National strategies pledge over half of EU’s 2030 electrolyser capacity target

LONDON (ICIS)–European nations have pledged to create 22GW electrolyser capacity for hydrogen production by 2030, more than a half of the European Commission’s goal.

On 8 July, the commission adopted its hydrogen strategy, earmarking 40GW of electrolyser capacity installed by 2030.

The Netherlands, Germany, Spain, Portugal and most recently France weighed in with 2030 targets in their national strategies.

The commission’s strategy showed a clear leaning towards green hydrogen as the future of the commodity’s production.

There was acknowledgement for blue or low-carbon sources as an intermediary measure, with focus on utilising carbon capture and storage systems on grey hydrogen production facilities at industrial sites. However the strategy tipped green hydrogen as the long-term objective.

Keeping in line with European sentiment, the Netherlands and Germany, which both released strategies ahead of the commission, pushed strongly to green hydrogen in their plans.

The Portuguese and French strategies, as well as the Spanish roadmap currently under final review, provide no space for blue hydrogen.

The exception to those, however, is the use of the term “zero-carbon” hydrogen in the French strategy, which might imply the use of nuclear power.

The commission foresees between €180-470bn of investment in renewable, or green, hydrogen to 2050, compared with only €3-18bn for low carbon, or blue hydrogen.

The EU strategy expects €24-42bn investment in electrolysers by 2030 plus a further €220-340bn in the renewable generation, or 80-120GW of capacity, needed to supply the electrolysers.

Blue vs green

Gas industry experts say, however, by marginalising blue hydrogen the EU main be undermining its own efforts to cut carbon emissions.

“The only way to make green hydrogen competitive is to raise the carbon price and forbid the use of unabated fossil fuels,” said Alex Barnes, director at consultancy Alex Barnes & Associates.

Barnes said significant extra investment is required in renewable generation to provide the additional electricity required for green hydrogen, unless it is produced in regions where there is already an excess of electricity production from renewables

“But then we need to look at the price and speed to build new transmission lines for electricity and build electrolysers,” he said, adding that regional opposition could make construction of electrical lines very lengthy.

However, according to Marcus Newborough, Development Director of UK-based developer and provider electrolyser hydrogen systems ITM Power, both dedicated renewable power for green hydrogen generation and utilising excess renewable power from the grid makes sense from a cost perspective.

“Outside of peak demand periods, wholesale electricity prices on the grid already fall to £10-30/MWh when renewable generation is plentiful, and in some cases falls to zero/negative values when supply exceeds demand and wind curtailment occurs,” Newborough told ICIS. He added that ongoing expansion of renewables is likely to pressure prices and increase the availability of renewable electricity hours per annum towards 7000h.

“This trend in the electricity grid serves to enable and encourage the production of green hydrogen close to the points of hydrogen demand,” Newborough said.

He also said that utilisation of off-grid electrolysers makes economic sense in regions with high renewable resource. “So in a few years from now we will see large scale production (eg. wind hydrogen in the North Sea and solar hydrogen in the MENA countries) with long distance transfer for example via a European high pressure hydrogen transmission grid,” Newborough said.

Despite acceptance for blue, the outline of the European strategy makes it difficult for investors in blue hydrogen to set up camp in the bloc. Barnes said that Europe’s hesitancy on blue hydrogen is partly political.

“Blue hydrogen can make a significant contribution to quicker decarbonisation, but it doesn’t fit with the all renewable narrative as it is not seen as ‘pure’ enough,” he noted.

Cost of production

According to the Oxford Institute for Energy Studies (OIES), production of high-carbon hydrogen currently costs €1.5/kg (€38/MWh).

The price of producing “blue” hydrogen where emissions are reduced by using Carbon Capture and Storage (CCS) goes up to €2/kg (€50/MWh), while the bill for green hydrogen is estimated between €2.5-5.5/kg (€65–135/MWh), with the lower limit being a stretch.

OIES estimated that the EU’s target of 40GW of green hydrogen production capacity by 2030 equates in energy content to around 12-15 billion cubic metres (bcm) of natural gas.

The largest electrolyser being built in Europe today has a capacity of 10MW, which makes achieving 40GW by 2030 a daunting prospect.

Electrolyser efficiency is expected to improve incrementally from 70% today to nearly 80% by 2030 if the ongoing R&D is successful, according to ITM Power,

Improved efficiency could raise production per MW to 500kg/24h per MW from the current 400kg/24h.

ITM expects eletrolyser costs to fall to £400/kW by the mid-2020s, based on upscaling the technology and increased manufactoring rates, which would lead to a 40-50% reduction Capex relative to today’s prices, depending on the size of electrolyser.

National pledges

Chief of the pledges was the most-recent strategy outlined by France, with 6.5GW of capacity planned for 2030.

Next in line is Germany, with 5GW expected for 2030, but plans for an additional 5GW by 2035 or 2040, making it the European nation with the largest overall pledged capacity.

The Netherlands and Spain have both earmarked 4GW, however the Netherlands’ overall low-carbon hydrogen production capacity will be larger, with blue hydrogen included in parts of its plan.

Lastly Portugal has pledged between 2-2.5GW by 2030.

Uptake of hydrogen

Two areas are at the forefront of all the strategies listed so far: transport and industry.

The latter is a key priority for both the commission and member states, as this remains one of the hardest areas to decarbonise.

Transport also features heavily in current plans, however there is a key focus on using hydrogen in areas where electric vehicles are not suited.

The result is a clear push towards using hydrogen in freight, HGVs, maritime, air and rail transport. There is additional mention of utilising excess renewable capacity for storage of electricity, adopting a power-to-X method whereby electrolysers could produce hydrogen for storage which can be used as flex.

Lastly, in the German, Dutch and Portuguese strategies there is acknowledgement of hydrogen in heating.

2024 falling short

Despite pledging over half of the EU’s 2030 target, European hydrogen strategies still lack near-term clarity. The commission also outlined the need for 6GW of electrolyser capacity to be installed by 2024, primarily to decarbonise industry.

However, of the five strategies reviewed, only the Dutch plan outlines capacity expectations within the middle of the decade. The Netherlands has outlined 500MW of electrolyser capacity to be online by 2025.

Additional reporting by Diane Pallardy