COMING UP
4 HYDROGEN FUELLED FOOD: THE CHALLENGE TO DECARBONISE ONE OF THE UK’S MOST VITAL SECTORS
8
INTERNATIONAL PROJECTS: AN OUTLOOK FROM ACROSS THE GLOBE
20 EUROPEAN 2024 MARKET MONITORING REPORT: PLENTY OF WORK AHEAD
24 EPISODE 29: H2ICE AND THE FUTURE OF HYDROGEN MOBILITY
MAJOR POLICY COMING FROM AFRICA COULD SWING NET ZERO BATTLE
16
HSEs NOVEL APPROACH TO CUTTING THE COST OF NET ZERO
FOREWORD
“2024 has been a year of ups and downs. However, progress is being made across the board”
As we end 2024, what can the hydrogen sector expect to see over the next 12 months? This issue breaks down the movements in legislation, policy announcements and the latest discoveries across Europe.
Additionally, Hydrogen Industry Leaders brings you the general objectives of the latest insights into the renewables market, a demystified outlook on the HBM, and how to negotiate a long- term global commitment to hydrogen.
In this issue we also highlight how to steer a hydrogen-powered steel Industry, the brief history of hydrogen in aviation and how to navigate financial instruments and models for energy production in 2025.
Hydrogen Industry Leaders looks at current hydrogen projects, innovations and policies shaping the hydrogen economy that will undoubtedly lead the way for the future of low-carbon energy.
Floyd March Editor f.march@peloton-events.co.uk
Hannah Wintle Multi Media Journalist
Paul Rose Graphic Designer
HYDROGEN FUELLED FOOD: THE CHALLENGE TO DECARBONISE ONE OF THE UK’S MOST VITAL SECTORS
According to the Food & Drink Federation (FDF), food consumption accounts for nearly one quarter of the UK’s total emissions, and in their latest sustainability strategy – Ambition 2030, released at the end of October – climate change and the subsequent decline of nature is cited as a growing threat to food security all over the world.
Reducing the industry’s impact is therefore paramount to securing a safe and healthy future for all. Karen Betts, Chief Executive of the FDF said: “We need ambition to ensure the food system, of which we’re part, responds to the causes and consequences of climate change.”
AMBITION 2030 HAS SET OUT THE FIVE PILLARS OF ITS STRATEGY
Finding sustainable routes for food and drink industry requires a multifaceted approach, which the FDF outlines through five key pillars, including:
HOW CAN HYDROGEN PLAY ITS ROLE IN THE DECARBONISATION OF THE FOOD AND DRINK INDUSTRY?
The first pillar in the strategy directly references the wider UK target to achieve net zero carbon emissions by 2050. As such a significant contributor to these emissions, the FDF have therefore highlighted the importance of the food and drink industry to halve farm-to-fork emissions by 2030.
Among the ‘entry’ level priorities for the net zero pillar is the need to identify and measure Scope 1, 2, and 3 emissions, and implement actions to directly reduce Scope 1 and 2 specifically, including heat decarbonisation, renewable energy, energy efficiency, refrigerants, and transport.
Hydrogen, therefore, could offer an ideal and attractive solution to cutting Scope 1 and 2 emissions. A recent FDF webinar exploring just this featured the insights of Ben Turner, Graeme Precious, and Greg Altria of SLR Consulting, as they explored the transition from natural gas to hydrogen, and unpacked the obstacles to its implementation in the food and drink industry.
1 October 2024 Webinar:
Hydrogen Implications for the food and drink industry
Key contributers:
Ben Turner Principal, Air Quality
Graeme Precious Technical Director, Carbon Management
Greg Altria Technical Director, Environmental Permitting
With natural gas making up around two thirds of the fuel used in the food and drink industry, Ben made reference to the widespread efforts of industry in general to transition to hydrogen, including the infrastructure projects being planned around the UK, starting with industrial clusters and leading to the formation of a national network.
However, the lack of information to support the transition poses a number of obstacles to its uptake. Ben said: “It’s clear that the transition to hydrogen is underway, but it’s also apparent that operators are facing a lack of clear information to guide them.”
NOX EMISSIONS
MUST BE CONSIDERED ALONGSIDE THE TRANSITION TO HYDROGEN
One of the major implications of introducing hydrogen into the food and drink industry is the associated NOx emissions. “Hydrogen is a clean fuel, and while that’s true in isolation, when hydrogen is combusted, it still produces NOx emissions,” he explained.
