BP PLC (LSE:BP.) has agreed a deal to supply green hydrogen to a lithium hydroxide processing facility in Tees Valley, to supply electric vehicle battery gigafactories.
Tees Valley Lithium (TVL), which is owned by Alkemy Capital Investments PLC (LSE:ALK), has signed an agreement with BP’s bp Alternative Energy Investments arm, which is developing the HyGreen Teesside project, where it aims to produce 60 megawatts of electric capacity (Mwe) by 2025.
Under the agreement, the two companies will evaluate the processes and energy requirements of TVL with the aim of decarbonising the plant by switching fuel from natural gas to green hydrogen.
TVL has secured a 20-acre plot on Sembcorp Energy’s UK site at the Wilton International chemicals park within the Teesside freeport.
The first ‘train’ of four at the processing facility is targeting output of 24,000 tonnes per year (tpa) of battery-grade lithium hydroxide monohydrate (LHM).
By 2030, when all four trains are completed and low-carbon feedstock sourced, the aim is to produce a total of 96,000 tpa of "the world's lowest-carbon" LHM, representing around 15% of Europe's projected demand.
As for BP it has previously said it plans to start production in 2025, with an initial phase of some 60MWe of capacity, with a final investment decision on the project expected in 2023.
The FTSE 100 oil giant’s UK chief Louise Kingham said the TVL agreement “has great potential to support its exciting aim of supplying its customers with the world's lowest-carbon lithium hydroxide” and “reflects the strong support we've already had from customers, who see HyGreen Teesside as the best way to decarbonise their operations”.
Alkemy noted that while more than 700GW of electric car battery gigafactories are planned for construction across Europe, requiring more than 325,000 tonnes of lithium hydroxide and 325,000 tonnes of lithium carbonate per year, there is "zero" lithium hydroxide capacity in Europe.
BP predicts the north-east England production facility could deliver up to 5% of the UK government’s hydrogen target of 10GW by 2030.
Creating the facility is also hoped to make Teesside the UK’s first major hydrogen transport hub.
Last week Tees Valley launched the £20mln Hydrogen Transport Hub competition with Innovate UK, challenging companies to “push the boundaries of hydrogen to see how it can be used to create a cleaner and more efficient transport sector”.
As part the competition, businesses and research groups will collaborate to discover how hydrogen can be used as a reliable fuel source.