An extensive literature on hydrogen is published by companies, governments, and energy market analysts. Everyone is looking for the most likely avenues for a major energy broker in a future carbon-free economy.
For the moment everything is conceptual as hydrogen production for industrial use is still quite carbon intensive. It looks like the importance of hydrogen as an energy storage and carrier will become apparent later in the 2020s and 2030s. Hydrogen can prove to be indispensable for energy storage in the energy sector and for the sector coupling that connects energy consumers and power sources.
A widely held view by major energy agencies and others is that “hydrogen hubs” will play an important role in getting carbon-free hydrogen up and running. These industrial locations, in which electrolysis systems are in close proximity to industrial users, shipping and transport infrastructures, should offer economies of scale. Numerous regional plans to achieve such concentrations are now emerging.
Of course, the growing demand in these hubs in the northern latitudes, coupled with the growing demand for storage capacity in national power grids, should ultimately outweigh the local capacity to deliver carbon-free hydrogen. This probability refers to the other pole of the current regional planning for clean hydrogen, which is planned for large global supply areas. It focuses on how source regions of carbon-free hydrogen and its derivatives (ammonia, methanol) can be developed to generate export revenue.
Source regions in more southerly latitudes can potentially harness their abundant solar and wind resources and achieve a combination of low prices for clean electricity and high rates of electrolysis utilization to produce carbon-free hydrogen at low cost. They could well become “renewable energy superpower regions,” said Michael Liebreich, chairman and CEO of Liebreich Associates and founder and senior contributor of Bloomberg New Energy Finance.
Assessment of superpower regions
The major energy agencies anticipate the emergence of “green hydrogen corridors” and shipping routes that connect hubs with regions that are rich in renewable energies. The latter, of course, include parts of southern Europe, the southern United States, Brazil, Chile, China, India, and Mexico. Regions that appear to have great potential include Australia, the Middle East and North Africa (MENA).
The different cost factors involved in producing inexpensive clean energy appear to favor these places to produce cheap hydrogen. However, you will also rely on their ability to move it cheaply, by pipeline, or by ship at sea. The transport costs are not yet known. Related: US Oil Executives Cautiously Optimistic Around 2021
The International Renewable Energy Agency (IRENA) claims in its recently published report Green Hydrogen: A Guide to Policy Making that much of the transport infrastructure does not need to be developed from scratch, but can be built by converting existing natural gas networks, including across international electricity networks Borders and waters. These exist in particular between North Africa and Europe in the entire Mediterranean area.
The establishment of the first international trade routes for hydrogen and / or its derivatives will, however, expect significant technological innovations. In its latest research on clean energy technologies, the International Energy Agency (IEA) identifies hydrogen as one of four critical value chains for technologies that need to be further developed.
In its 2019 report The Future of Hydrogen, the IEA sees plenty of room for optimism. The agency claims that there could be hydrogen transportation between them, as the cost of producing carbon-free hydrogen is likely to vary between countries and regions. Europe and Japan, with their strong political support for hydrogen and relatively high costs, are likely importers. The report sees the opportunity to export to the world's largest LNG importers: Japan, Korea and China. This is particularly promising for Australia, which is already the largest LNG exporter in the region.
Two regions to see
In sunnier parts of the world, countries move beyond planning hydrogen exports to the actual early stages of project development. The most notable feature of the projects is their sheer size.
If any country is well positioned, it is Australia with enormous coal and renewable energy sources. The National Hydrogen Strategy, published in late 2019, prioritizes the development of an export market to meet demand in Japan, Korea and Singapore. It is being advanced to support the development of new electrolyzer equipment.
For the Pilbara region in Western Australia, a huge project for renewable energies on hydrogen is currently in the advanced planning phase. It is known as the Asian Renewable Energy Hub and involves the generation of wind and solar energy over around 2,500 square miles. Large-scale production of carbon-free hydrogen and ammonia for export is a major goal.
Given the priority status of the Australian government, the project is being led by a consortium consisting of the Australian renewable energy developer CWP Renewables, InterContinental Energy from the USA and the turbine manufacturer Vestas.
The first phase of the project to develop 15 GW of renewable energy was recently approved by the environment. This includes installing solar panels and more than 1,700 wind turbines, as well as developing a power transmission network that could include submarine cables to Singapore. However, developers are focused on supplying the region with renewable electricity, building a desalination plant and producing carbon-free hydrogen for export. The first exports should take place in 2027-08, while the project itself could expand to 26 GW of wind and solar capacity.
Another region that many consider to have great export potential is the Middle East and North Africa. Intense sunlight, extensive windy areas, and proximity to key markets in Asia and Europe should position MENA well to generate export revenue from hydrogen. While several countries are doing serious planning, Saudi Arabia is furthest advanced on a major project. Another big project is on the way to actual development in Oman.
The Saudis intend to build a huge hydrogen production facility in NEOM, the planned city and special economic zone in the northwest of KSA on the Red Sea. NEOM is being developed by a company of the same name, wholly owned by the country's Public Investment Fund. It should be operated entirely with renewable energies.
In an agreement announced last summer, NEOM's first major energy project will generate carbon-free hydrogen through electrolysis. The owners include ACWA Power from Saudi Arabia, Air Products from the USA and NEMO. Air Products is partnered with Thyssenkrupp Uhde Chlorine Engineers Ltd. work together. Thyssenkrupp will supply electrolyzer equipment and technical services. A first phase electrolysis plant is being built and operated by Air Products.
The project, known as the Helios Green Fuels Project, will integrate more than 4 GW of renewable energy from solar and wind energy into storage. Starting in 2025, 650 tons of carbon-free hydrogen per day and 1.2 million tons of green ammonia will be supplied for export per year. Air Products will deliver the green ammonia globally by means not yet identified, but possibly by pipeline. See also: OPEC + meeting ends with great surprise from Saudi Arabia
Another project, currently in advanced planning, will aim to integrate carbon-free hydrogen into Oman's petrochemical sector, taking advantage of the country's sunshine and coastal winds. The planning focuses on the growing industrial port city of Duqm, a refinery and an industrial center with a large special economic zone.
Hyport Duqm Green Hydrogen is a joint venture between DEME, a Belgium-based marine engineer and offshore energy developer, and OQ Alternative Energy, a division of the OQ Petrochemicals conglomerate in Oman. The project, which started in December, is now in the design and engineering stages, albeit without an announced schedule.
The developers want to supply the country's chemical industry with green hydrogen and provide carbon-free hydrogen and derivatives for export to Europe. This can start with export to industry in the port of Antwerp, which DEME is partner with at Duqm. Much of the Duqm zone will be dedicated to renewable energy generation and a hydrogen production facility with an electrolyzer capacity of up to 500 MW in the first phase of the project, which could be expanded in later phases.
A competition space
Robin Mills, CEO of Qamar Energy in Dubai, believes these projects are feasible, but sees some significant challenges for the MENA region.
“The NEOM project has strong supporters and plans to start producing hydrogen by 2025. This sounds feasible, although the renewable energy projects in Saudi Arabia have not progressed very quickly, ”he says. “Duqm is clearly at a much earlier stage and has less experienced partners.”
“The challenge is that hydrogen can be an important part of a decarbonised economy and produce new export products, but not generate the same high rents as oil and gas,” says Mills.
“Australia, Chile, North Africa and other areas, including offshore wind in Northwest Europe, also have good conditions for green hydrogen and derivatives production. This is likely to be a competitive environment.”
By Alan Mammoser for Oil Genealogie
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