Past studies have found that hydrogen results in a 600% increase in NOx emissions compared to natural gas. The Environment Agency (EA) is exploring the implications of hydrogen combustion on NOx emissions and aims to align hydrogen emissions with existing environmental permitting regulations.
As such, the EA has proposed adjusting the emission limit values (ELVs) by a correction factor of 1.37, with linear interpolation for hydrogen/natural gas blends at 25% increments.
Dynamic ELVs that are set according to the blend of hydrogen pose new challenges in the uncertainty around whether these blends will remain at a fixed blend, or vary over time, and add another layer of complexity around regulation in that stack monitoring and emissions assessments will need to account for the precise fuel mix being used.
In practice, this means that the process the industry follows for new appliances will remain unchanged – an Air Emissions Risk Assessment will still be required for any new permit applications – while existing appliances may require permit variations due to increasing ELVs and uncertainty around whether these can be met and whether retrofitting is necessary.
As we go through the transition process from natural gas to hydrogen, it remains unclear how permitting authorities will manage these changes and what assessment they may require.
ENVIRONMENTAL PERMITTING AND THE CHALLENGE OF SCOPE 3 EMISSIONS
As current environmental permitting guidance does not consider hydrogen, the proposed draft guidance on ELVs for hydrogen combustion align with minimum standards for natural gas and factored to account for the lower volume but higher concentration of NOx.
While this guidance has yet to be published, Greg expressed the importance of reviewing current permits and considering the need for permit variations when switching to hydrogen.
He said: “Your environmental permit may or may not state the fuel types that are permitted for use, or it might have ELVs set at a level which the plant will not be able to comply with following switch to hydrogen due to being based on natural gas or some other fuel, and if so, permit variation will be required.”
When making applications for permit variations, Greg also highlighted that the application content will depend on the proposed scheme, including considerations for hydrogen storage and environmental risks.
Where emissions are concerned, Graeme emphasised that hydrogen, including blends, will bring Scope 1 emissions down. Scope 3 remains a key consideration, especially when it comes to how that hydrogen is produced.
He said: “The emissions associated with the hydrogen production can vary wildly depending on how it has been sourced, and that’s something you need to consider for certain areas of your carbon reporting.”
Many sites in the food and drink industry, Graeme added, will be tied to direct carbon reporting schemes, such as climate change agreements, the UK or EU Emissions Trading Schemes, and Streamlined Engine Carbon Reporting.
This is potentially good news, because if you were replacing combusting fossil fuels with hydrogen, then your direct emissions are going to reduce.
Graeme also explained the Well-to-Tank emissions, which include upstream emissions from extraction, processing, and transportation of hydrogen, and the importance of considering the source of hydrogen and its impact on overall global emissions, as well as reflecting poorly in company emissions reports.
As such, Scope 3 emissions are crucial, not only for the industry but also its customers: “In the food and drink sector, you’re part of your customers’ supply chain, and they are reporting their Scope 3 emissions… Their science based targets will include your emissions indirectly, so they’ll be wanting to know what your emissions are.”
DECARBONISING BRITISH TEA SUPPLIES IN KENYAN FACTORIES
As the UK food and drink industry strives to reduce its emissions and align itself with the FDF’s Ambition 2030 targets, decarbonisation initiatives are already taking shape further afield.
To hear more about how the British tea industry is safeguarding its supply by using waste tea clippings as a green fuel for Kenyan factories, Hydrogen Industry Leaders will be speaking to Compact Syngas Solutions in an upcoming episode of the HIL Podcast.
The combined efforts of food and drink industry players in driving down their Scope 1, 2, & 3 emissions, and the hydrogen sector in making hydrogen an accessible alternative to fossil fuels, paints a promising picture for the future of all vital industries in the UK as the mission to reach net zero picks up pace.
AN OUTLOOK FROM ACROSS THE GLOBE
EUROPE
The Lithuanian gas transmission system operator Amber Grid has received approval from the National Energy Regulatory Council for its gas transmission network development plan. It will be prepared every two years.
The gas transmission network is expected to require around €201 million in investments over the next decade. These investments will amount to around €138 million over the next five years.
While investment is needed to ensure Lithuania’s gas infrastructure is in good condition, Amber Grid has said they will continue to focus on diversifying the energy system, including exploring green hydrogen.
Meanwhile, in Germany, a team of researchers have developed a highly efficient alkaline membrane electrolyser, which is designed to match the performance of established PEM electrolysers.
