The Battle to Unlock HydrogenBy Cas Biekmann | Tue, 08/04/2020 - 12:53
According to a report published by GreenTech Media (GTM), the highly coveted potential of green hydrogen is attracting an increasing number of players into the fold. While oil and gas companies such as Shell and BP where among the early adopters, they now face competition from utility companies such as Iberdrola, Uniper and Enel.
To generate hydrogen, companies facilitate water electrolysis. Electric currents are used to split water into hydrogen and oxygen. Less cleaner forms of hydrogen, called blue and grey hydrogen, feature fossil fuels in the process, meaning they are not 100 percent renewable. Green hydrogen, however, uses renewable energy for electrolysis. A main advantage of hydrogen is that existing natural gas infrastructure can be used to transport it, adding to its viability and easing its adoption process in many countries. Its versatility is another strong point. Hydrogen can be used for heating, energy storage and transportation. For oil and gas companies, hydrogen offers an appealing prospect. Other than the potential to meet large energy demands, green hydrogen’s reliance on gas infrastructure means that the lifespan of these often rather large investments can be prolonged.
One factor that is holding hydrogen’s development back is its relatively high costs. For green hydrogen, PV Magazine reports it will take until 2030 to be price competitive against more polluting grey and blue hydrogen, energy forms that face tough competition from both conventional and renewable energy generation. Using wind power, investment banking institution Morgan Stanley thinks this line can be crossed by 2023. In any case, costs are dropping steadily.
Utility companies are therefore interested. Spanish giant Iberdrola, for example, announced a 20MW electrolysis project in Spain, benefiting an ammonia factory. The US$176 million project is expected to be finalized next year. Interestingly, Iberdrola is not building the project in search for profitability. Instead, the utility company aims to use it as an “innovation project,” testing its knowledge and technology in the process. Even though the profile of potential offtakers is not crystal clear, GE already boasts gas turbines that can run on 50 percent hydrogen. This means that natural gas emissions can easily be halved with already existing technology, keeping in mind that natural gas itself is already generating lower emissions than other fossil fuels.
In Mexico, players in the energy industry are begging to eye up opportunities as well. Philippe Esposito, President of utility scale project developer Dhamma Energy, thinks the company’s solar facilities can benefit from linking up hydrogen for storage. “A lot of work is and will be done to incorporate storage at solar facilities. This can be done via battery storage or storage through other means, such as green hydrogen generation, from water electrolysis. In this regard, we think Mexico has a bright future ahead regarding green hydrogen production. This will result in many opportunities regarding business development, generating interest and creating jobs. As an example, we would like to see the Mayan Train run on green hydrogen. This is already happening in Europe with advanced infrastructure projects. In the future, Mexico could export its hydrogen,” he said.
Alberto Escofet, Country Manager of Énagas, also foresees great potential for hydrogen: “Énagas is dedicating a great deal of resources to developments like these, on ways to fight climate change and reduce emissions, as well as introducing renewable aspects to the natural gas market. It is just a matter of time before these technologies take over the market,” he predicted.