Copenhagen Infrastructure Partners (CIP)

Solutions Statement

Copenhagen Infrastructure Partners (CIP) is a fund management company dedicated to greenfield renewable energy infrastructure meaning that CIP will be developing, constructing and operating renewable energy projects, such as offshore/onshore wind, solar PV and Power-to-X plants.

Since inception in 2012, CIP has established itself as a pioneer and market leader within the energy transition with ~250 employees, eight funds and EUR ~16 billion under management from ~100 international institutional investors.

In June 2021, CIP reached EUR 800 million first close on its new fund, CI Energy Transition Fund I (CI ETF I), with a target fund size of EUR 2.25 billion and a cap of EUR 3 billion. The fund has seen strong interest from leading institutional investors, endowments and family offices internationally, indicating a strong interest among investors to participate in the decarbonization of hard-to-abate industries such as shipping, steel production and agriculture through the use of green fuels and feedstock.

The Energy Transition Fund will invest in next generation renewable energy infrastructure including industrial scale Power-to-X facilities to 

produce hydrogen- based fuels and feedstocks. Power-to-X facilities will provide a zero-carbon alternative to fossil fuels in sectors where electrification is difficult or impossible, as well as support the further integration of renewable power generation in the energy mix through grid balancing. The industrialization of these technologies could enable the manufacturing of essential energy and chemical compounds purely from water, air and renewable electricity.

By building on CIP’s proven value creation approach in developing and constructing complex energy projects, the fund is uniquely positioned to capture the green hydrogen market opportunity. The Energy Transition Fund has secured an attractive portfolio of both integrated and export projects globally with exposure to different offtake markets, strong political support and low “cost of energy” for renewable electricity.

Challenge Statement

Power-to-X as an industry is still in a nascent stage. However, CIP believes green hydrogen will relatively fast be cost competitive with fossil fuels and blue hydrogen provided the following key factors are in place:

Firstly, a competitive “cost of energy” for renewable power (solar and wind is already competitive in several markets and costs are decreasing), and scalability of Power-to-X technology to reduce the cost of electrolysis.

Secondly, successful transition to green hydrogen requires equal treatment with fossil fuels and blue hydrogen. For example, with respect to tax regimes and access to existing infrastructure such as, electricity grid and gas pipelines, it is critical to reduce the cost of green hydrogen infrastructure build out and transportation.

Thirdly, demand for green hydrogen products depends on incentives for large energy consumers to decarbonize and to comply with net-zero carbon emissions obligations (e.g. replacing bunker fuel with green ammonia for transportation of consumer goods, producing CO2 neutral steel for cars and CO2 neutral fertilizer for crop production). This can be achieved by supporting international collaboration and a polluter-pays principle (such as the proposed EU ‘Carbon Border Adjustment Mechanism’).

Finally, government support may initially be required to overcome innovation and industrialization hurdles, and promote R&D for green hydrogen technologies throughout the value chain.

Energy Compact Description

CIP, through its funds, has secured an attractive portfolio of both integrated and export green hydrogen projects, including:

Project Høst, Esbjerg (Denmark)

Høst will be Europe’s largest production facility of CO2-free green ammonia, with 1GW electrolyzer capacity and up to 600,000 tpa of green ammonia produced using power generated by offshore wind turbines. The project has three value propositions:

  • The green ammonia, produced purely from water, air and renewable electricity, will be used by the agricultural sector as CO2-free green fertilizer and by the shipping industry as CO2-free green fuel. Fertilizer is an essential chemical for human development and is currently produced with substantial emissions of CO2. This new technology and its large scale application in Project Høst will enable the production of this critical chemical in a sustainable way for the generations to come.
  • The technology allows flexible operations and as such will be instrumental in balancing the Danish power grid that is increasingly in need of flexible load as the electricity generated from wind and solar makes up a dominant part of the total electricity. In other words, Project Høst is an enabler for further integration of wind and solar into the power grid. This is particularly important due to government plans to expand the offshore wind capacity and ultimately have a power system that runs entirely with renewable energy.
  • Finally, excess heat from the plant will be used to provide heating for approximately one third of the local households in Esbjerg. Thus, these households will be switching to 100% green heating with no emissions.