Its anode catalyst consists of inexpensive nickel double hydroxide compounds with iron, cobalt or manganese, instead of iridium. The water electrolyser cell works with a newly developed membrane electrode unit that is directly coated with a layer-structured nickel-based anode catalyst.
NORTH AMERICA
In the USA, the City of Vernon will be the home of Avina Clean Hydrogen Inc.’s new green hydrogen facility. With a capacity of 4 metric tons per day of compressed green hydrogen, their new plant will play a large role in pushing South California into a cleaner future.
The project has received support from government leaders and other industry players, and marks a major milestone in the company’s mission to decarbonize heavy-duty transport and support California’s clean energy goals.
This state-of-the-art facility is designed to produce up to 4 metric tons per day of compressed green hydrogen through electrolysis, using clean electricity to split water into hydrogen and oxygen.
Once operational, it will be among the largest integrated electrolytic hydrogen production and refuelling sites globally, supplying critical infrastructure to replace diesel trucking miles with hydrogen miles. The facility is expected to eliminate approximately 130,000 metric tons of CO2 emissions annually, significantly improving air quality in the local communities.
ASIA
In an exciting milestone for India, Rely has been awarded an EPsCm contract by AM Green India Pvt Ltd. for its 2 x 1500 tons per day green ammonia complex at Kakinada, Andhra Pradesh. The project, which reached FID in August 2024, includes two 640MW pressured alkaline electrolysers for the production of green hydrogen, making it one of the world’s largest green hydrogen facilities to move to execution phase.
The project involves conversion of an existing grey ammonia facility (erstwhile NFCL) to a green ammonia facility. It is strategically located at the Kakinada seaport on the east coast of India, in the state of Andhra Pradesh.
Having reached final investment decision in August 2024, the project is slated to deliver 1 million tons per annum of RED3 RFNBO compliant green ammonia, most of which will be exported to the European market. It will benefit from a round-theclock carbon free power, thanks to a combination of wind, solar power and pumped hydro storage system.
In the shipping sector, Mitsui E&S announced the delivery of a high-pressure, high-flow hydrogen compressor to Tsuneishi Corporation for Japan’s “first” offshore hydrogen station in a move towards carbon-neutrality.
The station, currently under development by Fukuyama-based JPN H2YDRO, will supply hydrogen to vessels, including tugboats equipped with hydrogen co-firing engines. Mitsui E&S’s VD4250GH-OL compressor is specifically designed for high-flow, high-pressure hydrogen supply, essential for fuelling vessels at the offshore station.
According to Mitsui, the compressor has been engineered with durability and longevity in mind, ensuring stable performance with minimal downtimes. This feature is critical for maintaining a consistent hydrogen supply in marine operations, where reliability is paramount.
AFRICA
The government of the Kingdom of Morocco and TE H2, along with its partners, recently signed a Preliminary Contract for Land Reservation for the ‘Chbika’ project. The agreement will allow TE H2, a joint venture between TotalEnergies and the EREN Group, together with the two Danish companies, Copenhagen Infrastructure Partners, through its Energy Transition Fund, and A.P. Møller Capital, through its Emerging Markets Infrastructure Fund, to launch the pre-FEED studies.
Located near the Atlantic coast in the GuelmimOued Noun region, the ‘Chbika’ project aims to build 1 GW of onshore solar and wind capacities that will power the production of green hydrogen through the electrolysis of desalinated seawater and its transformation into 200,000 tons per year of green ammonia for the European market. This project will constitute the first phase of a development program aimed at creating a worldscale green hydrogen production hub.
TE H2 and CIP will be responsible for the development of renewable energy production (solar, wind, green hydrogen, and its derivatives), while A.P. Møller Capital will develop the port and associated infrastructure. This contract, a first in Morocco, will highlight the country’s exceptional renewable potential and contribute to the economic development of the Kingdom.
And finally, at the other end of the continent, the closing event of the ‘Hydrogen Tryout Area’ (HyTrA) project took place in Cape Town, South Africa. The aim of the project is to establish the use of hydrogen technology for decentralised power supply in South Africa.
At the heart of the project is a microgrid for generating green hydrogen at a commercial site belonging to the South African company AluCab.
HyTrA is funded by the German Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection (BMUV – Bundesministerium für Umwelt, Naturschutz, nukleare Sicherheit und Verbraucherschutz) through the Export Initiative Environmental Protection (EXI) programme.
