Ørsted has decided to put an end to the development of its FlagshipONE project in Sweden.
The project, which aimed to produce 55,000 metric tons of e-methanol per year by 2025, was part of a strategy to meet the growing demand for alternative fuels in the maritime sector. Ørsted had acquired the project in 2022 and aimed to produce green hydrogen from a 70 MW electrolyzer, which would then have been combined with biogenic CO2 from the Horneborgsverket power plant to produce e-methanol.
However, several economic obstacles led Ørsted to reconsider its position.
Project costs far exceeded initial estimates, while commercial prospects proved less promising than anticipated.
In particular, the difficulty of securing long-term purchase contracts at competitive prices called into question the financial viability of the project.
Ørsted strategic reappraisal
The discontinuation of the FlagshipONE project reflects the challenges facing the e-fuel sector, which is still in its development phase.
Ørsted, while recognizing the long-term potential of e-fuels, has had to prioritize more technologically and economically mature initiatives.
The company thus maintains its commitment to renewable hydrogen, which it sees as an essential pillar of Europe’s industrial future, particularly in sectors such as steel and chemicals.
The financial repercussions of this decision are significant, with cancellation costs amounting to DKK 300 million and write-downs of DKK 1.5 billion.
These figures illustrate the risks inherent in investing in technologies that are still emerging.
The decision to refocus on hydrogen projects reflects a pragmatic approach in the face of market uncertainties.
Impact on the e-fuels sector
Ørsted’s abandonment of FlagshipONE underlines the difficulties faced by e-fuel projects in a slowly evolving market context.
Competition with fossil fuels, whose prices remain significantly lower, poses an additional challenge to the profitability of e-fuels.
Platts’ valuations for fossil methanol, for example, show a significant cost difference with green methanol, making the latter difficult to commercialize on a large scale.
This decision could serve as a warning to other players in the sector, prompting a reassessment of investments in similar technologies.
The e-fuels market will have to overcome considerable obstacles before it becomes a viable alternative to traditional fuels.
