Agriculture, Energy Transition, Refined Products, Biofuel, Renewables, Jet Fuel

October 09, 2024

INTERVIEW: Essar aims to start SAF production in India for export to UK unit by 2027

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HIGHLIGHTS

500,000 t/y SAF export to Stanlow Refinery

Output at Salaya in Gujarat, capacity to be doubled

FID for 350-MW low-carbon hydrogen project by March 2025

Mining to energy conglomerate Essar group aims to produce 500,000 metric tons/year of Sustainable Aviation Fuel by 2027 from an Indian project for export to its Stanlow Refinery in the UK, B C Tripathi, advisor, Essar Group told S&P Global Commodity Insights Oct. 9.

Tripathi said SAF will be produced at Salaya in Gujarat, where Essar has a thermal power plant and a captive port. It will then be exported to the group's Stanlow Refinery in northwest England, where it will be blended into jet fuel to serve the group’s customers in the UK and other European markets.

“SAF is one of the low-hanging fruits as it comes through the bio [fuels] route, plus there is a blending mandate coming soon,” Tripathi told Commodity Insights at the FT Energy Transition Summit India over Oct. 8-9 in New Delhi.

The group’s Future Energy Complex at Salaya “will start executing the project sometime by next year and complete it by the end of 2026.”

The group renamed its UK oil refining operations to Essar Energy Transition Fuels (EET) in 2023, initiating the decarbonization of captive facilities and targeting sales of low-carbon fuels in the UK and elsewhere in Europe.

According to the EU’s blending mandate for SAF under the ReFuelEU Aviation initiative, part of the “Fit for 55” package, fuel suppliers must ensure 2% of fuel made available at EU airports is SAF in 2025, rising to 6% in 2030, 20% in 2035 and gradually 70% in 2050.

For the procurement of used cooking oil and animal fats needed for manufacturing SAF at Salaya, “a lot of supply lines have been examined and MOUs/term sheets have been signed,” Tripathi said.

“Contracts are being finalized and the plant’s design, engineering, costing, technology selection and site preparations are on – they are all in the final stage of completion.”

The group's plans are supported by a low-cost production advantage for Indian renewable fuel projects. Tripathi said that by 2030, he saw renewable hydrogen prices around $2.5/kg in India.

SAF capacity at Salaya will be doubled to 1 million metric tons/year in the second phase, in line with the rollout of the blending mandates for SAF not just in the EU but in other countries too, Tripathi added.

In the latter phases, the Salaya complex will also produce 1 MMt/y of renewable ammonia and 1 MMt/y of renewable methanol, which is intended primarily for exports.

Low-carbon hydrogen at Stanlow

Meanwhile, Tripathi said EET's 350-MW, phase one, low-carbon or ‘blue’ hydrogen project at Stanlow has received planning permission approval and is in the final stage of securing the Final Investment Decision by FY25 (ending March 2025).

This project, in the HyNet cluster in the northwest of England, aims to reduce carbon dioxide emissions by producing low-carbon hydrogen with carbon capture. Eni will transport and store the carbon dioxide.

EET will produce the low-carbon hydrogen via Auto Thermal Reforming and use it for decarbonization of the Stanlow Refinery.

“In the second phase, 1 GW (additional) low carbon hydrogen production is expected for which necessary permissions are being sought,” Tripathi said.

“About 60% of that will meet our refinery requirement and the rest will go to nearby industries.”

The potential off-takers in the industrial zones are mostly ceramic, chemical and glass firms, which are now in discussions with EET about term sheets, prices and timelines for future purchases of low-carbon hydrogen.

The UK government awarded GBP21.7 billion ($28.5 billion) in funding for carbon capture and low-carbon hydrogen projects under its Track 1 industrial cluster decarbonization program for HyNet and the East Coast Cluster around Teesside in the northeast Oct. 4.

With investment close to $3 billion, EET is aiming to commission the first phase of the low-carbon hydrogen project in the UK by end-2026-early 2027, and the second phase by 2029, according to Tripathi.

Separately, EET will partner with UK gas-fired power generator SSE Thermal for the Gowy Green Hydrogen project. The initial phase will be sized to 40 MW of electrolyzers and supply will be targeted at industrial off-takers in the region. Tripathi said an alkaline electrolyzer for the project had been shortlisted.

Stanlow Refinery has a refining capacity of 10 MMt/y and supplies a range of conventional fuels including about 2 billion liters/year of jet fuel to the UK and other European markets, according to the company.

Geopolitical conflicts

Tripathi said geopolitical conflicts will expedite renewable energy adoption as people would see renewable hydrogen and renewable energy production as an alternative to oil and gas.

“In the Middle East where not just supplies but trade routes could get affected, people would like to see what they produce locally in their regions which is not contingent upon supplies coming from the Middle East,” Tripathi said.

“The whole global trade will definitely have an impact for some time, prices may go up, freight rates may go up too and insurance will have an issue. So people will try to push renewables as early as possible.”

Essar plans to add 10 GW of energy in the next decade in India to its energy portfolio. As much as 8 GW will be renewable power and 2 GW will be thermal power at its existing 1.2 GW power plant at Salaya.