At the heart of the project is a microgrid for generating green hydrogen at a commercial site belonging to the South African company AluCab. This robust and cost-efficient microgrid, which has been specially developed for the African market, combines an electrolyser for hydrogen production with fuel cells for reconversion.
MAJOR POLICY COMING FROM AFRICA COULD SWING NET ZERO BATTLE
LAUNCH OF THE PILOT TECHNOLOGY ASSESSMENT REPORT ON ELECTROLYSERS FOR GREEN HYDROGEN PRODUCTION IN SOUTH AFRICA
The Technology Assessment (TA) pilot project in South Africa on green hydrogen electrolyser technologies, has concluded. The process included navigating through all the steps outlined in the United Nations Conference on Trade and Development (UNCTAD) TA Methodology, resulting in the completion of a comprehensive TA Report.
This report, which analyses the role of green hydrogen electrolyser technologies within the country’s national development, as well as its challenges and opportunities, is accompanied by a draft Action Plan aimed at facilitating widespread adoption and diffusion of the TA.
DETAILS OF THE REPORT
To formally close the project, there is a need to officially launch the report with stakeholders especially with a view to implement the proposed Action Plan. Recognising the significance of stakeholders in the TA process, the Department of Science, Technology and Innovation (DSTI), in collaboration with UNCTAD, is organising the launch of the TA report on December 3, 2024, in Pretoria, South Africa. The event is to take place on the margins of the 2024 Science Forum South Africa.
The Technology Assessment (TA) pilot project in South Africa, implemented by stakeholders in South Africa with close collaboration by UNCTAD, focused on assessing green hydrogen electrolyser technologies.
2024 has been a year of hydrogen developments on a scale not seen before, especially in Africa and MENA. Morocco has seen much of the plaudits, but there has been significant movement across the continent.
As 2024 comes to an end, Hydrogen Industry Leaders takes a peek at some of the policy decisions being made across Africa.
THE GOAL OF THE PILOT PROJECT
The Technology Assessment (TA) pilot project in South Africa, implemented by stakeholders in South Africa with close collaboration by UNCTAD, focused on assessing green hydrogen electrolyser technologies. This event will formally launch the TA Report, which aims to assess the benefits and risks for South Africa of adopting and producing these technologies in the country. The report highlights the potential for competitive commercialisation of these technologies and the implications for national development and includes a draft Action Plan. It is a pilot technology assessment aimed at building national capacity in technology assessment and assessing an area of technology that may contribute to both energy security and decarbonisation efforts in South Africa.
PURPOSE OF LAUNCH EVENT
The launch event will provide a platform for discussing TA, the adoption of the practice of TA in Africa and key elements of the report. It is expected to contribute to broader knowledge-sharing within Africa on TA methodology and practices and opportunities for diffusing TA more widely across the continent. The event is intended to engage policymakers, experts, and stakeholders from academia, industry, government, and civil society to raise awareness of the practice of TA and the opportunities for diffusing TA more widely in Africa.
This is seen as important in light of the rapid technological advances taking place in a number of frontier technologies that are creating important economic, social and environmental implications and raising critical ethical, regulatory, legal and other concerns. Participants will also have an opportunity to network and contribute to discussions on the potential of green hydrogen and electrolyser technologies for sustainable development in South Africa and beyond.
AFRICAN MINISTERS TO REVIEW KEY AU STRATEGIES FOR ALTERNATIVE FUELS AND ENERGY EFFICIENCY
The African Union (AU) is preparing to convene the 3rd Extraordinary Session of the Specialised Technical Committee on Transport and Energy (STC-T&E), scheduled for December 3-5, 2024.
This pivotal meeting will focus on endorsing strategic initiatives aimed at advancing sustainable development across Africa, building on outcomes from the recent 4th Ordinary Session held in Zanzibar, Tanzania, in September 2023.
The agenda for the extraordinary session is both comprehensive and multifaceted, outlining a series of key initiatives within the transport and energy sectors. The initiatives are instrumental in promoting sustainability in Africa’s infrastructure development thereby laying the groundwork for a more cohesive and climate responsible development.
Her Excellency Dr Amani Abou-Zeid emphasised that strategies to be considered at the forthcoming ministerial meeting are designed to strategically position Africa at the forefront of implementing significant global commitments aimed at fostering sustainability, while simultaneously advancing the continent’s development aspirations.
