With the growing awareness that electrification alone won’t be enough to decarbonize some sectors, hydrogen – more especially green hydrogen – has become a trendy topic.
Several governments have announced ambitious roadmaps for its development, key industrial players are either starting pilot projects or setting up coalitions. Tens of GW of capacity and tens of billions euros of investments are planned. Even more are needed to reach the right scale.
Hydrogen in its production or its use is not new but what is becoming of interest is its emission-free version, or so called green hydrogen, produced with renewable energy.
To do so, electrolysis is used, passing an electric current through water, splitting it into hydrogen and oxygen gases. This process, powered by renewable sources of energy, is generating no carbon emissions.
Electrolysis is ready to scale up, solar PV or wind technologies exist already, hydrogen is in use in industrial processes or to fuel cars and trains so why this burst of announcements.
The rising focus is due to the alignment of interests from the various parties involved as well as the creation of a full value chain.
First, the offtakers. Refineries, fertilizer producers are consuming 95% of the current global hydrogen demand. More opportunities in other industries (such as steel) could be created with hydrogen as a feedstock or in high temperature heat processes. Long distance transport that electrification is struggling with (shipping, aviation, heavy duty transport…) could see a benefit to shift from fossil fuels to hydrogen. On the electricity production side, hydrogen compatible gas turbines or fuel cells could provide backup generation for when renewable energy is not available in enough quantities.
Second, renewable energy from solar PV or wind (on-shore and off-shore) are facing limits: producing too much or not enough or not aligned with demand. When producing too much electricity, it tends to drive the wholesale price down (even to negative levels) and may have to be curtailed. When solar and/or wind don’t produce enough, fossil fuel-based alternative sources have to step in.
Hydrogen production could help solve these issues: electrolysis being a very electricity intensive process, it could increase the demand when the supply of electricity from renewables is high. Wholesale price level would be supported and curtailments avoided. In addition, it could provide balancing services to the grid.
As any technology, green hydrogen has pros and cons:
- Doesn’t emit CO2 neither during production nor combustion.
- Can be transformed into other substances to produce feedstock or electricity.
- Is transportable.
On the negative side:
- Costs are still high. Eventhough renewable energy costs are trending down, in most parts of the world they are still higher than fossil fuel based power generation. Furthermore, electrolysis requires large quantities of electricity, adding to the cost of the process.
- Safety measures are needed as hydrogen is both volatile and flammable.
- Infrastructures to store or transport hydrogen on long distances are still in development.
- Conversion losses happen when converting hydrogen in other substances for transport for example.
However the growth of the two main elements of the process, renewable energy and electrolysers is tied; Goldman Sachs estimates each GW of electrolyser requires twice that size of dedicated wind or solar capacity.
This joint growth is not the only alignment within the value chain: collaboration is increasing between renewable energy producers, electrolyser manufacturers and green hydrogen offtakers, or within dedicated clusters adding gas or electricity grid operators or industrial companies.
Iberdrola and Orsted are each developing projects with fertilizer companies. They are also working together, jointly with ACWA Power, CWP Renewables, Envision, Snam and Yara in a newly formed coalition called the Green Hydrogen Catapult. It aims at deploying 25 GW of renewables-based hydrogen production capacity by 2026.
Shell and Gasunie recently started feasibility study for 3 to 4 GW offshore wind to produce hydrogen, in the port of Eemshaven, Netherlands, later distributing it to industries and consumers via the natural gas network.
These are just few examples of the projects currently being developed. The volumes involved in the governmental and corporate initiatives will contribute to bring down the largest barrier so far, cost, green hydrogen becoming competitive with its grey counterpart.
Countries with large renewable energy capacity and lower electricity prices will concentrate larger volumes of electrolysers and become exporters of green hydrogen. Clusters (such as ports) grouping delivery of electricity produced by wind or solar plants, large industrial offtakers and transport infrastructure will become the first node of a new network.
The value of the whole hydrogen chain will come from the creation of ecosystems making use of the strengths and needs of the different players.
Sources: Hydrogen Council, Goldman Sachs, companies website – Visuel: iStock