Newly established renewable dimethyl ether (rDME) joint venture Dimeta recently revealed the location of its first commercial-scale production facility — the Teesworks free port in Teesside, northeast England. The company, formed by LPG distributors SHV Energy and UGI International, will build a 50,000 t/yr plant by 2024, one of six similar facilities to be developed by 2027. Dimeta's chief executive, Soren Jacobsen, previously worked as a decarbonisation project manager and managing director at global nitrogen and methanol producer OCI. Argus spoke with Jacobsen to discuss the Teesworks project and the company's plans:
Why did Dimeta choose to locate the plant at the Teesworks free port?
For our first project, we will produce rDME from municipal solid waste using an advanced gasification process. Teesworks is a great location with significant efforts being put into pioneering green innovations. It is also a question of having land available for the current plant configuration and for retrofitting of CCUS [carbon capture, utilisation and storage] in the future, which they have at Teesworks. Moreover, Teesside is an area with LPG demand and the possibility to blend rDME into LPG. Longer term, the Teesworks site will also have green hydrogen available, which means that if we can import that, we can produce even more rDME with an even lower carbon footprint. Finally, Teesside will be one of the connection points of the UK's CCUS network, so the CO2 separated in the process and not used for the rDME production could be sequestered in the future, taking the plant's rDME from being a low-carbon product to a zero-carbon product and beyond.
Have you secured the necessary feedstock to produce 50,000 t/yr by 2024?
By the time the final investment decision [FID] on the plant is made, all of the contracts for feedstock and offtake will be secured, and we are currently in advanced commercial discussions with several parties. We are looking for supply of roughly 200,000t of municipal solid waste in long-term contracts, and parties are open to that. The beautiful thing about doing waste gasification is that normally you have to pay for raw materials. We are being paid to take the waste. That is also an essential factor when we look at where we will go next. You want to be in a place where there is sufficient waste but also where the gate fees or the tipping fees are reasonable. Coupled with the plant's highly efficient gasification process, this enables us to provide an affordable low-carbon fuel to off-grid customers, while avoiding the environmental impacts from landfilling or incinerating waste.
Could you increase feedstock supply if you decide to expand the plant?
We aim to develop a relatively small or medium-sized plant, but you could expand it, and we have thought about whether we should commit to more land for this purpose. But it is our first plant, so it is likely to retain its current planned capacity. Then we may consider scaling up for the second or third plant.
Who will buy your rDME?
We will sell a large chunk to UGI and SHV Energy. The remaining volumes will go to other players in the LPG market, and we are already in talks with some of them. We will sell at least 20pc of the rDME produced to third-party players, to support the defossilisation of the LPG industry as a whole. Having prominent and reliable offtakers is very important in securing the business case for the plant.
In terms of a target market, SHV, UGI and other players want to help decarbonise the UK's off-grid heating sector, so I expect most of the supply from the first plant will be directed there. It would be a logical home for it, but it could also go to the autogas sector or be used in specific industrial applications.
Will rDME from Teesworks be distributed in pure form or as a blend with LPG?
It is up to the offtakers, but I think a large part of it will end up blended into LPG to reduce the carbon footprint of the latter, up to around 20pc. But the distributors might have industrial customers interested in having a 100pc rDME. Time will tell.
Have you secured all permits and approvals for the plant's construction?
We are busy with that now and are confident it will go reasonably smoothly. We are still securing permits necessary for the plant, given that Teesworks is an industrial site that is being redeveloped. We are also doing what we can in terms of the plant's design to keep it as simple as possible in that sense. We are confident that it will go reasonably smoothly by the time we make the FID by the end of the year.
What is the regulatory and policy backdrop for a renewable fuel such as rDME?
The outlook overall is positive for renewable fuels, and particularly for those produced using non-imported waste feedstocks. Some things could concern the LPG sector. For instance, plans to phase out gas boilers could reduce the market size for rDME. It is not a major threat given the size of our rDME production relative to the much bigger LPG sector, but it is something to keep in mind. I see a drive on the regulatory side to address climate change, but another critical issue is energy security. This fuel will be produced in the UK from UK waste, significantly strengthening the UK's energy security. There is a lot of pressure to solve the waste problem and shift to zero waste as part of a circular economy, which fits nicely with what we are doing. There is also talk about energy poverty — you cannot push new costly installations to consumers who may be unable to pay for it. Retaining the gas boiler and decarbonising the fuel is a much cheaper solution, and you can do it today.
How do you plan to raise awareness about rDME?
Our primary role is to be a product developer of the new rDME plants in the UK, Europe and the US. But part of the role is also spreading the gospel of how wonderful rDME is and how it can help decarbonise LPG applications. We also support the development of safety standards and regulations, carry out testing and disseminate information around the use of rDME in the LPG sector.
What role are SHV and UGI taking in Dimeta now the firm has been founded?
What has been very positive is that both joint-venture partners, despite it being a small part of their business, really focus on us. The help we are getting is not only financial but also in terms of the offtake. Some of my colleagues, including in the leadership team of Dimeta, are staff seconded from SHVE or UGI. So we are building a team of competent individuals with a good understanding of the LPG industry.
What are the biggest challenges ahead for the company?
The biggest challenge will be keeping the momentum, getting this plant developed, and getting to the FID at the end of the year. But we are now working on finding the locations for the second and third plants. The ambition is to have six plants in five years. So we need to have a pipeline of new projects. The other challenge is market development. We strongly believe in our rDME but we also need to convince many other people that it is the future.
What is the timeline for the opening of the six plants?
The overall target is six plants in five years. One project is already in progress, and the next five will need to come roughly one every year. But it is not all in our hands, and it could be that some of them come in parallel. Then the challenge is for us to handle more than one project simultaneously.