AFRICA’S SUSTAINABLE AVIATION FUELS STRATEGY
In the transport sector, ministers will consider the Continental Sustainable Aviation Fuels (SAF) Strategy. This initiative aims to promote the use of sustainable aviation fuels carbon aviation fuels and other clean energy aviation fuels across the continent.
Aligning with global efforts to reduce carbon emissions in the aviation industry, several African nations including Burkina Faso, Côte d’Ivoire, Kenya, Rwanda, South Africa, and Zimbabwe have taken steps towards development and deployment of SAF. By adopting a Continental SAF Strategy, the AU seeks to improve air transport efficiency while contributing to climate change mitigation.
Additionally, the session will address the Revised Abuja Aviation Safety and Air Navigation Targets, which are crucial for improving safety standards and operational efficiency in the African airspace.
This revision incorporates the latest international aviation safety practices, ensuring that African countries meet global benchmarks while advancing the Single African Air Transport Market (SAATM), which aims for open skies across the continent.
This initiative, recommended by African ministers, aims to position Africa as a leader in green hydrogen production
AFRICA’S GREEN HYDROGEN STRATEGY
On the energy front, two key roadmaps will be presented: the African Energy Efficiency Strategy (AfEES) and the African Green Hydrogen Strategy. The AfEES seeks to provide a comprehensive framework for enhancing energy efficiency across various sectors in Africa. By adopting this strategy, the AU aims to optimise energy consumption, reduce costs, and promote sustainable energy use among African countries, ultimately fostering economic growth. The African Union’s Energy Commission has been at the forefront of shaping pathways toward energy efficiency, emphasising universal access to electricity.
Recognising the increasing importance of renewable energy sources, the AU has also developed a comprehensive strategy for green hydrogen development in Africa. This initiative, recommended by
African ministers, aims to position Africa as a leader in green hydrogen production, facilitating a transition to cleaner energy and promoting regional energy security.
In line with global efforts to integrate sustainability, the Smart and Climate Resilient Infrastructure Policy has been designed under the framework of Programme for Infrastructure Development in Africa (PIDA). This policy will guide member states in creating infrastructure that is sustainable and resilient to climate change impacts.
The outcomes of this extraordinary session are expected to drive critical advancements in Africa’s transport and energy sectors, promoting sustainable development and regional integration. The AU remains committed to collaborative efforts that address the continent’s unique challenges while leveraging its vast potential for growth and innovation.
HSEs NOVEL APPROACH TO CUTTING THE COST OF NET ZERO
The cost of net zero from wind, solar, hydrogen and EVs is by far the biggest barrier to entry and a sticky point the sector often struggled to get passed.
Just as true of the innovation around the technologies to get costs down, there are considerable policy decisions and directions to cut costs too.
The management of Holding Slovenske Elektrarne (HSE) and the mayors of the municipalities of Trbovlje and Hrastnik recently signed an agreement on mutual cooperation in the field of renewable energy development projects.
Under the agreement, HSE commits to sell 10% of the annual electricity generated from the newly built solar power plants at Prapretno to the municipalities at cost price, and the municipalities will use this share of electricity to supply public institutions in Trbovlje and Hrastnik at lower costs.
THE SIGNED AGREEMENT
IS THUS AN EXAMPLE OF GOOD PRACTICE AND EXEMPLARY COOPERATION BETWEEN THE INVESTOR AND THE LOCAL COMMUNITY IN THE SITING OF AN ENERGY FACILITY
The HSE Group is the largest producer of electricity from renewable sources in Slovenia, and Zasavje, as a strategic energy location, plays an important role in the country’s decarbonisation. The Prapretno solar power plant, commissioned in April 2022 and still one of the largest solar power plants in Slovenia, is accelerating the green transition of the former coal region.
It not only preserves the existing energy site at the closed Prapretno landfill, but also upgrades it. The Prapretno SPP, which will be located in both municipalities following an expansion, will have a new capacity of 9.8 megawatts, and a battery storage of up to 7 megawatts will be added to increase flexibility and direct control.
The HSE has already obtained a construction permit for the above-mentioned energy facilities and the upgraded part is expected to be operational in October 2025. Activities in the area of new development projects in Zasavje region have been coordinated by HSE’s subsidiary, HSE – Energetska družba Trbovlje, for several years.
