Slow-developing e-fuel market prompts Ørsted to terminate FlagshipONE project

Danish energy company Ørsted has decided to cease the development of what was set out to be Europe’s largest commercial-scale e-Methanol facility under construction, the FlagshipONE project in Sweden.

This strategic decision, which came nearly two years after final investment decision (FID) on the project, was disclosed in Ørsted’s interim report for the first half year of 2024.

“The liquid e-fuel market in Europe is developing slower than expected, and we have taken the strategic decision to de-prioritise our efforts within the market and cease the development of FlagshipONE. We will continue our focus and development efforts within renewable hydrogen, which is essential for decarbonising key industries in Europe and closer to our core business. We maintain a strong focus on de-risking project execution and prioritising growth options with the highest potential for value creation,” Mads Nipper, Group President and CEO of Ørsted, commented.

To remind, FlagshipONE, was expected to be operational in 2025 and supply up to 55,000 tonnes of e-Methanol per year to the shipping industry.

Originally developed by Swedish Liquid Wind, FlagshipONE was acquired by Ørsted in December 2022, and the construction of the plant began on May 24, 2023.

In late 2023, the EU-Catalyst Partnership, which consists of the European Commission, Breakthrough Energy Catalyst and the European Investment Bank, vowed to support the project, highlighting its innovative nature and the potential to contribute to the decarbonization of shipping.

Despite decision to halt the development of FlagshipONE, Nipper said Ørsted’s operations are performing well, particularly the earnings from the company’s offshore wind farms, adding that the core business has increased.

“Therefore, we maintain our EBITDA guidance for the full year, and we increase our earnings expectations for our offshore wind business,” Nipper said.

Impairment losses had a negative effect in the first half of 2024 of DKK -3.2 billion ($472.5 million), mainly driven by the decision to cease execution of FlagshipONE (DKK -1.5 billion or $221.5 million), the company stated in the interim report.