By Raphael Schoentgen
Hydrogen gas was first produced artificially back in the 16th century, while the first fuel cells and electrolysers were made in the 19th century. Until recently, however, the price of electrolysers – which produce hydrogen by splitting water into hydrogen and oxygen with electricity – and fuel cells – which recombine them to produce electricity and heat – were too expensive.
This has all changed. The price of electrolysers went from between €2 and €4 million per MW a couple of years ago, to around half a million now. This means the main driver for the cost of hydrogen produced by electricity is now electricity itself, which represents three quarters of the cost of production.
As green electricity gets cheaper every day, low cost green hydrogen is coming. In parallel, as with solar and wind, the cost of hydrogen production is falling exponentially, as system sizes and production volumes grow, while performance improves.
The challenge of cutting carbon
All nations wish to tackle climate change. Many have very strong policies focused on green electricity, at both the national and regional level. California just announced that it is aiming to achieve 100% green electricity on its network by 2030. Europe will reach 30% by 2020 and is aiming for 50% by 2030.
Electricity, however, represents less than a quarter of energy use in Europe. Around half of total energy use is for heating, which is mainly covered by natural gas. The other big part is transport, which represents a third of the total, and is mainly covered by liquid fuels.
One can argue that biomass and biogas help decarbonise heating in Europe (covering 17% of total heating needs) and biofuels help decarbonise transport in Europe (with 6% of the total). But we still face three major facts about Europe, which are true of other regions too.
- Greening electricity networks is great and should be further encouraged but even if half our electricity was produced by renewables, we would still only decarbonise about 10% of the energy we use. As 80% of worldwide CO2 emissions are related to energy, it is key that we understand where to put the emphasis in order to reduce them faster.
- Heating and transport, which represent 75% of our energy needs, are mainly covered by solid, gas and liquid fuels, which are emitting CO2 (even biomass, biogas and biofuels). And we know that if we do not want to warm up the planet by more than 2°C, we cannot release more CO2 than we did between 1985 and today. So, it is only if we have major CO2 sinks (such as large forests and carbon capture and storage sites) that we can expect to cope with this reality. If not, we need to look for a substitute to these fuels which does not emit CO2.
- Increasing green electricity levels on the grid leads to major instabilities due to the intermittent nature of solar and wind resources. We therefore need to find ways to store these electrons on a massive scale for later use. Battery-based large storage exists, but it fills up very quickly and is best for storing and releasing electricity within a day, not for long-term storage.
Green hydrogen offers a solution
It is the only gas that does not contain any carbon, and so using it for heating and transport does not generate any CO2 – only water. Generating it from green power helps store it and balance the grid.
On the heating side, green hydrogen can be mixed up to 20% with natural gas in pipelines, or dedicated pure hydrogen pipelines can be laid (there are several thousands of kilometres of them around the world already). It can then be used in existing gas appliances or dedicated fuel cells to generate heat and power.
On the transport side, hydrogen can power fuel cell-based vehicles, such as electric vehicles carrying a hydrogen tank and a fuel cell that transforms on-demand hydrogen into electrons to power the car.
The past months have showed an amazing array of political engagement, confirming large support for green hydrogen development worldwide.
In June, France launched its first national plan for green hydrogen. The following month, energy ministers from around the world and the EU Commission gathered in Malmö under the umbrella of Mission Innovation – a post COP21 initiative – and announced the launch of an initiative for hydrogen and fuel cells. EU energy ministers, who met in Linz in September, signed a “hydrogen declaration” stating that green hydrogen will be part of the EU’s energy future.
In July, California published its plan to reach 1 million hydrogen fuel cell cars on its roads by 2030. Lat month, the Netherlands appointed Noe van Hulst, chairman of the governing board of the International Energy Agency, as its Special Envoy on Hydrogen. While Norway just kick-started a study to set up its own national hydrogen roadmap.
Companies are betting on hydrogen
In parallel, companies set up organisations and business alliances, developed commercial projects, and lined up major investments in hydrogen.
In 2017, a dozen Fortune 100 companies created the Hydrogen Council in Davos – which now comprises over 40 members, including major energy and transport companies – and stated for the first time that hydrogen will be part of the future for energy systems. In 2018, Chinese companies created a similar Council gathering major Chinese energy and transport companies, chaired by the chief executive of China Energy.
New alliances do not, however, only extend to large companies but also full ecosystems of R&D centres, NGOs and local authorities. Over the past 12 months, new national hydrogen associations were launched in Chile and Ukraine, and a hydrogen coalition was set up in the Netherlands.
In terms of transport, in September this year, Alstom started the commercial operation of the world’s first hydrogen fuel cell train in Germany. Several countries are now asking for such systems. Hyundai announced 1,000 hydrogen trucks will be put in operation in Switzerland by the end of 2019, with another 4,000 slated for the following four years. Earlier this year, US-based company Nikola sold 800 hydrogen trucks to transport Budweiser beer across the US and embarked on a $200 million funding round to set up a production plant in Arizona. This month they presented their truck for Europe to be put in operation in 2020.
On the energy side, Rotterdam harbour started work on a 100 MW electrolyser project; several large companies, such as Equinor, Gasunie and ENGIE, published documents stating that hydrogen will be at the core of their future gas networks, pure hydrogen pipelines will be laid on the sea bed, and hydrogen is set to become a substitute to liquid natural gas, and will therefore be transported overseas. Norwegian firm NEL, a leader in electrolysers, also announced a tenfold capacity expansion this summer, with the aim of delivering 360 MW each year, three times the global electrolyser market in 2017.
On the investment and M&A side, South Korea has announced a €2 billion investment in its hydrogen economy over the coming five years. In August, Weichai Power, Chinese engine, auto parts and logistics conglomerate, agreed to purchase a 19.9% stake in Canadian fuel cell pioneer Ballard for $163 million.
In summary, green hydrogen is set to enter industrial processes, mobility, homes, buildings and cities. As such, we must ask ourselves how it will impact our activities as it develops into a new energy source, and much sooner and faster than initially thought.
Raphael Schoentgen is the Founder and Chief Executive Officer, Hydrogen Advisors
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