The HSE has already obtained a construction permit for the abovementioned energy facilities and the upgraded part is expected to be operational in October 2025
In the agreement on mutual cooperation in the field of renewable energy development projects, signed today by Dr Tomaž Štokelj, CEO of HSE, Uroš Podobnik, Commercial Director of HSE, mag. Zoran Poznič, Mayor of Trbovlje, and Marko Funkl, Mayor of Hrastnik, the investor, HSE, undertakes to sell to the municipalities 10% of the annual electricity produced from the Prapretno solar power plant at cost price, and both municipalities to ensure lower costs for the supply of electricity to public institutions in Trbovlje and Hrastnik.
It not only preserves the existing energy site at the closed Prapretno landfill, but also upgrades it.
WORDS OF LEADERS ON THE TOPIC
“As Slovenia’s most important energy company, the HSE Group has a key and responsible role to play in Slovenia’s green transition,” emphasised the CEO of HSE Dr Tomaž Štokelj. “Our development orientations are focused on the potential of renewable energy sources, in particular solar, hydro and wind, while developing green energy solutions for end-users.
“The energy location in Zasavje region offers a number of opportunities to realise our vision of being a leader in Slovenia’s green transition, which is also linked to the national decarbonisation strategy. We are focusing on speeding up the siting process and engaging in constructive dialogue with all key stakeholders.”
Uroš Podobnik, Commercial Director of HSE, emphasised: “HSE has challenging, but fair and constructive interlocutors in the field of spatial planning in Zasavje region. I believe that today’s signing of the agreement is a great step forward, that we will continue our constructive cooperation and that together we will successfully implement a number of energy projects in Zasavje region.”
He cited the construction of the hydroelectric power plants on the Middle Sava as a key project, the first section (Suhadol HPP, Trbovlje HPP and Renke HPP) of which is expected to be publicly announced and undergo a public discussion in spring 2025.
The Mayor of the Municipality of Trbovlje, mag. Zoran Poznič: “The Municipality of Trbovlje is preparing to launch large-scale projects that will not only represent a new economic breakthrough, but bring fundamental changes in all areas of the local community’s life.
At the beginning of the 21st century, the principle of efficient use of energy through the green transition principle is, of course, of paramount importance. The agreement with Holding Slovenske elektrarne represents significant savings for the Municipality of Trbovlje and also confirms that our investment in equipping all public buildings with solar power plants is also leading our development in the field of efficient use of energy resources on the right path.
Together with the Municipality of Hrastnik, we will host the largest solar power plant in Slovenia. Thank you again for the understanding of the HSE management, and for their willingness to work with the local community in our development.”
The European hydrogen market is beginning to take shape, driven by ambitious EU-wide strategies and national policies. This report marks the start of ACER’s monitoring work on this emerging sector, in line with the hydrogen and gas decarbonisation package. It takes stock of recent developments and highlights key challenges from a regulatory standpoint.
The EU has a strategic goal of 20 Mt of renewable hydrogen consumption by 2030; current consumption is 7.2 Mt, and even then, 99.7% of it comes from fossil fuels. The amount produced with electrolysis (around 22 kt) is negligible.
EU renewable energy and decarbonisation targets can translate into 2-4 Mt of renewable and low carbon hydrogen consumption by 2030, but so far renewable hydrogen uptake in industry and transport has increased slowly, making it challenging to reach the EU target.
The total installed capacity of electrolysers in Europe is currently just over 200 MW. Projects accounting for another 1.8 GW of capacity, mostly captive to a single off-taker or industry, are under construction and expected to become operational by the end of 2026.
EUROPEAN 2024 MARKET MONITORING REPORT: PLENTY OF WORK AHEAD
Projects accounting for around 60 GW of capacity announced as being operational by 2030 are waiting for the final investment decision (FID).
Projects accounting for around 60 GW of capacity announced as being operational by 2030 are waiting for the final investment decision (FID). Although funding instruments are becoming increasingly available, the actual deployment of these projects remains at risk due to sector uncertainties, in particular the evolution of demand and renewable hydrogen cost prospects.
EU Member States’ strategies vary, lacking full alignment with EU-wide targets. 4 Several Member States have set targets for hydrogen production, electrolyser capacities, and infrastructure expansion, with a focus on renewable hydrogen. Ambition varies across countries, leading to different paces of development across the sector, and requiring further efforts to align with the broader EU hydrogen vision.
This first hydrogen Market Monitoring Report (MMR), covering 2023 and first half of 2024, sheds light on the main regulatory challenges of the hydrogen markets at EU and national level. It addresses issues such as the repurposing of gas networks and the need for greater coordination by hydrogen, natural gas and electricity network operators.
WHAT MARKET TRENDS DID ACER MONITORING FIND?
