Hydrogen – Key To Full Potential Of Wind And Solar

The massive decline in renewable energy costs has disrupted the global energy system. Across the world, wind and solar farms are going up at a rapid pace. In many places, renewable energy is displacing coal and even natural gas.

However, even if clean electricity is able to fully displace fossil fuel electricity, major challenges remain. Electricity represents less than one-fifth of total energy consumption, meaning the world will need to find a way to replace other forms of dirty energy as well. Part of this is already underway — the rise of electric vehicles will soon allow personal cars to be powered by clean energy. However, other sectors could be much more difficult to power by electricity.

Here, hydrogen can play a valuable role. Hydrogen is already used as an input for a variety of industrial processes, including refining and in ammonia production for fertilizer. There are also numerous other high-potential use cases that have yet to be exploited, including transportation (such as powering aircraft, ships, or long-haul trucking), energy storage, heating, and industrial production. Many of these applications have challenges that renewable electricity cannot easily address directly.

However, hydrogen is currently produced almost entirely with fossil fuels. Green hydrogen, which is produced using a process called electrolysis that requires only electricity and water, produces less than 0.1% of hydrogen today. The slow uptake of green hydrogen is mainly due to the high cost — the International Energy Agency estimates that green hydrogen produced with renewable energy costs roughly three times as much as traditional hydrogen produced with natural gas.

Luckily, the rise of wind and solar energy has unlocked abundant clean electricity at a low cost, which creates the possibility of cheap hydrogen without emissions. According to the most recent analysis from the International Energy Agency, onshore wind energy can be produced at a median cost of $50 per MWh while utility-scale solar can be produced at a median cost of $56 per MWh. This compares to $71 per MWh for natural gas and $88 per MWh for coal.

There is good reason to believe the cost of green hydrogen will come down substantially in the near future—cost competitiveness with traditional hydrogen could be on the horizon. The International Renewable Energy Agency predicts competitive costs by 2030, but some companies are aiming for even earlier.

There are several reasons behind the declining costs. Renewable energy costs have fallen substantially over the past decade, and they will likely continue to see costs decline in the years to come. Mass production and standardization of electrolysers should serve to reduce costs as well, and further technological progress is likely to increase efficiency.

Between declining costs and numerous applications, the future looks bright for green hydrogen. Different organizations project that green hydrogen could serve anywhere from 6 to 25% of final energy consumption by 2050. By comparison, nuclear power provides just 4% today. If the higher end predictions prove correct, green hydrogen could be nearly as important in meeting energy demand as oil is today. It’s no wonder that governments and energy giants alike are rushing to get a piece of this emerging market.

A flurry of large green hydrogen projects has been announced across the globe. Last month, the US Department of Energy announced $52.5 million in funding for 31 different clean hydrogen projects across the country. The European Union has been even more aggressive; Germany alone recently invested nearly $10 billion across over 60 different projects and the European Commission has stressed the need for massive investment in the sector. Even Middle Eastern countries have made plans to open numerous large plants.

Yet, the most surprising investor has been the oil & gas industry. Looking to diversify their assets away from fossil fuels, a variety of energy giants have poured investment into green hydrogen. Shell recently opened Europe’s largest electrolyser, and they have projects in development that have the potential to be many times larger. Total and British Petroleum also have planned investments in the space.

With technological progress, heavy investment, and government support, the green hydrogen industry seems primed for huge growth. However, the industry remains in a vulnerable stage; if costs don’t fall as quickly as expected, private investment could stall. Furthermore, many of the potential applications require major innovation down the line. While hydrogen ships and planes have long been discussed, they remain far from reality.

Still, the wide range of use cases and high technological potential mean that green hydrogen is likely to play a substantial role in a clean future. If progress is favorable, green hydrogen could become one of the most important future energy sources.

Source: Brayden Gerrard.

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