The Hydrogen opportunity — Spotlight on the DACH region
2021is set to be a game-changing year for the international hydrogen production industry, as governments around the globe will follow up on their promises to focus on greener power generation and long-term storage of renewable energy. 2020 marked a crucial shift for the hydrogen economy, with more than 10 countries setting out roadmaps for hydrogen as part of their energy decarbonization strategies. To kick off our investigation, let’s take a closer look at hydrogen’s status quo in Europe with a special focus on the DACH region (Austria, Germany & Switzerland) and its potential developments.
As of now, hydrogen accounts for less than 2% of Europe’s present energy consumption and is mainly used to manufacture chemical products such as plastics and fertilizers. The major stake of this hydrogen is produced through natural gas, thus emitting significant amounts of CO2 emissions in the process. However, hydrogen can also be produced in electrolyzers by splitting water into oxygen and hydrogen, using renewable energy from wind or solar panels, and thereby becoming “green” hydrogen. The EU strategy for energy system integration outlines a vision to create a smarter, more integrated & optimized energy system, whereas hydrogen will play an important element of that strategy.
In this context, the Commission adopted on 8th July 2020 a new dedicated strategy on hydrogen in Europe. Until 2024 the installation of at least 6 GW of renewable hydrogen electrolyzers in the EU with a combined production of up to 1 million tonnes of hydrogen is planned. Between 2025 and 2030 the production capacity is subject to be increased to 10 million tonnes of renewable hydrogen with at least 40GW of hydrogen electrolyzers integrated within the energy system. From 2030 onwards, deployment of renewable hydrogen across all “hard-to-decarbonize” sectors shall be accomplished.
Critical Success Factors
Hydrogen produced through electrolysis costs between $100 and $200 per MWh, roughly 3 times the cost of SMR (steam-methane reformation) according to a report by the Hydrogen Council. Coal power was averaged to $65 — $159 per MWh and natural gas to $44-$73 per MWh by a Lazard study in 2020. Therefore, the major obstacle to overcome for the hydrogen industry is to ramp up its production to the point, where it starts to pay off. Economies of scale are essential to reduce the manufacturing cost of green hydrogen. This will ultimately increase the demand.
Another focal point is retrofitting infrastructure to accommodate hydrogen use, such as adapting car engines and repurposing gas pipes to fuel growth in the hydrogen industry.
As large-scale projects of 100 MW/year and even up to a GW scale have been announced recently, the industry should soon begin to benefit from economies of scale, cutting cost by 40% in the short term while analyses predict up to 80% in the long run. An increasing number of governments are pursuing a shift away from fossil fuels towards decarbonization targets, thus paving the way for alternative energy sources to establish themselves. However, fossil fuels are not the only competitor that hydrogen must displace — it must also outcompete other renewable alternatives on the market. This is where its storage capability comes into play, making it a serious contender against electric batteries, which currently dominate many sectors due to their high efficiency.
Opportunities
As the global political agenda is shifting more and more towards sustainability and clean energy — the transportation industry of course offers attractive potential for innovative technologies. Battery storage will be a crucial technology for the security of supply during the transition to a CO2-free energy world. Hydrogen’s outstanding storage capability will play an important role, although electric batteries will probably be dominating the passenger cars market due to the already existing infrastructure. Hydrogen fuels will be rather applied in heavy-duty vehicles like buses, trains or aircraft — the Russian Transport Ministry for example is expecting hydrogen fuels in aviation by 2035.
Currently mainly overlooked in the public debate, wastewater treatment plants might prove to be the most practical place to start producing blue or green hydrogen with their existing infrastructure and the available abundance of purified water and biogas generated in anaerobic digestion processes (utilization in SMR production of hydrogen). Other advantages include their proximity to urban areas and pre-existing supply-chains. The idea of using seawater as a feedstock for electrolysis offshore is being tested through the OYSTER project, funded by The Fuel Cells and Hydrogen Joint Undertaking under the European Commission. This project investigates the potential of combining an offshore wind turbine with an electrolyzer, integrating desalination and water treatment processes in the electrolyzer, and transporting renewable hydrogen to shore. Countries such as Denmark and the UK, whose water sectors are under significant pressure to be climate-neutral by the end of the decade, may well look to this type of project to fuel their own vehicle fleets as well as public transport, helping achieve decarbonization targets.
The technological overlap of green hydrogen production with the water sector creates yet another promising route for companies to enter this field. Particularly within electrochemical separation synergies with fuel cell technology and hydrogen production arise. This is the case for electrode technology, which has led to some electrode-producing companies seizing the opportunity to offer their products and expertise to the hydrogen sector like Evoqua (key player in electrochemical separation market), De Nora (background in electrolytic chlorine production) or ThyssenKrupp.