Current levels and trends of hydrogen demand mean the EU is likely to miss its 2030 strategic goal of 20 Mt renewable hydrogen consumption:
Current hydrogen consumption at EU level is 7.2 Mt (99.7% of it produced from fossil fuels).
EU renewable energy and decarbonisation targets can increase demand for renewable and low-carbon hydrogen by 2030, but so far uptake has been slow.
Slow electrolysers rollout means the EU is likely to miss its renewable hydrogen production target:
Total installed capacity of electrolysers in Europe in 2023 was 216 MW. Another 1.8 GW of projects expected to become operational by end-2026. Around 70 GW of projects announced to be operational by 2030, but few are advanced.
Overall planned electrolyser capacity is significantly less than the 100+ GW needed to reach EU’s 10 Mt renewable hydrogen production target by 2030.
High costs prevent renewable hydrogen uptake:
Renewable hydrogen produced via electrolysis is 3 to 4 times more expensive than hydrogen produced from natural gas, discouraging early offtake.
Significant electrolysers scale-up and renewable electricity cost reductions are necessary to reduce renewable hydrogen production costs.
Significant infrastructure plans face uncertainties in implementation:
42,000 km of hydrogen pipelines, numerous storage projects and terminals are planned for the next decade, but only 1% has reached final investment decision, as future hydrogen demand uncertainties pose significant challenges to project promoters.
Integrated planning by (gas, electricity and hydrogen) network operators is needed to ensure grid development at sufficient pace and to optimally locate electrolysers.
Supporting initiatives to close investment gaps:
A lot of EU-wide and national support schemes are set to bridge the investment gap, but it can be challenging for project investors to navigate them.
European Hydrogen Bank’s (EHB) November 2023 auctions resulted in low premiums, revealing cases of low renewable hydrogen production costs and some off-takers’ willingness to pay within the cost range.
Cost uncertainties still pose risks for early investors, highlighting the need for clearer cost information to increase demand for hydrogen.
Cost uncertainties still pose risks for early investors, highlighting the need for clearer cost information to increase demand for hydrogen.
WHAT ARE ACER’S KEY RECOMMENDATIONS?
1. Quickly transpose the hydrogen and decarbonised gas package into national legislation and proceed with its implementation. Member States need to develop their national hydrogen markets in line with the EU framework to enable infrastructure development and avoid fragmentation.
2. Speed up electrolysers deployment and decarbonisation of electricity sector to increase renewable hydrogen competitiveness. Capital expenditures and electricity are the primary cost drivers for renewable hydrogen. Scaling up global electrolyser production and access to cheap renewables is key to lower the cost of renewable hydrogen.
3. Improve forecasting and accelerate integrated planning to identify realistic hydrogen infrastructure needs, avoiding overinvestments and reducing cost related to under-recovery risks.
4. When future demand is highly uncertain, consider incremental infrastructure development based on market needs (to avoid building too much network too fast and stranded assets).
5. Consider carefully the repurposing of gas networks for hydrogen to minimise costs, while not overlooking the potential impacts on the broader gas sector (including security of gas supplies).
6. Address future demand risk in financing hydrogen networks. Properly identify different risks associated with uncertain future hydrogen demand. Allocating these risks among stakeholders (considering also crossborder implications) is key to enable hydrogen infrastructure investments.
7. Provide market certainty over the role of nonrenewable, low-carbon hydrogen. To reduce hydrogen uptake costs, some stakeholders advocate to use hydrogen produced from natural gas with carbon capture in the short/midterm. Clarity on the uptake of non-renewable hydrogen should be provided by the European Commission and Member States.
EPISODE 29: H2ICE AND THE FUTURE OF HYDROGEN MOBILITY
Q: What can you tell me about H2ICE technology?
Todd: Many of the vehicles that we operate and use for transportation today have internal combustion engines that run on either diesel or petrol or gasoline. H2ICE uses that same combustion technology which has been proven and refined over decades of work across the industry, only it replaces the diesel or petroleum fuel source with hydrogen. As a zero carbon emissions fuel, when we’re able to combust hydrogen in an ICE vehicle, we’re able to get both power and propulsion, but without the harmful effects of carbon entering the environment.
Q: What do PHINIA’s trials imply for the future of hydrogen and mobility?
