Outlook 2023: Paving the road to zero emission | Green Hydrogen

Every year signals the onset of an important era – energy storage, electric vehicles, giga factories, so on. What is this year going to be a harbinger of? The world is abuzz with its fascination of 'hydrogen', being touted as the fuel of the future. So, maybe this is the year that will lend impetus to green H2 being explored as a potential alternative to fossil fuel.

We believe that every year, irrespective of what it may promote, will bring us closer to the global aim of 'zero emission'. What needs to be determined now are the paver blocks that are going to lay down the road toward a cleaner and greener world. Team ETN brings a compilation of sector-wise projections for 2023 and the years that follow.

GREEN HYDROGEN OUTLOOK

Apart from various battery chemistries being explored, newer materials being researched, and the mushrooming of mega-sized battery manufacturing facilities; green H2 has become the current favorite around the world as the fuel technology to look out for.

Energy outlook reports state that the hydrogen production market that has been valued at $130 billion, is expected to grow about 9.2 percent every year up to 2030. Although, green H2 is the ultimately desired outcome, current hydrogen production is mostly fossil-fuel based. With use cases increasing across sectors and regular advancements in H2 technology, it is slated to be one of the promising fuels in the energy transition.

According to analysts at GlobalData, investments in low-carbon hydrogen have shown an increase from 600 to over 1,700 in the last two years itself. Beginning of this year, over 90 percent of both active and pipeline hydrogen projects were green, as a result of the increasing manufacturers' electrolysis capacity and the number of EPC contractors participating in bigger green projects.

If development in the H2 sector continues at this pace, with improved renewable energy inputs, it will create a momentum that will accelerate cost reduction across the entire hydrogen value chain, the analysts say. It has also been noted that close to 400 hydrogen-related deals were made last year, showing a significant increase from the preceding years and indicating an upward trend in the hydrogen market development.

GlobalData also reported that since last year, over 111.9 Mtpa hydrogen capacity was announced in many countries, including US, Denmark, Egypt, Canada, and Portugal. In Canada, Green Hydrogen International (GHI) announced two important green hydrogen projects that are expected to begin production in 2030.

With the focus being on producing low-carbon hydrogen, electrolysis is being considered as a key technology to produce green H2. Reports show that main companies using this process for production include Hydrogenics, Nel ASA, ThyssenKrupp, ITM Power, HydrogenPro, Enapter, and Plug Power.

Expert inputs show that the UK and Germany are set to play a crucial role in achieving a milestone for the hydrogen market in Europe. The planned projects indicate a surge in total installed capacity of hydrogen projects across Europe from ~236MW in 2022 to more than 2GW in 2023.

Policy decisions

The governments of various countries are showing an avid interest in supporting the development of H2 production, through policies and programs that provide subsidies and tax rebates.
Government subsidy schemes are slated to start this year in the US, EU, UK, and Germany. Countries like Canada, India, and Portugal, are also keenly looking at implementing policy support.
Some key policy decisions:
The US hydrogen tax credits — unveiled in last year's Inflation Reduction Act — aim to pay producers up to $3 per kilogram of green H2 for the first 10 years of a project's lifetime.
Contracts for Difference (CfD) subsidy programs from the EU and UK are also due to begin this year, along with Germany's H2Global scheme, which will provide financial support for clean hydrogen (and its derivatives) imported from outside the EU. A special firm owned by the German government - Hydrogen Intermediary Network Company (HintCo) - will buy green H2 or its derivatives from international producers, and sell it to European customers.
Scotland announced in December last year its $112 million Green Hydrogen Fund, calling for H2 project proposals early this year. The goal is to install 5GW of clean H2 by 2030 and 25GW by 2045.
Canada has announced a hydrogen tax credit of as much as 40 percent for H2 production, to be launched in 2023 and run till 2030.
In January this year, the Indian government approved an initial outlay of ₹197.44 billion ($2.4bn) for its 'National Green Hydrogen Mission', which aims to make India a global hub for the production, utilization, and export of renewable H2 and its derivatives. About ₹174.9 billion ($2.11bn) of the funds will go towards production of green H2 and for domestic manufacturing of electrolyzers. The government also plans to mandate the use of green H2 in industrial sectors such as steel, oil refining, fertilizer, and cement production.
Oman will announce the winners of its first green hydrogen tender this year in March, and its second in December.
Early this year Portugal unveiled details of its first national green hydrogen tender — offering 10-year contracts to renewable H2 producers, with the H2 then being sold on to natural-gas suppliers for blending into gas networks.
Norway is considering introducing a CfD scheme this year.

