Finland Launches First Commercial Green Hydrogen Plant

HELSINKI (Reuters) - Finnish company P2X Solutions has started commercial green hydrogen production at its facility that is first-of-a-kind in Finland and one of the first in Europe, it said on Wednesday.

A number of European companies, such as oil majors British BP and Spanish Repsol or Norway's aluminium and energy company Norsk Hydro [NHY.OL], have either cancelled or put their green hydrogen projects on hold due to spiralling costs and regulatory hurdles among other reasons.

"We are among the first in Europe to start production of this scale," P2X Solutions' chief executive Herkko Plit told Reuters.

P2X, majority-owned by Swiss energy group Alpiq since last year, said its new production plant in Harjavalta, Western Finland, has a production capacity of 20 MW and will also include a methanation facility that will launch its operations at a later stage.

It uses renewable electricity, such as wind power that is abundantly available in Finland, which enables it to call the hydrogen it produces "green."

The facility received a 26-million euro investment grant from the Finnish Ministry of economic affairs and employment, as well as a 10 million euro capital loan from the Finnish Climate Fund, Plit said.

Plit said the investment decision had been made prior to the start of Russia's invasion of Ukraine in 2022, which caused inflation to soar and demand for fossil fuels to increase again, hampering market development for clean fuels, such as green hydrogen.

"Our company strategy has been to scale up, bearing market and technological risks in mind," he said, adding it was easier to find sufficient customers for a smaller facility and scale up production gradually in the changed demand environment.

The company has plans to build two other similar facilities in Finland, with 40 MW and 100 MW of capacity.

Plit said regulatory restrictions that are due to take effect for emissions in air and marine traffic, as well as industrial production, meant that demand would pick up within a few years.

Europe should consider the new U.S. President Donald Trump's order to pause some of the Inflation Reduction Act (IRA) funds to clean technologies as "an opportunity," Plit said.

"I also see this as an opportunity for Europe to (...) increase competitiveness, which perhaps was not as strong when the IRA was attracting investments to the United States."

(Reporting by Anne Kauranen in Helsinki; Editing by Aurora Ellis)