) on the Phoenix Hydrogen Hub in Q3, the sale gives Nikola a much-needed cash injection while offloading a deprioritised project.

Updated to include confirmation from Nikola of continuation of DOE loan application.(Copyright)