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PE Live: Q&A on sustainable hydrogen supply chains

Answers to questions on hydrogen transportation, reducing the costs of green hydrogen, Middle East hydrogen projects and the diversity of hydrogen production methods

Webcast PE Live 9: Creating a sustainable hydrogen supply chain attracted a huge number of questions from participants around the world. Here, Aurelie Nasse, strategic marketing director, MHI Vestas Offshore Wind, answers your questions relating to using renewable energy to create green hydrogen.

Given the difficulty of transporting hydrogen, will areas with existing clusters of ammonia production facilities have an advantage in attracting hydrogen projects?

Nasse: Hydrogen is difficult to transport unless there is an H2 infrastructure backbone. Existing ammonia facilities will have to find ways to decarbonise their production either with green or blue hydrogen.

Usually industries are located where they can find cheap and abundant feedstock, but renewable resources are not necessarily correlated to human activity. Remote places with very good renewable resources such as Chile or Australia—which both have extraordinary good solar resources that can be complimented with wind resource—can produce ammonia with electrolysis relatively easily. It is a good way to transport this cheap and abundant renewable energy to the consumption points.

We can therefore expect to see existing ammonia plants, which need to decarbonise, as being potential hubs for hydrogen in areas with good renewable resources.

What is your view on the Saudi Arabian Neom project involving Air Products?

Nasse: Saudi Arabia has the lowest price in the world for solar electricity: $17/MWh in the Sakaka tender in 2017. There is also space to create a 4GW solar plant. Green ammonia in this location can end up being cheaper than grey ammonia; cheap and abundant renewable resources with the ability to build a large-scale project.

What will drive cost reduction in green hydrogen, to create parity with blue hydrogen? And how tangible are these drivers?

Nasse: There are three technical drivers for cost reductions, which are the same we have seen in all renewable industries.

“Remote places with very good renewable resources such as Chile or Australia can produce ammonia with electrolysis relatively easily” Nasse, MHI Vestas Offshore Wind

The first one is performance, meaning being able to use less kWh of electricity to produce hydrogen. Research is ongoing on new types of electrodes intended to enable better performance.

The second driver is on the supply chain and production side. Today, only 100MW of electrolysers are being produced per year. In the future, we will have to produce several GW of electrolysers per year. We will automate the production facilities, produce many more subsystems, and optimise all parts of the value chain that lead to the production of the stack. This has big cost-out potential.

The third driver is that we will develop bigger projects: from 1MW electrolyser facilities to 10MW, 100MW and then GW scale. This will enable greater utilisation of plant facilities and therefore also lower the cost of plants.

There are also financial drivers that can come into play, such as the fact that the maturity of the technology leads to better loan conditions and lower expected returns on investment as risk goes down from the investors’ perspective.

Is the EU’s assumption that the price of electrolysers will fall by 50pc plausible?

Nasse: These cost-out mechanisms have been seen before in other renewable sectors. Costs have been falling in wind and solar PV to the tune of more than 50pc. In solar PV, every time production doubles, the module price decreases by 19pc. We would expect a similar trajectory for an emerging technology such as hydrogen production through electrolysis.

Are the different ‘colours’ of hydrogen in competition with each other or is there room for all of them? Are they all needed to achieve decarbonisation?

Nasse: We need to achieve carbon neutrality by 2050, so we only have 30 years in front of us. Therefore, we need all the different technologies that can help us on that journey to participate. The characteristics of a location determine the best route for decarbonisation. Existing plants could have a faster and cheaper decarbonisation route by utilising CCS while others could use renewable resources to continue to decarbonise the electricity mix and hard-to-abate sectors.

A recording of PE Live 9: Creating a sustainable hydrogen supply chain can be heard here

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