Hydrogen is turning into the next media star after solar and wind. In its latest claim to fame, two spinoffs of German tech conglomerate Siemens are joining forces to advance green hydrogen technology by building wind-to-hydrogen systems to help decarbonize the global economy. Green hydrogen is touted as a solution to many climate change problems: the element can be an energy carrier, it can be used to store energy and it can be used in fuel cells to power vehicles. Green hydrogen is a particularly attractive option because its production comes from hydrolyzing water using electricity produced by renewable systems, meaning it has a much lower carbon footprint than gas- or coal-sourced hydrogen.
Siemens Gamesa and Siemens Energy have therefore joined a growing group of green hydrogen proponents, many of whom see it as the ultimate solution to the planet’s pollution problem.
The two plan to invest $120 million over five years to develop a fully integrated offshore wind-to-hydrogen system that involves a turbine with an electrolysis system integrated into it, the companies said in a press release this week. They are aiming for a full-scale demonstration of their pilot by 2025 or 2026.
“Our wind turbines play a huge role in the decarbonization of the global energy system, and the potential of wind to hydrogen means that we can do this for hard-to-abate industries too. It makes me very proud that our people are a part of shaping a greener future,” the chief executive of Siemens Gamesa, Andreas Nauen, said in the release. Related: Saudi Arabia Starts New Bull Run In Middle East Oil
“With these developments, the potential of regions with abundant offshore wind will become accessible for the hydrogen economy. It is a prime example of enabling us to store and transport wind energy, thus reducing the carbon footprint of economy,” said the head of Siemens Energy, Christian Bruch.
But for all its promise, green hydrogen production is not a trouble-free technology. It is a very expensive technology that has made some experts warn it is unlikely to be economically viable for years and maybe decades to come. And yet, some are forecasting major cost drops for the technology.
Wood Mackenzie analysts, for instance, last year wrote in a report that they expected the production costs of green hydrogen to fall by as much as 64 percent by 2040 and in some places, even sooner.
“On average, green hydrogen production costs will equal fossil fuel-based hydrogen by 2040. In some countries, such as Germany, that arrives by 2030. Given the scale up we’ve seen so far, the 2020s is likely to be the decade of hydrogen,” the author of the report, senior research analyst Ben Gallagher wrote, adding, “Rising fossil fuel prices will boost green competitiveness, further strengthening the case for this technology in the coming years.”
And yet, this cost reduction will require quite a solid effort: right now, green hydrogen production costs between three and six times more than gas-derived hydrogen. On the other hand, the prices of gas-derived hydrogen may rise as demand for gas rises, somewhat leveling the playing field. This, however, suggests that green hydrogen would depend on gas prices for its competitiveness rather than on technological advancements that would make the process itself cheaper.
That the energy transition will come at a cost is clear. The question is, how high this cost will be, and how much of the world will be able to afford it. Solutions such as the one Siemens Gamesa and Siemens Energy are working on sound like the way to make the process cheaper and bring green hydrogen closer to mainstream reality. However, it’s worth bearing in mind these solutions would be region-specific rather than universal. For now, mainstream green hydrogen remains more of a promise than a reality.
By Irina Slav for Oilprice.com
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