Our deep dive last month on hydrogen, addressing the prospects of the its role both in the energy sector and within the infrastructure community, came at a prescient time for these questions.
All within the same month as the publication of our piece, energy giants Orsted and bp announced plans to develop an initial 50MW electrolyser powered by offshore wind; Copenhagen Infrastructure Partners unveiled a partnership with Hydrogen Renewables Australia to develop 5GW of green hydrogen in Western Australia and then be exported to Asia; while Ardian revealed it would be looking at green hydrogen projects in Italy with partner A2A, as it seeks to become “a reference fund manager in green hydrogen”, according to its statement.
All three announcements were aiming to fulfil the key hydrogen targets of their respective jurisdictions, whether in Europe that’s to fill the “vital missing piece of the puzzle”, as proclaimed by the European Commission’s energy commissioner Kadri Simson, or, as Australia’s minister for energy Angus Taylor told us, cementing the country’s “position as an energy exporter and an energy superpower”.
Potentially literal fuel was added to the proverbial fire this week when Orsted joined by ACWA Power, CWP Renewables, Envision, Iberdrola, Snam and Yara formed the Green Hydrogen Catapult, outlining plans to develop 25GW of green hydrogen by 2026 and halving the cost in the process.
It’s a similar level of ambition displayed by the EC, which wants 6GW by 2024 and 40GW by 2030 – the UK has since released a 5GW by 2030 target – despite these being described as “purely political” by Christian Weinberger, senior advisor and hydrogen co-ordinator at the EC, in our piece.
Talked up for decades, there’s little doubt that renewable hydrogen’s time is arriving. That’s down to, as we explored, the ramp-up of renewable energy capacity enabling green hydrogen to be realistically produced. But also, as one can derive from the Green Hydrogen Catapult membership, oil and gas companies having to find new ways of staying relevant.
However, within these big numbers lies an element of running before being able to walk. That much was alluded to by Orsted itself, which, in its aforementioned deal with bp, added the caveat the project would only proceed “subject to appropriate enabling policies being in place”. This was a theme prevalent in our analysis, as demonstrated by the views of the likes of Macquarie Capital, SUSI Partners and KGAL.
Does hydrogen investment need to be powered by subsidies, or are there other models to woo private capital? Investors and policymakers are at this stage divided, while the conversion of gas boilers and pipelines to accommodate hydrogen needs to address questions around feasibility, efficiency and cost. This was underlined this week by Chris Stark, chief executive of Britain’s Climate Change Committee, who told the Times that the UK’s 300GW offshore wind requirement to replace natural gas heating with green hydrogen “doesn’t seem like a practical solution”, eyeing electrified heating as “the bedrock of the energy transition”.
The wave of private capital interest and activity in the sector is welcome, but without joined up energy policy and strategy across geographies, hydrogen as a major energy source will be reduced to only slightly more than a pipe dream.
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