The Power Generation Demand for Clean Ammonia: Could Be Huge, but The Economics Matter

Key Points

If Japan can show tangible success in co-firing its coal facilities with ammonia, and as many regions struggle to keep up with the growth in power demand and transition needs, other countries may look to mimic Japan.
Demand would be very price sensitive, but depending on how carbon values develop, power generation could put a floor under ammonia pricing through the 2030s – we have only looked at developed Asia.
Blue ammonia is the obvious choice here because of costs, but also because large-scale investments like blue ammonia lend themselves to the “cost plus take-or-pay” offtakes that are needed to get financing.
We set up next week’s report by looking at whether too much optimism is a constraint to progress – if the consensus is that costs and prices will fall over time, why buy today? No progress = no better costs/pricing.
We show very little project activity this week but have some views on why the agricultural side of ammonia may be worth investing in this quarter and a lot more on power.

Exhibit 1: If Japan has real success, high carbon values anywhere could pull more towards coal co-firing.