Project Murchison, Western Australia 

Murchison is located in Western Australia with some of the best combined onshore wind and solar conditions. This in turn will provide low cost electricity to competitively produce green hydrogen and ammonia for export purposes. The project will consist of a 5GW onshore wind and solar facility, which will use 3GW of electrolyzers to ultimately produce 1.7m tpa of green ammonia based on green hydrogen feedstock. The project will enable energy import dependent countries such as Japan and Korea to decarbonize their energy and chemical sectors. 

The Power-to-X technology can support countries that are currently importing large amounts of coal, gas and oil by offering a real alternative to traditional fossil fuel imports, in the form of seaborne green commodities. Ammonia, hydrogen or other green energy carriers can be transported via large scale vessels similar to known technologies applied in oil and gas and thus cost effectively reach import countries far away from production sites. Murchison is a large-scale project that will be pioneering the industrialization of this new technology – driving down costs to the benefit of customers and a greener future.

Project Wind Island, North Sea (Denmark)

Project Wind Island will be the world’s first energy island and will be located in the Danish part of the North Sea. The energy island will host up to 10GW of offshore wind, a part of which could be used for hydrogen production on the island and then shipped or piped to offtakers onshore. This will allow a cost efficient way of producing green hydrogen compared with onshore production – the cost of transporting hydrogen over long distances is only a fraction of the cost of transporting electricity. In other words, power transmission lines are much more expensive per unit of energy transported than hydrogen pipelines.

The demonstration of large-scale offshore hydrogen production at the Danish energy island could have a global impact since the scale and cost effectiveness could make such facilities attractive in many markets across the North Sea and beyond. There is already an emerging interest in several Asian markets for energy islands and large scale offshore hydrogen production.

Besides the cost effectiveness, such facilities also features other advantages, such as a lower visual impact in coastal areas, less disturbance of other activities and the potential of creating more biodiversity in the form of new artificial reefs.

Energy Compact Indicators

Project Høst, Esbjerg (Denmark)

The green ammonia from the plant is expected to reduce CO2-emissions by about 1.5 million tons CO2 yearly – or the equivalent to removing 730,000 cars from the roads permanently. Final Investment Decision (FID) Q1 2023, Commercial Operation Date (COD) 2026/2027

Project Murchison, Western Australia 

The green ammonia from the plant is expected to be used in Korea and Japan, which have aggressive decarbonization targets, and where green ammonia can be used to co-fire existing coal plants. The emission reduction potential is up to 4.5 million tons CO2 yearly by comparison to existing technologies. Other industrial and agricultural uses are also expected. Final Investment Decision 2025, Commercial Operation Date 2029.

Project Wind Island, North Sea (Denmark)

 The demonstration of large- scale offshore hydrogen production at the Danish energy island could have a global impact since the scale and cost effectiveness could make such facilities attractive in many markets across the North Sea and beyond. Final Investment Decision 2025, Commercial Operation Date 2030.

Acceleration of Green Hydrogen

  • Removal of barriers to a levelized playing field with fossil fuels and blue hydrogen – for example, via establishing tax depreciation schemes equivalent to those available to oil and gas industry and enabling the use of existing infrastructure (pipelines, grid etc.).
  • Establishing a polluter pays principle – for example supporting the implementation of CO2 taxes and introduction of EU Carbon Border Adjustment Mechanism.
  • Regulatory support in the form of public funding or technology grants for large projects to overcome innovation and industrialization hurdles.
  • The process for tendering out the Danish energy island will decide how fast hydrogen production can be demonstrated on the island – hence speed is of essence in these processes, including a parallel tender for the offshore wind hosted by the island.
  • Energy Island specific regulatory frameworks, e.g. clarity needed on bidding zone and island tariff regime.
  • The infrastructure from island to shore needs to be in place – including frameworks for establishing hydrogen pipelines from the island will be required, including the possibility to establish private pipelines.