Optimising Electricity Purchasing Strategies for Hydrogen Plants: Insights from Fortum’s Kalla Project

In our presentation at the first Hydrogen Summit & Expo in Tampere, we highlighted these critical aspects and shared insights from our hydrogen pilot project in Kalla, Finland.

The Kalla Hydrogen Pilot Plant

Fortum’s Kalla project exemplifies our commitment to innovation in the hydrogen economy. The 2 MW pilot plant, employing two electrolyser technologies (alkaline and PEM), is expected to begin production at the end of 2025, continuing roughly until 2028. This facility serves as a testing ground for developing operational models that optimise safety, efficiency, and flexibility in hydrogen production.

Key Considerations for Hydrogen Electricity Purchasing

Electricity procurement for hydrogen plants involves navigating a complex landscape of market dynamics and technical challenges. There is no one-size-fits-all solution, but after numerous discussions with the customer, we have identified several critical elements in crafting an effective purchasing strategy:

1. Building the portfolio: An electricity hedging portfolio can be built using different instruments, ranging from 10-years PPA’s (Power Purchase Agreements) to real-time market adjustments. Finding the right combination of different instruments to fulfill the electricity needs in the optimal way is key for many hydrogen companies.
2. Sustainability Demands: Meeting stringent environmental standards is crucial to ensuring hydrogen’s role as a clean energy solution. For example, renewable fuel from non-biological origin, RFNBO, has specific requirements for the origin of electricity. In addition to regulatory requirements, companies might have their own sustainable targets.
3. Flexibility: In a time of highly volatile electricity prices, flexibility has become the most interesting topic for many customers. It is important to find the balance between technical risks and the economic benefits from market optimisation.

We at Fortum can offer solutions for all the different aspects mentioned above, from planning the optimal purchasing strategies to the end products.

Flexibility and Innovation at Kalla

With the Kalla project, we aim to pioneer flexibility services by integrating dynamic operation modes for electrolyzers and exploring grid services. By leveraging renewable energy sources, optimising energy management systems, and tailoring production schedules, the project seeks to establish a benchmark for scalable and cost-effective hydrogen production. We will use the experiences to provide more support and expertise to our customers.

Ensuring the Thriving Hydrogen Economy

Navigating the current regulatory framework and market conditions to develop the hydrogen economy is complex. Luckily, Fortum offers a suite of services tailored for the hydrogen industry. In addition to a wide range of electricity supplies, new renewable, hedging possibilities and long- term agreements, we can support our customers in the following areas:

• Industrial site development – ready to build industrial sites for companies who want to start or expand business in Nordics
• Demand response systems – helping customers to make the most out of flexibility and volatile market prices
• Waste heat utilisation – ensuring capture of the value of waste heat produced by hydrogen plants

By sharing our expertise and collaborating across sectors and decision-makers, we aim to foster a robust and competitive hydrogen economy in the Nordics.

A Collaborative Vision for the Future

Building a sustainable hydrogen ecosystem is a collective endeavour, and there is plenty of work to do in multiple areas to ensure we have one. It was great to see at the Hydrogen Summit, how many bright-minded people are working on this topic relentlessly, with their specific and divergent expertise. We have also learned at Kalla the importance of collaboration, innovation, and adaptability in advancing low-carbon energy solutions.

If you need reliable partner for your hydrogen project, don’t hesitate to contact us. Let’s build a thriving Nordic hydrogen economy – together!