On June 28, 2019 in Osaka, Japan, as part of the G20 Summit, the International Energy Agency (IEA) planned to release the results of the study “On assessment of the role of hydrogen and its economic potential in developing a new model of the global energy system.”
According to the Minister of Economic and Climate Policy of the Netherlands, Noévan Hulst, a stable position regarding the widespread use of hydrogen as a key energy carrier in the transition to a new low carbon paradigm for the development of energy systems in Europe and the world where hydrogen will be generated from different sources has already been formed by experts.
Noévan Hulst noted that today, according to the technology of hydrogen generation, there are three types of it: “Gray”, “Blue” and “Green”. “Gray” hydrogen is the one that is produced from methane. As of now “gray” hydrogen is cheaper than “blue” and “green”. Its market price is about EUR 1.50 / kg. “Blue” hydrogen is the one that is generated from carbon dioxide, which is drawn out at industrial sites. The formation of its market price will depend on the scale of further development of carbon (СО2) extraction and its storage technologies in the EU. “Green” hydrogen is the one the production of which is not related to the use of methane or carbon dioxide, it is produced by means of electrolysis with the use of green energy obtained from wind and solar generation.
According to Noévan Hulst, the IEA is convinced that, due to the use of the latest technologies, the cost of hydrogen production in the world will decline significantly already after 2030. The main driver of this process will be the relatively high price of natural gas and the medium-term prospect of the natural gas price increase, which is predicted by the IEA.
Currently the companies located in the Member States of the EU are paying EUR 20-25 per tonne of carbon dioxide emissions. According to the EU climate policy, this figure will increase to EUR 30-40 per tonne of CO2 over the next 10 years. Under such conditions, as Noévan Hulst notes, the price of “gray” hydrogen will increase to EUR 2.0 per kg.
The market price of “blue” hydrogen in the EU is currently EUR 1.7 per kg. The formation of a relatively high price of “blue” hydrogen is influenced by both the implementation of the EU climate policy and the small scale production of “blue” hydrogen in the EU. According to Noévan Hulst, the cost of extraction, transportation and storage of CO2 is about EUR 50-70 per tonne for EU industrial enterprises. Therefore, it is more profitable for EU companies to buy CO2 emissions rather than invest in its extraction and processing.
The market price of “green” hydrogen in the EU is now uncompetitive and stands at EUR 3.5-5.0 per kg. It consists mainly of the cost of electrolysis and the use of expensive electricity and the price is high due to the small scale of “green” hydrogen production. According to the IEA, due to scaling and technological modernization of the electrolysis process, the cost of green hydrogen will be reduced by 70% by 2030 – to the level of EUR 1.0 – 1.5 per kg. As a result, the market price of thousands of cubic meters of hydrogen may be lower than the price of natural gas in the EU.
According to the former US Secretary of Energy, Steven Chu, due to high solar activity, the price of green energy in Latin America, North Africa and the Middle East is now about 2 cents per kWh. With technological upgrading and scaling, in the short term, it will be reduced to 1.3 cents per kWh. The countries of these regions, according to Steven Chu, have, in particular, the highest economic potential of production of “green” hydrogen with the prospect of its further export to the EU and other world energy markets by sea and pipelines, as is currently the case with liquefied gas. Japan is already implementing pilot projects for the production of green hydrogen in Australia, Saudi Arabia and Brunei.
In the EU, according to the IEA, the largest amount of “green” hydrogen will be generated in the Northern European states, where large-scale wind energy production is currently observed, the excess of which will be used for the electrolysis and production of “green” hydrogen.
According to Noévan Hulst, the country’s natural gas reserves are running out and the Dutch government is already developing a new policy of developing a low carbon economy in the country, where the use of “green” hydrogen will be one of the main elements of the strategy. He stressed that European Commission experts are already discussing the possibility of imposing obligations on gas companies to buy at auctions and mix some “green” gas produced from hydrogen into traditional gas. The adoption of such a legislative decision, according to Noévan Hulst, could in the short term significantly affect the scale of production of “green” hydrogen and the formation of a new market – the market of hydrogen in the EU, which will compete with natural gas market.
In Germany, the first green hydrogen generation project was launched in 2003 by the energy company “Uniper”. The power of the test generating station, according to the executive director of “UniperEnergyStorage”, Axel Wietfeld, was 2 MW. The station has generated “green” hydrogen at 15 GW / h for 15 years. Now “Uniper” is focused on scaling this project to other regions of Germany. A. Wietfeld noted that a single electrolyzer now costs about EUR 700,000-800,000 per megawatt of “green” gas. The 10 MW capacity station will be around EUR 7 million. However, as technology scales across the EU and the world, the cost of such projects will be significantly reduced.
According to the head of «RAG Austria AG» research group, the country’s largest gas storage operator, Stephan Bauer, in 2013, in Austria, “RAG Austria AG” implemented the Underground Sun Storage project. A solar station, a hydrogen electrolysis station, and a green hydrogen research facility were built. While pumping carbon dioxide into the green hydrogen storage, the scientists observed the recovery of methane natural gas from a mixture of hydrogen and carbon dioxide. The main goal of the project, according to S. Bauer, is to build a model for the generation of methane or “green” hydrogen from excess solar energy produced in Austria in the summer and not used by the consumer market. S. Bauer said that without a sound EU regulatory policy and scaling up of electrolysis and green hydrogen generation projects in the EU, it is impossible to achieve commercial feasibility and benefits in implementing such projects.
According to the EU Commissioner for Energy and Climate Action Miguel Arias Cañete, the European Commision is convinced that after 2050, green hydrogen will make up a significant share of the EU energy balance, gradually substituting methane from the market produced from the Earth in a traditional way. Appropriate policies and regulations, as he said, are already being developed.
Thus, the International Energy Agency (IEA) considers hydrogen production as one of the most effective ways of integrating renewable generation capacity with traditional electricity grids and a tool for transporting green energy in the form of gas between regions of the world and gas markets.
The European Commission is preparing a new policy aimed at launching the development of a green hydrogen market in the EU. Electrolysis technology using renewable energy is called a key element of EU energy security after 2050. The EU decarbonisation strategy foresees that green hydrogen is intended to gradually crowd methane natural gas out of the EU gas market.
Building an economically viable model for the generation of “green” hydrogen with the prospect of replacing imported natural gas with hydrogen will not be possible without a sound regulatory policy and support for such projects by the European Commission, their scaling in the EU and the world.
Image of www.japan.go.jp/g20japan/