Japan’s power utilities are taking a lead in co-firing ammonia in both coal- and gas-fired power plants. Initial tests have shown encouraging results, and commercial operations are scheduled to start around 2025. South Korea also recently expanded plans to co-fire hydrogen and ammonia in thermal power plants.

Speaking at the APPEA conference in Brisbane, Prakash Sharma, vice president of multi-commodity research at Wood Mackenzie said: “The possibility to burn low-carbon hydrogen and ammonia in thermal power plants provides countries with an additional tool for decarbonizing the power generation sector. This strategy allows for optimization of power plants, while maintaining grid resiliency and lower carbon intensity of power generation.

“Just a 10% use of ammonia co-firing in coal plants could result in a 50% growth from today to 200 million metric tons (mt) of ammonia demand by 2050, and this is a $100 billion market opportunity,” Sharma said. “Additionally, co-firing will deliver a 10% reduction in carbon emissions, a strategic benefit in markets with physical limitations to build renewables and CCUS capacity.”

While the costs of renewables and electrolyzers will continue to decline, resulting in lower costs of production for green hydrogen, the hydrogen value chain, particularly the midstream, is complex as it considers processing, storage, shipping, and reconversion for different carriers of hydrogen and different transportation methods. Hydrogen needs to be competitive at the point of delivery or end use, not at the point of production.

Sharma said, “When looking at power generation, ammonia is one available option to be used directly either by itself or by co-firing with no reconversion cost needed. Our analysis shows on average the delivered cost of low-carbon ammonia to Japan is expected to fall 60% from $1,250 per mt currently to under $500/mt by 2050.”

Wood Mackenzie considered both blue and green hydrogen production in Australia, Canada, Chile and the Middle East for delivery to Japan. Ammonia was assumed as the preferred carrier method across all four trade routes as the end-use application for the case study is ammonia co-firing in power plants, and there would be no requirement for reconverting ammonia back to hydrogen.