In recent months, there has been a surge in major green hydrogen projects announced worldwide. They include Saudi Arabia’s $8.4bn, NEOM Green Hydrogen Company investment and Lhyfe’s plans for a 70-megawatt hydrogen plant in Perl, Germany.
The rapid scaling of any technology creates potential for risk. The question is, how can the industry safely and effectively scale to meet the demand?
PwC’s report ‘Hydrogen on the horizon. Ready, Almost set, Go?’ revealed that after 2030, the demand growth of hydrogen will accelerate, particularly from 2035 onward. By 2050 the demand could vary from 150 to 500 million metric tonnes per year.
With China currently being the biggest producer of hydrogen, data provided by Hydrogen Insight by Rystad Energy highlights that Australia, the US, and Spain will lead the market by 2030, followed by Canada, Chile, Egypt, and Germany.
Meeting this demand requires the development and larger-scale manufacturing of new products and technologies, particularly electrolysers, as well as the development of new global supply chains. In 2021, the entire global installed capacity of electrolysers producing green hydrogen rated at 250-megawatts. By 2030, we need 3,000 times that.
What are the risks of scaling and how can we overcome them?
Policy frameworks
To facilitate this significant transition, it is vital that governments around the world pursue hydrogen-supportive policies to create a regulatory framework that encourages long-term investment in production equipment. Doing so requires enabling policy and regulatory frameworks which are key in stimulating sustainable investment, although this has its own set of risks. Transparency is key.
SMEs
Perhaps the biggest current risk to scaling green hydrogen rests in the lack of subject matter experts (SMEs). Whilst skills are transferable within the energy, power and engineering space, people need to realise hydrogen reacts differently to other gases, with specialist awareness training needed to ensure the safety and quality of design and production.
Technology
Electrolysers are a rapidly advancing technology, but production scale is bottlenecking. Membrane-based electrolysers including PEM and AEM (proton-exchange membrane and anion-exchange membrane) are most likely to be adopted for green hydrogen production, as they don’t require a continuous power supply.
Implementing strategic decisions around investment and manufacturing could lead to the cost of electrolysers dipping in the same way that solar cells and batteries have.
Many notable and emerging electrolysis production companies have grand plans to increase production to multi-gigawatts in the next five years. This is indicative of the steady shift towards large-scale production to enable greater accessibility of green hydrogen.
The risk in scaling comes from quality of manufacture and availability of technology. Will existing and new suppliers be able to maintain quality standards at scale, or understand and meet the standards and regulatory needs of new countries they are exporting to? Rigorous supply chain assessment and inspection will be essential.
Regulation
Concerns and uncertainty about a slow-evolving regulation and standards landscape in some markets will undoubtedly have an impact not only on the speed of green hydrogen production, but also on the safe handling, storage, and transportation. As green hydrogen becomes more accessible, new players entering the industry will be required to gain an understanding and observe the stringent safety and quality standards established or available as best practice elsewhere.
Disputes around being able to classify how carbon-intensive or green the hydrogen is also stemming from the scarcity and lack of unity regulation.
Having a set of holistic regulations is not only beneficial to producers of hydrogen but also to the supply chain which can be greatly affected by limited transparency and governance.
Social license to operate
For many people, their fears of hydrogen are based on cultural memories of 19th-century airship disasters. Hydrogen is dangerous gas if not handled properly, but engineering, quality and safety standards have come a long way since the Hindenberg. Robust governance, communication and education are vital to ensuring that public concerns over hydrogen use in public transport, domestic supply, and infrastructure do not affect the industry’s ability to support the race for net zero.
As the hydrogen industry evolves, understanding the benefits and risks of scaling-up is vital. Many current green hydrogen projects highlight the necessity to scale-up quickly, yet it remains clear that the lack of SMEs and infrastructure to accelerate this must be resolved to ensure that targets are met by 2030.
As new players enter the market, larger energy companies have a responsibility to build trust within their new supply chain through the rigorous application of standards, inspections, and training, facilitated by the right policy frameworks. Achieving this will help pave the way for both public support and a safer, faster scaling of the entire sector.
Leanne Halliday is a member of the Standards Australia Hydrogen production and storage working group and is LRQA’s Subject Matter Expert for Hydrogen, supporting projects globally.
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