As the global energy transition gains momentum, green hydrogen is emerging as a promising resource to enable a shift from fossil fuels to power vehicles, industrial operations and national power systems with renewables.
Green hydrogen production can draw an electrical generation from wind and solar projects to power electrolysis, providing a way to extract additional value from renewables project while accelerating a reduction in emissions.
But, with hydrogen produced through electrolysis estimated by the International Renewable Energy Agency (IRENA) to have made up just 5% of global production in 2019, the sector will need an integrated policy approach, substantial investment and rapid innovation in the coming years to reach its potential, and for the high production costs to fall.
Scaling up
Green hydrogen has attracted significant interest from project developers in recent months, including from energy majors which have previously been focused on fossil fuels. A number of key projects are now in development globally, with significant deployment of renewable power planned to support a boom in production in the coming years.
Many of these projects are emerging in northern Europe, which is fast becoming a prime location for green hydrogen development. The NortH2 scheme, for example, is a collaboration between Equinor, RWE and Shell and intends to produce hydrogen using renewable energy generated by wind farms off the Dutch coast. The project is notable for its planned scope, with the project partners aiming for 1 GW of wind power capacity for electrolysis by 2027, rising to over 10 GW by 2040, equating to one million mt of green hydrogen by 2040.
Europe is also home to the AquaVentus project, another 10 GW wind-to-hydrogen project that could be completed by 2035. The project is based in Heligoland, where RWE – which is said to be among the project partners – operates 297 MW of offshore wind, with 342 MW set to come online in 2021.
Outside of Europe, Australia is also emerging as a hotspot led by the Asian Renewable Energy Hub, which is set to have 26 GW of wind and solar capacity. This will power the production of green hydrogen for the domestic market and for export to Japan and South Korea. In Port Gladstone, meanwhile, Austrom Hydrogen is planning to develop a 3.6 GW facility in Port Gladstone powered by solar energy.
Sizeable projects are also being planned in China, where energy utility Beijing Jingneng has announced a $3bn project to use hydrogen to store output from a 5 GW combined solar and wind project in Inner Mongolia.
Production costs
A key roadblock to development has been prohibitive production costs, with green hydrogen costing between two to three times more to produce than hydrogen from fossil fuels in 2020. There is significant optimism within the industry, however, that costs will fall sharply in the years ahead, with IHS Markit predicting a 15% drop by 2025 and a 30% fall by 2030.
Among the factors expected to drive this reduction are improvements in electrolyser design and size, economies of scale as more multi-GW projects emerge, and falling renewable power costs, which are especially significant given the price of electricity is the main contributor to the cost of green hydrogen. According to IRENA, the average weighted cost of electricity produced by offshore wind could fall by nearly 50% by 2030 from its 2019 level, while the cost of solar could fall by 55% over the same period.
Electrolyser innovation is, meanwhile, also occurring at pace. Shell, Mitsubishi and Vattenfall are developing a 100 MW green hydrogen facility in Hamburg that will utilise a 100 MW electrolyser, which would be 10 times larger than the biggest in operation. Orsted and ITM Power are, meanwhile, among the firms exploring combining electrolysers with wind turbines to generate hydrogen offshore, allowing seawater to be used in the electrolysis process. This would potentially address the challenge of deploying electrolysers in hot and dry regions where there is restricted availability of freshwater but an abundance of seawater.
Green and blue
At current costs, blue hydrogen – produced using fossil fuels in conjunction with carbon capture and storage technology – is closer to cost parity with grey, unabated fossil-fuel based hydrogen than green hydrogen. It has, therefore, caught the attention of energy majors such as Equinor and Shell, which both have projects in development.
Critics argue the pursuit of blue hydrogen over green could hamper global decarbonisation efforts. According to a recent report by IRENA, however, green hydrogen could be cost competitive with its blue equivalent by 2030. Such assumptions are leading European policymakers to accept that natural gas will be needed in the short- to medium-term, but only as a bridge to the end goal of green hydrogen.
It is true that electrification will likely remain the key strategy for decarbonisation to limit hydrogen conversion losses, investment and transport costs, but for those difficult to tackle sectors – heavy transport, steelmaking, refineries – wider adoption of the green hydrogen, and the renewable power inherent in its production, is inevitable.
Source: energycentral