Todd: We wanted to do an endurance trial and we had this engine that was operating quite well in our validation trials, and we put it through both a 12 hour durability test and then also recently a 24 hour durability test as well. The journey that we had over a thousand kilometres in 12 hours demonstrated that the H2ICE engine has similar performance characteristics to what we might expect in a diesel engine, the power at grade and at various temperatures, was excellent. We were able to carry a full payload of capacity on the vehicle and the driver performance, was very similar to what you might expect from a diesel. So it was really encouraging to see a lot of our work, showing the results that we would expect in a trial like this for endurance.
For us to achieve our decarbonisation goals, it’s not one solution that fits everything. We’ll need the best of every technology for us to move forward, globally. That means electric vehicles will be important for the uses that they’re most suited for, and hydrogen as well. What this means is we’ve been able to demonstrate the viability of H2ICE in the mobility sector to be able to work effectively and really provide a seamless operator or user experience, in using H2ICE.
Q: Can you tell me more about the H2 injectors for port fuel injection?
Todd: Well, for a combustion engine there are multiple ways of getting fuel into the combustion chamber. One is through a direct injection into the combustion chamber itself and the other is to inject fuel into a port prior to the combustion chamber. And that’s where a PFI or port fuel injection technology can be used. We actually started production for a serial production with a customer coming up in the third quarter of 2024 using a port fuel injection, H2ICE injector, which we’re really excited about and will be one of the first hydrogen ICE serial production machines, or equipment that will be operating in our industry.
Q: How is PHINIA demonstrating their forward thinking in a sector where innovation is key?
Todd: It’s something that we’re quite passionate about and with our company’s focus, I like to say sometimes we eat, sleep and breathe, our fuel injection and propulsion methods and our competencies of very precise manufacturing processes and technology to bring to the industry is something that we’re really excited to continue to innovate. I would also say that while there are potential perfect solutions in the future, there are steps that we can take right now to implement rapidly in the mobility space. It may be making sure that we don’t let ‘best’ get in the way of ‘better’, that we can take steps now to make improvements now, even while we’re driving efficiencies today and then moving toward a carbon neutral and ultimately carbon free future. And that’s our passion and our focus at PHINIA as we innovate in this space.
It may be making sure that we don’t let ‘best’ get in the way of ‘better’, that we can take steps now to make improvements now
Q: What are the applications for hydrogen in the broader mobility sector?
Todd: We’ve done quite a bit with motorsports, and it’s exciting to see H2ICE perform in an area that requires really excellent, excellent product performance. So recently in the Alpenglow, we had an H2ICE engine, 24 hour Le Mans operate, and we’ve had a number of racing companies that we’ve been working on in the cutting edge of development. And it’s been satisfying for us to see not only the technology that we use in light commercial vehicles can operate for what I would call maybe regular or typical day to day operation, but this same technology can be used in high performance, high power applications quite effectively. I’d also mention that in addition to motorsports, heavy goods vehicles, even light commercial vehicles, we’re looking at hydrogen and working closely with stationary power generation. So maybe not as much a mobility topic but certainly an area that requires good power and performance from combustion, engines and being able to do stationary power generation using a carbon free fuel is an excellent step forward for us as an industry.
Q: What needs to change in order for us to reap the rewards of these technologies?
Todd: It’s really critical that we get a supply of green hydrogen and green hydrogen production. If we are using hydrogen vehicles, but the hydrogen is produced in a black or a grey method, then we’re really not taking a step forward. Sure, the vehicle may not have carbon emissions, but the process of getting the fuel does. So for us as an industry, making sure that green hydrogen production is ramping up, that it’s available and that it’s plentiful is critical for us. Once we get that green hydrogen, then it needs to have an infrastructure to deliver it. The alternative fuel infrastructure regulation that’s happening in Europe has some regulations to install hydrogen fueling stations in major cities and along the T10 network of motorways, and I think that’s a great step. It’s an example of making sure that we have hydrogen available for the vehicles to use, when they get on the road. Then the other thing I would mention, it could be, as we get more green hydrogen production, more vehicles using it, the cost of hydrogen can drop. But right now the cost of hydrogen is higher than what would be effective if we were to use it in a widespread way.
Hear from industry experts across aviation, rail, and the highway sectors.
We will be hearing from industry experts across aviation, rail, and the highway sectors to find out about their vision to create a sustainable future and how hydrogen will fit into the energy mix.
The conference will allow organisations an opportunity to showcase products and solutions that the transport sector can take away and incorporate into their long-term vision.
This includes innovative new products, solutions and overall new ways of thinking which will help transform the UK into a truly resource-efficient nation.