Spotlight — The DACH Region
In the context of Europe, it will be fundamental to build a supportive framework, well-functioning markets, and clear rules, as well as dedicated infrastructure to optimize a sustainable hydrogen value chain. Hydrogen projects require partnerships between numerous different players as the industry is new and projects are complex, demanding high capital expenses. This already is the case among some renowned energy & mobility providers within the DACH region as the following examples will show.
Within the context of the European Commission’s Important Projects of Common European Interest (IPCEI), Austrian provider VERBUND AG together with technology partners and consumers develops the Green Hydrogen @ Blue Danube project. The overall goal of this project is to establish a European value chain for green hydrogen, ranging from production to transportation and customers in the industrial and mobility sector. Hydrogen production will initially be executed in Austria and Bavaria. Due to capacity constraints, the future of the project relies upon additional production of green hydrogen in South-East-Europe, using the Danube as a traditional European transport corridor. During the initial phase, utilization of the first industrial electrolyzers is expected to generate 180 MW of renewable energy and 27.000 tons of green hydrogen. Within the succeeding phase, the expansion to Europe’s south-east will produce up to 2 GW of renewable energy and 80.000 tons of green hydrogen. Companies involved in the development of the project besides VERBUND AG are among others Agrana, AVL, Bosch, Cummins, Hydrogenious LOHC Technologies, DB Schenker, ÖBB and Siemens Energy.
Wien Energie has just received the approval for construction of the pilot special-waste incineration plant in Vienna, Austria. This involves a syngas generator based on a thermal transformation process using waste. The gas mixture can then be further processed into green hydrogen.
The TOSYN-FUEL project (Germany) is currently under construction and expected to be operational by 2021. It is based on thermo-catalytic reforming with hydrogen separation through pressure swing adsorption. 2.100 tonnes of dried sewage sludge per year will be transformed into 210.000 liters of liquid biofuels and up to 30.000 kg of hydrogen.
AVL has continued with the development of a hydrogen combustion engine, specifically tailored for use in heavy-duty vehicles. The development project’s target is to increase the efficiency potential of multi-port and a direct-injected hydrogen engine concept for direct propulsion of a commercial vehicle with an existing standard power train. In 2019, heavy-duty vehicles exceeding 3,5 tons were responsible for 240 million tons of CO2 emissions in the European Union, accounting for roughly one-quarter of all road transportation-based CO2 emissions within the EU. In proceeding with this project, AVL is advancing the pan-European goal of becoming the first climate-neutral continent by 2050.
Yet another Austrian company, namely the international oil, gas & chemicals player OMV, has announced a joint investment in the construction of Austria’s largest electrolysis plant in the OMV Schwechat Refinery. In cooperation with Kommunalkredit Austria AG, a total investment of approximately EUR 25 million is being utilized to build the plant with an annual production of up to 1.500 metric tons of green hydrogen, potentially saving 15.000 metric tons of CO2 emissions. OMV laid out its ambitious climate targets back in July 2020, including reaching net-zero emissions in operations by 2050 or sooner.
German group RWE is engaged at every value-added step within green hydrogen production. Unsurprisingly the group is involved in numerous H2 projects, like AquaVentus (production of green hydrogen from offshore wind power stations), GET H2 Nukleus (commission of an electrolyzer with capacity for 100 MW until 2023 to foster the development of a German-wide hydrogen infrastructure), or NorthH2 (development of a center for green hydrogen in North-West-Europe) and several others.
ThyssenKrupp in cooperation with the Carbon2Chem project is aiming to benefit from exhaust gases via using them in combination with additional hydrogen to produce fertilizers, plastics, and synthetic fuels.
Switzerland’s largest producer of renewable energies, Axpo AG, is establishing two new departments in the batteries and hydrogen business fields to diversify its portfolio. The company has been continuously advancing the expansion of renewable energies as a solar plant and wind farm developer. In the area of green hydrogen produced with electricity from renewable energy sources, Axpo is developing the necessary know-how and intends to realize leading-edge projects with cooperation partners.
The project landscape in the DACH region is not limited to the projects mentioned above. We are currently seeing a lot of dynamics in the hydrogen segment in the DACH region. For more info get in touch with me directly
Sources:
· https://ec.europa.eu/energy/topics/energy-system-integration/hydrogen_de
· EU Hydrogen Strategy by the EU Commission
