Hydrogen could be an important decarbonization tool in the energy mix. Pilot projects are showing how to scale up “green” hydrogen production and bring down costs
There are parts of the low-carbon economy that only hydrogen will be able to reach. After decades of being outshone by other clean-energy technologies, hydrogen is now seen as the best way to take fossil fuels out of the energy mix, in a range of applications. The challenges industry faces in fulfilling this potential are twofold: greening the production of the gas and lowering the cost of that green hydrogen.
Hydrogen is already widely used in industry and about 80 million tonnes are produced every year, almost all of it by reforming natural gas or gasifying coal. That production creates around 830 million tonnes of CO2, equivalent to the CO2 emissions of the U.K. and Indonesia combined, according to the International Energy Agency (IEA).
This means that “the first step is to decarbonize the use of hydrogen as a feedstock,” says Dr. Samuel Pérez, head of hydrogen and heat research at Spanish electricity group Iberdrola. “If we can avoid 830 million tonnes of CO2 emissions a year, that’s a huge contribution to decarbonization.”
Technically, hydrogen can be used in many low-carbon applications. It can be burnt to release heat and energy, and it can be used in a fuel cell to produce electricity. Therefore, it can function as a fuel for heavy-duty transport; or to decarbonize energy-intensive industrial sectors.
Splitting water molecules—a process known as electrolysis—can also make hydrogen. This requires a lot of energy and is expensive. So, for hydrogen to make a significant contribution to greening the economy, production costs must come down, and the energy for electrolysis will have to be found from renewable sources. Hydrogen produced with renewable energy is known as ‘green’ hydrogen, as opposed to the ‘grey’ hydrogen created from fossil fuels.
The role of hydrogen in decarbonization
“This is a market that is just beginning,
but the potential is huge.”
Because of these challenges, Dr. Pérez sees hydrogen playing a complementary role to renewable energy in the transition to low-carbon economies. “The main decarbonization solution will be electrification, but in some cases that doesn’t work. For about 15 percent of global energy usage, hydrogen could provide a solution, so it will be a very important decarbonization tool.”
Of its many applications, the most promising include shipping, aviation and other ‘hard-to-abate’ sectors, such as cement and steelmaking, where electrification is not an option because coal is an essential part of the production process, as well as being used to provide the heat for furnaces.
Episode 2
Laying the Foundations for Green Hydrogen
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Episode 2: Laying the Foundations for Green Hydrogen
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Green hydrogen is a nascent sector. Following the EU strategy, from 2025 to 2030, hydrogen needs to become an intrinsic part of our integrated energy system, with at least 40 gigawatts (GW) of renewable hydrogen electrolyzers and the production of up to 10 million tonnes of renewable hydrogen in the EU. To capitalize on that projected growth, Iberdrola has recently launched a green hydrogen unit, with the aim of becoming a world leader in the technology.
The sector is still at the stage where pilot projects are providing experience in how to scale up green-hydrogen production. One of the first is Iberdrola’s €150 million joint venture with Spanish fertilizer producer Fertiberia, which will see Iberdrola build Europe’s biggest green-hydrogen plant for industrial use.
The plant will comprise a 100-megawatt (MW) solar farm, a 20-megawatt-hour (MWh) battery-storage system and a 20MW electrolyzer. The incipient state of the hydrogen industry is highlighted by the fact that the new device will be one of the largest in the world, yet will only provide a small fraction of Fertiberia’s demand for hydrogen—a big input in the production of fertilizers.
Iberdrola’s green hydrogen will help Fertiberia to produce sustainable, low-carbon fertilizer. The plant is seen as an important first step in scaling up production to cut the price of green hydrogen (currently €5-€9 per kilogram) to make it more competitive with grey hydrogen, which costs just under €2 per kilogram. “By 2030, we think the price of green hydrogen will be competitive,” says Dr. Pérez.
One-third of the cost of the product is capital expenditure in the form of electrolyzers and two-thirds is the energy cost, he adds. “We expect the cost of the technology to fall below €500/kW installed over the next 10 years, from more than €1,200/kW currently. Some of that reduction will come from technological advances that improve the performance, but most of it will be economies of scale from increasing production. The cost of renewable technologies will also continue to drop.”
Even though national electricity networks will become increasingly renewable over the next decade, Iberdrola says it makes sense to build new, dedicated renewable-energy capacity for green-hydrogen projects. The hydrogen produced will also likely not travel too far before being used, because the cost of transporting it over long distances would be prohibitive. That means it will be produced close to industrial clusters or individual facilities with a demand for the gas.
Iberdrola is also exploring the potential of hydrogen as a transport fuel, through its U.K. subsidiary ScottishPower, part of the Green Hydrogen for Scotland project, which will implement a network of green-hydrogen production plants to supply fleets and heavy transport vehicles that will run on fuel cells.
Such plans will help not only to decarbonize the economy, but also to boost it in the wake of the pandemic, Dr. Pérez says. “Building a green-hydrogen industry will create many jobs, not just in individual installations, but also through the development of a value chain producing electrolysis equipment.
“There is just 50MW of electrolyzer capacity operating in Europe now, but European authorities have announced plans to build 40GW of capacity. Green hydrogen is expensive today, but we are confident that we will be able to produce it competitively within eight to 10 years, because renewable energy and electrolyzers will both be cheaper,” he explains.
“This is a market that is just beginning, but the potential is huge.”
Making green hydrogen commercially viable
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