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International investment in electrolysers supports a green hydrogen economy.

By April 19, 2023 No Comments

The global investment in green hydrogen is increasing at a rapid rate.

With Governments across the planet developing investment for their own hydrogen economies, green hydrogen technologies are advancing rapidly.

Green hydrogen can only be referred to as ‘green’ if the electricity to power the electrolysers is renewable.  Utilising solar PV or offshore wind power emits lower carbon emissions associated with green hydrogen than with most hydrogen production using steam methane reformation or coal gasification.

Despite China still being the largest producer of hydrogen producing 30% of the world total (2020), two thirds of their production is still fuelled by coal. This means that although in use the hydrogen only emits water as a by-product, the production of the hydrogen emits approximately 360 Mt of CO2 emissions (2020).

Investments in green hydrogen more than tripled in 2022 to a record $1.2bn with electrolysers accounting for 99% of the finance.

This represented an increase in commissioned electrolyser capacity to 1.2GW in 2022 compared to less than 0.5GW in 2021 making H2 the fastest-growing sector of the energy transition. (1)

With the increase in investment and the demand growing for global hydrogen economies, electrolyser demand is predicted to more than triple in 2023. This demand is mostly being driven by the strong Chinese domestic demand. Furthermore, the start-up of major hydrogen projects in Australia and Europe is also driving electrolyser demand.

With the green hydrogen economy growing there is recognition in many quarters of the benefits green hydrogen can have, particularly in the transport and energy sectors.

The EU commission having recognised the part hydrogen can play in decarbonising transport and in particular the heavy-duty sector, is backed up by other international movement in the hydrogen industry.

Therefore, if the transport sector and the energy sector recognise the value of hydrogen as an important future fuel, how can we ensure that green hydrogen production is increased to keep up with demand?

Europe being a global leader in the manufacturing of electrolysers hosts over 30% of proposed hydrogen investments globally.

The EU Hydrogen Bank which supports the objectives of the Green Deal Industrial Plan, and the NetZero Industry Act; will in part support the scaling up of electrolyser manufacturing for renewable hydrogen in Europe.

Furthermore, to support the scale-up of electrolysers, Horizon 2020 (2) has supported the development of the first 100 MW scale electrolysers.

As demand for renewable hydrogen increases, so too does the scaling up of some of the electrolyser deployments globally.

German electrolysis company Sunfire has recently installed the world’s first multi-megawatt high-temperature electrolyser for the production of green hydrogen.

Based at Neste’s Renewable Products Refinery in Rotterdam the pioneering MultiPLHY hydrogen project is entering its commissioning phase. Over the past few months, Sunfire has installed twelve electrolysis modules at the refinery, which together make up the world’s largest high-temperature electrolysis system (2.6 MW) installed in an industrial environment. (3)

The system is based on Sunfire’s efficient SOEC (Solid Oxide Electrolysis Cell) technology, which operates at temperatures of 850 °C. Utilizing industrial excess heat, the electrolyser processes steam to hydrogen with the highest conversion efficiency. (3)

Once operational, the electrolyser will produce more than 60 kg of green hydrogen per hour. (3)

Further afield, Ireland is being hailed as a contender for being able to produce the cheapest green hydrogen in Europe by 2030.

Ireland’s competitive advantage stems from its high wind speeds, particularly in the west, compared to other European countries, and rising congestion within the electricity transmission system. (4)

Production under optimal conditions could result in a levelized cost of €3.50/kgH2 (real 2021) in 2030, 8% lower than optimal production costs in Spain and 35% lower than in Germany. (4)

Considering this, the Irish government aims to install 2GW of offshore wind generation connected to electrolysers by 2030, which could produce up to 138kt of green hydrogen annually. (4)

But what about big oil? Is there any significant movement towards adding to the green hydrogen economy?

bp have recently launched plans for a low-carbon green hydrogen cluster in the Valencia region (HyVal) of Spain.

Led by bp, this public-private collaborative initiative is intended to be based around the phased development of up to 2GW of electrolysis capacity by 2030 for producing green hydrogen at bp’s refinery. (5)

HyVal is expected to play an instrumental role in decarbonizing the operations of bp’s Castellón refinery. Its transformation – including green hydrogen, biofuels and renewable energy – could see bp invest a total of up to €2 billion in Castellon by 2030. (5)

The United States have also recognised the importance of investing in their own green hydrogen economy with $9.5 billion in green hydrogen development has been funded by the Inflation Reduction Act of 2022.

This funding offers green hydrogen producers a tax credit worth up to $3 per kilogram for the first 10 years of a project’s duration.

By 2030, global hydrogen demand will rise to 118 million metric tons, from 94 million in 2021. By then, about 10% of that amount will come from green hydrogen, compared with less than 0.5% in 2021. (6)

Written by Katy Mason for and on behalf of Dolphin N2

  1. https://www.hydrogeninsight.com/electrolysers/green-hydrogen-boom-electrolyser-sales-doubled-in-2022-and-could-triple-in-2023-bnef/2-1-1395432
  2. EU’s research and innovation funding programme from 2014-2020 with a budget of nearly €80 billion
  3. https://hydrogen-central.com/sunfire-successfully-installed-worlds-first-multi-megawatt-high-temperature-electrolyzer-for-the-production-of-green-hydrogen-at-nestes-renewable-products-refinery-in-rotterdam/
  4. https://auroraer.com/media/ireland-could-produce-cheapest-green-hydrogen-in-europe-by-2030/
  5. https://www.bp.com/en/global/corporate/news-and-insights/press-releases/bp-launches-plans-for-low-carbon-green-hydrogen-cluster-in-spains-valencia-region.html
  6. https://money.usnews.com/investing/stock-market-news/slideshows/green-hydrogen-stocks-to-watch