Connor: More bad news for Europe, especially Germany. bet big energize this boondoggle Fields where electrification is not an optionsuch as some parts of industrial manufacturing. The next article briefly touches on that risky bet, but here’s the details. energy connects:
Germany plans to build more than 20 power plants much larger than the one in Leipzig, which it touts as the continent’s first “hydrogen-enabled” facility. They will be supplied by state-of-the-art liquefied natural gas terminals equipped to process niche clean fuels such as ammonia and a network of special pipes spanning about 6,000 miles (9,600 kilometers).
However, there were always many challenges.
However, there is no formal definition of what makes a plant compatible with hydrogen, opening the door to greenwashing. For power plants, hydrogen combustion has not even been tested on a large scale.
…Next, there is the issue of hydrogen transfer. The Leipzig factory is not connected to the electricity grid (and has not yet installed its own electrolyzers), so the highly flammable fuel will be transported by truck until the second wave of the government’s grand plan comes to fruition. There is a need. A €1 billion liquefied natural gas terminal is being built in the North Sea town of Brunsbüttel, initially planned to import LNG, but also designed to handle future clean fuels (possibly). .
Hydrogen can only be liquefied at -253C (-423F), which is far beyond the capabilities of today’s LNG ships. So Germany plans to import hydrogen in the form of liquid ammonia, a combination of hydrogen and nitrogen that can be more easily made into a liquid. However, ammonia is toxic and requires better ventilation systems for handling. Energy think tank Fraunhofer ISI said many components inside the terminal, most of which have not been tested with ammonia, would also need to be upgraded, including control valves, fire and gas sensors, and in-line equipment. .
Germany does not have an ammonia pipeline network, and transporting it by truck on an industrial scale is dangerous, so there are restrictions. This means that ammonia needs to be converted back into hydrogen, and there is currently no economically viable technology to do so. The terminal operator said it would consider alternative strategies if no alternative was found by next year.
…The difference is that wind and solar produce clean electricity. This electricity is already in use around the world. Achieving green hydrogen, on the other hand, requires building more solar and wind farms, although it is often easier to use that clean energy directly. By the time the hydrogen is produced, stored, and combusted to make electricity again, it uses nearly 70% less energy than it started with and costs three times as much.
Green hydrogen will probably only be useful at the end of the energy transition, once primary electricity demand is sufficiently met by renewables, according to Pierre Wunche, Belgium’s top central banker.
Tsvetana Paraskova is a writer for Oilprice.com with over 10 years of experience writing for news outlets such as iNVEZZ and SeeNews. It was first published in crude oil price.
- Initial excitement around low-carbon hydrogen has waned due to high project costs, regulatory uncertainty and weak demand.
- Only a small number of hydrogen projects in North America and Europe have reached final investment decisions.
- Major energy companies such as Shell and Equinor have suspended green hydrogen plans in Europe, citing poor project economics and an unclear regulatory framework.
The hype around low-carbon hydrogen has begun to fade in recent months as companies and investors find their ambitions facing the reality of expensive projects amid regulatory hurdles and uncertainty about future demand. There is.
momentum behind green hydrogen Inflation caused by the US Inflation Control Act (IRA) two years ago has slowed amid still high costs and macroeconomic headwinds. Furthermore, regulatory uncertainty and lack of committed demand undermine 2030 production targets for low-carbon hydrogen in both the United States and Europe.
As a result, investors are reconsidering their financing options, companies are rethinking their hydrogen production strategies, and the stock prices of major hydrogen companies are plummeting.
For example, Denmark’s green hydrogen system (CPH: Green), a provider of standardized modular alkaline electrolyzers, is down 65% year-to-date. US-based Plug Power (Nasdaq: Plug) stock is down 53% since the beginning of the year, and Ballard Power Systems (Nasdaq: BLDP) plunged 58%.
Other companies focused on green hydrogen and technology also see signs that project commitments with final investment decisions (FIDs) are only part of the overall project pipeline, despite progress in project announcements. Meanwhile, stock prices are plummeting.
McKinsey & Company and the Hydrogen Council report that U.S. low-carbon or renewable hydrogen projects in North America and European projects aiming to be operational by 2030 have so far reached FID. said that only 5% of report last month.
“A key sector-specific challenge for the hydrogen industry is the uncertainty associated with many regulatory frameworks, such as the EU regulatory framework and the IRA investment tax credit rulebook.” All of this “impedes the bankability of the project,” the report’s authors write.
“Coupled with rising costs of renewable electricity and electrolyzers, this is leading to delays and cancellations of projects, especially renewable hydrogen projects,” they added.
In Europe, the European Commission has set unrealistic hydrogen production and import targets, and the EU is not on track to meet them, the EU’s top auditing body, the European Court of Auditors, has announced. I described it in a paper. report This summer.
The European Commission has been partially successful in creating the necessary conditions for an emerging hydrogen market and hydrogen value chain in the EU, but a “reality check” is needed going forward, the European Court of Auditors says. said.
Even the International Energy Agency (IEA), the most vocal supporter of all forms of renewable energy, warned The introduction of green hydrogen is delayed globally due to policy and demand uncertainty.
According to the IEA, the main reasons for the slow uptake of low-carbon hydrogen include “uncertain demand signals, financing hurdles, delayed incentives, regulatory uncertainty, licensing issues and operational challenges.” included.”
A lack of demand outlook and regulatory uncertainty has led to the cancellation of several major projects in Europe this year alone.
For example, Spanish energy companies Repsol and Cepsa Pausing Green hydrogen investment in Spain, one of the most promising EU markets for renewable hydrogen, is considering making a windfall tax on energy companies permanent.
The idea that this tax could become permanent has infuriated many major companies, including energy companies that plan to invest in green energy projects.
The Spanish company suspending projects is the latest European company to suspend or scrap green hydrogen plans, citing policy and demand concerns.
More recently, Shell and Equinor abandoned the plan Due to lack of demand, it will be used for the production and transportation of low-grade hydrogen in Northern Europe.
Investors are also not rushing to invest in supporting green hydrogen projects due to economic conditions and poor profit potential.
“Green hydrogen is not investable yet. It’s rubbish in terms of investment,” said Mark Lacey, head of thematic equities at British asset manager Schroders. financial times.
