October 15, 2024 [H2 View]- Uniper and Sasol have cancelled a 200MW hydrogen-based sustainable aviation fuel (SAF) project in Sweden, according to reports.
H2 View understands the two companies cited slow market development, insufficient regulations and cost increases as key factors that led to scrapping the SkyFuelH2 initiative.
Construction was originally expected to begin next year (2025), with the start of production scheduled for 2028, although this was delayed by a year prior to the cancellation. Reports suggest that South Africa’s Sasol left the project in the spring of this year.
The German energy company first announced the plans in 2022. However, Uniper has now determined that the project is “no longer commercially viable,” naming the war in Ukraine and inflation as contributing elements.
Uniper’s statement said, “The decision is based on a combination of challenging market conditions and increased costs, which means that the project is not currently considered commercially viable.”
“The basic idea behind SkyFuelH2 is still important. The aviation industry must change, and the demand for more advanced SAF will grow in the future. However, climate and business sustainability must go hand in hand, and each project must stand on its own two feet.”
The SkyFuelH2 facility was set to use Sasol’s Fischer-Tropsch technology to produce SAF, using forestry residues and green hydrogen as feedstock.
In September 2023, the project secured approximately $13m from the Swedish Energy Agency for a feasibility study.
However, by July 2024, it became clear that broader European ambitions were facing significant challenges, as H2 View reported that the EU’s combined target of producing and importing 20 million tonnes of green hydrogen was deemed “unrealistic” and unlikely to be met.
Last month (September), Equinor announced it had scrapped plans to export blue hydrogen from Norway to Germany. They too cited insufficient demand, inadequate regulatory framework and high prices.
The Norwegian firm had agreed to build a hydrogen supply chain between the two companies, with the end goal of decarbonising German power plants.
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