Hydrogen Investment

Interest in Hydrogen Energy has been soaring over the past few months…

With the Hydrogen Energy Economic Outlook for 2020 looking promising, many companies and countries are now more eager to explore hydrogen investment opportunities and the possibilities that Hydrogen could bring to help in achieving a cleaner, more affordable, and secure future.

Economic Viability

Not all hydrogen is produced/extracted using similar methods and they are usually distinguished into four main groups based on their environmental credentials:

  • Grey Hydrogen – produced using fossil fuels like oil and coal, and where emissions are released into the atmosphere.
  • Brown Hydrogen – produced from coal.
  • Blue Hydrogen – produced in the same way as Grey Hydrogen, however, carbon capture technologies prevent emissions (e.g. CO2) from being released (either through carbon capture methods or utilising the carbon through further industrial processes).
  • Green Hydrogen – the cleanest variety with zero carbon emissions and produced using electrolysis powered by renewable energy.

In the current climate, virtually all of this hydrogen is supplied using fossil fuels, meaning there is major potential for making clean hydrogen and therefore reducing emissions.

The Cases For Green and Blue Hydrogen

Although Green Hydrogen is the most environmentally friendly, clean hydrogen still costs too much to enable it to be widely deployed. Currently, grey hydrogen is cheaper than the blue and green variants, with the main driver being the price of natural gas.

The price of blue hydrogen is also mainly influenced by natural gas prices as well as the costs associated with carbon capture and storage. In Europe, the current price of blue hydrogen is slightly higher than grey, nevertheless, this gap is set to shrink if the price of CO2 emissions increases further in the future. Once the process of CCUS in blue hydrogen plants is scaled up and standardised, the cost is likely to come down. This could bring the price of blue hydrogen closer to that of grey hydrogen.

Different factors come into play for the price of green hydrogen, such as cost of electrolysis, however, the most significant factor is the price of the green electricity used. The cost of generating solar and wind energy has decreased hugely during the last 10 years, which could indicate a decrease in the cost of green hydrogen for the future.

Because of this, blue hydrogen may well be used to narrow the gap between the currently cheaper grey hydrogen to cleaner alternatives that could become cheaper and more widely deployed in the future.

Market Watch

5 countries that have made some large steps in Hydrogen include:

Australia
Are looking to greatly step up their involvement to replace fossil fuel exports. For example, in October 2019, Siemens joined a partnership to develop a 5-gigawatt combined solar/wind project aimed at powering hydrogen production.
France
In June 2018, France unveiled a €100 million investment plan for the technology and in September they deployed their first hydrogen-powered passenger bus. In October 2019, the Auvergne Rhône-Alpes region committed €200 million toward 1,000 hydrogen vehicles and 15 electrolysers.
Germany
Already a leader in hydrogen development and are aiming to continue with plans for 20 research labs, with a total budget of €100 million, being unveiled over the summer of 2019.
Japan
Leading the way in hydrogen fuel-cell vehicle development due to automotive companies such as Hyundai, Toyota and Honda. Policymakers are eager to encourage green hydrogen as an alternative to liquefied natural gas.
U.K.
In September 2019, the U.K. government unveiled a £12 billion plan to use 4 gigawatts of offshore wind for renewable hydrogen production in the early 2030s.

 

Considerations for Hydrogen Investment

Infrastructure Acceptability

According to the IEA, the development of hydrogen infrastructure is slow – holding back widespread adoption. To aid this, the IEA recommends building on existing infrastructure, such as natural gas pipelines.

Hydrogen Fuel Cells Technology

To continue the rise in momentum for hydrogen, the IEA recommends supporting research and development to bring down costs and improve performance for fuel cells as well as mentioning that fuel cells, refuelling equipment and electrolysers can all benefit from mass manufacturing.

Regulations and Policy

According to the IEA, the number of countries with polices that directly support investment in hydrogen technologies is increasing, along with the number of sectors they target. Over the past few years, global spending on hydrogen energy research, development and demonstration by national governments has risen.

Adjacent Industries
Current industries which benefit from the use of hydrogen include:
Transport
Buildings
Power Generation
Oil Refining
Amonia Production
Methanol Production
Steel Production
Market Players
Some of the main market players include:
Panasonic
FuelCell Energy
Plug Power
Intelligent Energy Holdings
NEL
Air Products and Chemicals, Inc.

 

 

Explore the questions we can answer for you:

Hydrogen Investment Opportunities
Hydrogen Companies To Invest In
Infrastructure Acceptability

Hydrogen Fuel Cells Technology
Regulations and Policy
Transaction Due Diligence

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The client was interested in learning more on the future of the hydrogen economy from a commercial perspective, in particular regarding “Green” or “Low Carbon” Hydrogen. Within 48 hours, telephone consultations between the client and two Experts were arranged. The Experts’ combined international leadership experience – spanning nearly 50 years – in the energy and chemical sectors, with expertise in industrial gases and renewables and European Business/Technology Innovation awards under their belt, allowed the client to quickly come up to speed with the current Hydrogen economy.

Scenarios for significant growth were identified for the client’s business, as well as recommendations on how to upscale and and de-carbonise simultaneously.”

Strategy Director

 

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