McDermott will construct Canada’s first commercial green hydrogen and ammonia facility. The US engineering company has been awarded an early contractor involvement (ECI) agreement from Abraxas Power Corporation for the Exploits Valley Renewable Energy Corporation (EVREC) project in Central Newfoundland.

According to a McDermott press release, the facility will produce 165 kilotonnes per annum of hydrogen and 5,000 tonnes per day of ammonia.

The project will include the development of a 530-turbine wind farm with the ability to generate 3.5GW of electricity and 150MW of solar photovoltaic (PV).

Under the scope of the agreement, McDermott will provide front-end engineering design, engineering, procurement and construction (EPC) execution planning services, and an open-book EPC cost estimate for the hydrogen production, ammonia processing and product storage portion of the project.

Rob Shaul, senior vice-president of McDermott’s Low Carbon Solutions division, said: “The agreement is testament to McDermott’s industry-leading delivery and installation expertise, and the breadth of our capabilities across the energy transition.”

“Our century of experience, from concept to completion, and integrated delivery model, means we can offer Abraxas a repeatable modular implementation solution that is expected to drive cost savings, reduce risk and provide quality assurance.”

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Green hydrogen is considered the most environmentally friendly form of the power source, as it does not require polluting chemicals for its production, only water and electricity, which create hydrogen using electrolysis.

However, the cost of green hydrogen has remained an obstacle to its commercialisation. A price of $1/kg is required for green hydrogen to be used cost effectively in applications such as industrial heating, but current costs are between $5.26/kg and $8.42/kg. Some analysts are sceptical that the required cost decrease can be achieved by 2050.

In 2020, the Canadian Government announced its Hydrogen Strategy for Canada, stressing the importance of low-carbon hydrogen as a tool for achieving net-zero emissions by 2050. According to the government, 80 low-carbon hydrogen production projects have been announced since, representing the potential for a further $100bn ($137.48bn) of investment in the power source.

While Canada has been pushing to develop green hydrogen production capabilities, it will play a “disappointingly small role” in global decarbonisation between now and 2030, according to International Energy Agency executive director Fatih Birol.

“Of all the projects today in the pipeline, only 7% will see the light of day and come online before 2030,” he said earlier this year.