It is expected that the schemes announced will attract considerable investments this year, and many projects might even begin construction by the end of the year.

Global projects

Green hydrogen is a major part of the global solution to reach net zero emissions and is expected to be worth more than $2.5 trillion by 2050.

A look at some significant H2 project progress around the world:

HyDeal Ambition (Europe) - aims at producing 3.6 Mt of green hydrogen in 2030 with 95 GW of solar and 67 GW of electrolyzer capacity, in an integrated upstream, midstream, and downstream system spanning from Spain to France and Germany. It has been ranked by the International Renewable Energy Agency (IRENA) in a January 2022 report as the world's largest green hydrogen project.

The Western Green Energy Hub (Australia) - an ultra-scale renewable energy project that will generate around 50GW of electricity via upstream combined solar and wind. This will enable production of more than 3.5 million tons of green H2 per year, for use in power generation, shipping fuel, minerals processing, and manufacturing.

Green Hydrogen International (Canada) - announced two important green hydrogen projects as a sole participant, with 43 Mtpa capacity each, which are expected to begin production in 2030.

Fortescue Industries (Australia) – set to develop the 'world's largest' green hydrogen integrated project outside Australia, together with Tree Energy Solutions (TES), to help Europe mitigate its current energy and climate crisis.

Green hydrogen production in China - expected to expand significantly in 2023, with the world's largest project — a 260MW facility being built in Xinjiang by local oil giant Sinopec — due to be completed around the middle of the year.

Iberdrola Hydrogen (UK) – to build a facility in Felixstowe, the UK's largest port, to supply green hydrogen to vehicles and machinery. The project's first phase, set to begin operations in 2026, will have the capacity to produce 14,000 tons of hydrogen per year via electrolyzers.

Green Energy Hub GEO (Oman) - Shell Oman has signed a Letter of Intent with the Ministry of Energy and Minerals in Oman to investigate the deployment of Liquified Synthetic Gas (LSG) that is created when green H2 is combined with carbon dioxide to produce natural gas, which is then liquefied.

Hy Stor Energy (USA) – in partnership with the Green Hydrogen Organisation (GH2), plans to promote the GH2 Green Hydrogen Standard across North America and the rest of the world, with renewably produced green hydrogen and energy storage at scale.

St. Gabriel Green Hydrogen Plant (USA) - starting operations in 2023 in Louisiana with a capacity of 15 tons per day to supply the fuel cell market. Handled by Hidrogenii (a JV between Plug Power Inc. and Olin Corporation), where Olin will produce hydrogen and provide operational support, while Plug Power will be responsible for marketing the hydrogen and providing logistical support.

Sauk Valley Green Hydrogen Plant (USA) - the first green hydrogen project operated by Invenergy in Illinois. Starting operations in 2023, the plant will have a capacity of 52 tons per year and will be able to store 400kg of hydrogen on site. The project will generate green hydrogen by utilising power from Invenergy's co-located solar plant and Ohmium International low-carbon electrolyzer technology.

GAIL PEM-based project (India) - will build one of India's largest proton exchange membrane (PEM) electrolyzer at Guna in Madhya Pradesh to produce green hydrogen by the end of 2023, as it looks to supplement its natural gas business with carbon-free fuel.

For Outlook 2023 articles on Energy Storage and E-mobility sectors, click here.