Uniper scraps Swedish e-SAF project amid ‘challenging market,’ rising costs

Uniper has cancelled its SkyFuelH2 project to make green hydrogen-based sustainable aviation fuel in Sweden because of what it called a “challenging market situation and rising costs.”

Uniper said the continued regulatory and policy uncertainty also made the project unviable.

“Continued uncertain effects of the regulatory frameworks that are intended to support increased demand for sustainable aviation fuel means that the project is no longer commercially viable,” a Uniper spokesperson said in an email Oct. 11.

Capital costs for green hydrogen projects have soared in recent years, and this, along with supply chain disruptions and teething problems for scaling projects, has caused setbacks for the nascent industry.

The project in Solleftea, Sweden, was to have produced enough e-SAF to cater for 10% of total Swedish aviation fuel demand, and had good access to renewables, biomass and railway logistics.

“However, climate and business sustainability must go hand in hand, and each project must stand on its own two feet,” Uniper said.

Uniper did not disclose the electrolyzer capacity planned for the project.

Project partner Sasol ecoFT withdrew from the development at the end of 2023 because of a strategy change in the parent company, Uniper said. Sasol did not respond to a request for comment.

Sasol ecoFT was to supply the Fischer-Tropsch technology to produce the e-SAF. Uniper had planned to bring new partners on board for the project, which it planned to construct from 2026 with first operations by 2029.

Uniper said it would apply knowledge and insights from the project to future developments.

"This was a tough decision to make, but it is one rooted in realities,” Uniper Sweden CEO Johan Svenningsson said in a statement. “While SkyFuelH2 will not move forward, our commitment to sustainability and innovation remains strong.”

Uniper said it would explore other potential uses for the site in the Hamre area, where it had already secured land for the development, and was working closely with the local municipal authority.

Platts, part of S&P Global Commodity Insights, assessed the cost of producing hydrogen via alkaline electrolysis in Europe at Eur6.82/kg ($7.46/kg) Oct. 10 (Netherlands, including capex), based on month-ahead power prices. Proton exchange membrane electrolysis production was assessed at Eur7.05/kg.

Project headwinds

The decision comes not long after Orsted pulled the plug on an eMethanol project in northern Sweden earlier in 2024, citing slow market progress and an inability to sign long-term offtake contracts.

Orsted had already taken a final investment decision on the 70-MW FlagshipONE project in 2022 and was targeting emerging demand in the marine fuel sector.

And Shell also withdrew from an e-SAF partnership in Sweden with renewable fuels producer Vattenfall in July, amid a wider retrenchment in European renewable fuels projects.

Elsewhere in Europe, Germany’s first H2Global hydrogen derivative import tender for e-SAF attracted no final bidders.

H2Global executive director Susana Moreira said the tender failed because of the limited volume available for the tender size, as well as EU rules defining green credentials for SAF.

Moreira said projects competing in the H2Global e-SAF auction would only be viable if the companies greened existing production, allocating green power and hydrogen to the e-SAF.

However, e-SAF is one of several products of the Fischer-Tropsch process, and the EU requires that the green attributes of the process are shared across all byproducts, making the cost prohibitive.