RICHLAND, WA – A Swiss company behind a $1.5 billion climate-friendly fertilizer factory proposed in central Washington is not giving up on the project despite the Trump administration’s termination of a significant federal subsidy.
In fact, CEO Petter Østbø said Atlas Agro will double down with a further $500 million investment in a large data center next door to the planned fertilizer plant.
Atlas Agro’s plans represent a potential economic boon for the Tri-Cities and Washington state. But local enthusiasm for the projects is paired with a dose of caution.
Earlier this month, the U.S. Department of Energy nixed funding for the Pacific Northwest Hydrogen Hub, which was set to pass through a large subsidy to Atlas Agro for making zero-carbon fertilizer using clean hydrogen. Funding for the hub won approval during President Joe Biden’s time in office.
Apart from the lost federal dollars, other hurdles lie ahead for the project.
In an interview Wednesday, Østbø described an unexpected way to recover from the funding setback: by tacking on a second costly and energy-intensive component to his company’s plans in Washington.
“One very interesting thing is the ability to share infrastructure,” Østbø said about adding a profit-making data center. He said sharing the cost of construction for power infrastructure at the site could be “very beneficial” and that this expense alone amounted to almost twice as much as the canceled federal funding.
City, state and federal taxpayers have skin in this game. Atlas Agro secured a city property tax abatement. It should qualify for federal production tax credits and has already pocketed several million dollars in Washington state economic development grants.
But the slice of the $1 billion in Northwest hydrogen hub money that the Trump team yanked would have been the most valuable subsidy of all.
Atlas Agro’s share of that award was roughly $150 million. It was slated to cover about 10% of the costs to design, permit, construct and start up the Pacific Green Fertilizer plant.
Trump’s Energy Secretary Chris Wright justified the grant rescission by saying taxpayer money shouldn’t flow to questionable projects that would not provide a good return.
Østbø responded that the economic case for the green fertilizer factory is solid, as shown by the fact that Atlas Agro has already lined up a distributor and has major customer commitments from farmers in the region who want cheaper, locally-produced nitrogen fertilizer that is not derived from fossil fuels.
“It is economically viable,” Østbø said. “With industrial megaprojects, they always hit challenges along the way that you did not foresee. And then it’s critical to have good partners to work with. All of that is still in place, and we’re super excited about taking this forward.”
Power-hungry projects
Data centers typically require oodles of electric power and need water for cooling, both of which are supply-constrained in Central Washington.
Atlas Agro’s CEO expects sufficient water can be secured, especially if adjacent industrial developments recycle water among their operations. Sourcing the vast amounts of needed renewable electricity on the open market and arranging for its transmission is the more vexing issue.
The fertilizer factory alone needs 320 megawatts, which is much more than the entire city of Richland currently consumes. Østbø said the new data center would require at least that much additional electricity, if not more.
Atlas Agro is in competition with other data center developers in the Northwest to buy the entire output of multiple new wind farms or solar farms with battery storage that are not yet built.
Østbø was not in a position to announce a power supply contract yet, but said with certainty, “It’s available.”
He said he’s more concerned whether the Bonneville Power Administration will come through in time with high-voltage transmission upgrades to increase capacity to move the electricity from its sources to waiting industrial customers. Other executives in a variety of industries around the Northwest are in the same boat.
Preliminary site map for the proposed five-building Atlas Agro data center at the northern city limit of Richland, Washington. (Image courtesy of city of Richland)
The multinational fertilizer company has no prior experience in data center development. Østbø said it was fortunate that the biggest investor in Atlas Agro is the global finance firm Macquarie Group, which has expertise he can draw upon from backing other data centers.
Østbø anticipated his company’s proposed data center would serve customers in the hot sectors of cloud computing and artificial intelligence.
‘Creative, or desperate’
The proposed fertilizer factory and adjacent data center are proposed to be built on undeveloped desert parcels that were once federally-owned buffer lands between the growing city of Richland and the Hanford Nuclear Reservation. A decade ago, the Department of Energy transferred 1,641 acres from that buffer to the Tri-Cities community for economic development.
The Port of Benton responded cautiously a couple weeks ago when Atlas Agro asked for a one-year extension to complete the purchase of the 150-acre parcel for the fertilizer factory, which the port controls.
Port commissioners moved to shorten the requested extension to six months to be followed by an update on the project’s viability before they would consider a further extension.
“I’m fully supportive of this project. However, it sounds like there are a lot of uncertainties,” Port Commissioner Lori Stevens said at the meeting on Oct. 15.
Meanwhile, the Richland City Council has the final authority over the property sale for the data center development. A citizen-led economic development advisory committee voted 7-0 on Oct. 20 to recommend that the city give Atlas Agro an exclusive option to purchase the 275-acre parcel. Before the vote, one committee member wondered out loud whether the Atlas Agro data center proposal was “creative, or desperate,” according to the Tri-City Herald’s meeting coverage.
The full Richland City Council still has to weigh in, which could happen in November. Then, multiple parties are waiting for clarity about when the new Bonneville Power Administration transmission lines, upgraded substations and grid connections will come through.
Atlas Agro needs to begin serious construction on its green fertilizer plant by the end of 2027 in order to qualify for valuable federal tax credits that are still available outside the hydrogen hub program. Østbø anticipated that the innovative and complex factory would take three to four years to complete.
Status of other hydrogen hub projects
Atlas Agro’s green fertilizer plant was the largest funding recipient within the terminated Pacific Northwest Hydrogen Hub project, but there were others in the mix.
The next biggest was a proposal to redevelop a closed aluminum smelter near Ferndale, Washington, to make green hydrogen for refinery use, truck fueling and possibly backup power generation. At last report, this redevelopment was undergoing further review by its proponent, Calgary-based firm AltaGas.
Lewis County Transit is proceeding with a small hydrogen fueling depot for its zero-emissions fuel cell bus fleet. Previously received state and private grants will cover the cost to complete construction, which is already underway. But the loss of the multi-year federal hydrogen hub grant stalls plans to scale up hydrogen production to fuel other jurisdictions’ fleets, the Chehalis mayor told OPB.
A plan to build a hydrogen liquefaction and distribution plant in Boardman, Oregon, led by Air Liquide, now looks doubtful without the hydrogen hub funding or a nearby supplier of green hydrogen.
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