Retrofitting gas pipelines key for blue hydrogen
Energy companies to lift hydrogen investments by 2025
Clear policies, frameworks lift investments
Energy professionals say a lack of infrastructure investment, along with cost, is the main barrier to expanding the hydrogen economy, according to a report from risk management and verification company DNV published July 1.
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Register NowA large majority of senior energy professionals surveyed said repurposing existing infrastructure would be essential to developing a large-scale low-carbon and renewable hydrogen economy, according to the report, "Rising to the challenge of a hydrogen economy."
The report underlined expectations that renewable and low-carbon hydrogen would be critical to meeting global climate targets.
"To meet the targets of the Paris Agreement, the world needs to transition faster to a deeply decarbonized energy system," DNV CEO of Energy Systems Ditlev Engel said in a statement.
"In addition to energy efficiency gains, this will require greater renewable power generation and electrification, and the scaling of technologies to remove the carbon from fossil fuels," Engels said. "Hydrogen will be needed to connect and enable these paths."
Almost three quarters of those surveyed said current hydrogen ambitions "tend to underestimate the practical limitations and barriers," DNV said, though almost half of the energy professionals said the majority of national and organizational goals were realistic.
The report found that for those not currently invested or involved in hydrogen, a lack of infrastructure was the main reason for focusing elsewhere.
New infrastructure would be required for the rollout of green hydrogen, produced from the electrolysis of water powered by renewables, though lessons could be learnt from the rapid rise in renewables capacity in recent years, particularly in Europe.
A large majority of those surveyed thought the re-purposing of gas networks would be needed to develop blue hydrogen, produced from natural gas with carbon capture and storage.
"Our research work is showing that the majority of our assets are indeed capable," project director for hydrogen at the UK's National Grid Antony Green said in the report. "It has shown us that there are really no showstoppers to re-purposing our natural gas network for hydrogen transmission."
A strong regulatory framework and clear policies have also helped guide hydrogen investments.
"It really helps to have clear policy frameworks that are transparent on long-term goals," Shell Norway business opportunity manager for hydrogen Kristina Wittmeyer said. "The targets that are set, for example, by the EU, provide greater predictability, which helps in commercial decisions that drive investments in hydrogen."
Supply and demand
Almost half of companies surveyed with investments in the hydrogen space said the energy carrier would account for over 10% of their revenues by 2025, up significantly from just 8% of companies currently with over a tenth of revenue from hydrogen. Hydrogen accounts for just 1% of revenue at present for almost half of the companies surveyed.
A large majority of energy companies entered the hydrogen space only in the last five years, with over half becoming involved in just the last three years, the report found.
Demand is similarly expected to rise sharply in the coming years, with a third of hydrogen consumers expecting hydrogen to account for a tenth of energy and feedstock spending by 2025, from just 9% of companies now.
Competition between direct electrification and renewable hydrogen production was not an issue for most, with 80% saying the two would work in synergy, helping both to scale up. Most thought both blue and green hydrogen would be needed to reach the scale of production required.
S&P Global Platts assessed the cost of producing renewable hydrogen via alkaline electrolysis in Europe at Eur5.07/kg ($6.00/kg) June 30 (the Netherlands, including capital expenditure). PEM electrolysis production was assessed at Eur6.30/kg, while blue hydrogen production by steam methane reforming (including carbon, CCS and capex) was Eur2.72/kg.
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Infrastructure biggest hurdle to hydrogen economy as investments gather pace: DNV - S&P Global
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