A consortium of Gasunie, Groningen Seaports (GSP) and Shell Nederland expressed their intentions to build Europe’s largest green hydrogen project in which 3-4 gigawatt of offshore wind will be delivered in 2030 and the ambition continues to extend the project to 10 gigawatts around 2040. The green hydrogen would initially be produced in the Eemshaven-Groningen, and potentially later expand production offshore. Total production is estimated at 800.000 tonnes per year, which primarily will be delivered to industrial users in the Netherlands and further afield in northwest Europe. Mapping this across hydrogen projects and activities globally, The Netherlands are doing quite well with 92 (Brazil 46, United Kingdom, 61, according to IEA data).
Minister Wiebes (Dutch Minister of Economic Affairs and Climate Policy) and IEA director Fatih Birol recognizing the need for all low Co2 alternatives, should arguably be delighted with this announcement, considering this was a topic of debate during the IEA’s World Energy Outlook in Den Hague. The IEA identified four near term opportunities that could increase hydrogen usage and are worth reflecting in the light of the NortH2 project.
However, this project is ambitious and in its early stages. The first step is a feasibility study, and much of its success will depend on it.
The Hydrogen Council authored a report last month “Path to hydrogen competitiveness. A cost perspective” which suggests that scaling-up will be the biggest driver of cost reduction, notably in the production and distribution of hydrogen and the manufacturing of system components. However, to reach the scaling up stage, there is a need for investment, policy alignment, and demand creation.
For the NortH2 project, national subsidies would cover some of the cost to produce hydrogen, but European and regional subsidies, together with lower Capex, in addition to a low energy price should cover the additional cost gap. The current energy prices for wind and solar power purchase agreement (PPA) range from $53 to $153 per megawatt-hour, whilst prices around $30 per megawatt-hour would be needed for the electrolyzers to be competitive with existing hydrogen production methods according to Wood Mackenzie experts. Even if electrolyser Capex is reduced with 70-80% in the next 5-10 years, price competition of green hydrogen with blue needs to be bridged.
Regions like Chili and Australia have access to wind and solar at low LCOE, offshore wind in Europe operates at less optimal conditions. Estimates for the optimal regions suggest that the cost of hydrogen per Kilogram could reach $2.50 by 2025 and drop to $1.20 in 2030. Green hydrogen from European offshore grids could reach $2.50 per kilogram by 2030.
Much would depend on the carbon and natural gas price, but at a carbon price of $50 per ton, blue hydrogen in Europe could drop as low as $1.80 in 2030.
Perhaps the European Green Deal’s Investment Plan, the Sustainable Europe Investment Plan and additional regulation on a carbon pricing could potentially support the NortH2 project further.
All in all, the NortH2 project is a great initiative and could pave the way to a net-zero goal.
The Hydrogen Zone at Gastech 2020
The Hydrogen Zone at the Gastech 2020 Exhibition will provide a spotlight on this fast-emerging fuel source and allow specialist companies from across the Hydrogen value chain, or larger companies looking to showcase their divisions focusing on Hydrogen, to showcase the latest products, services, and solutions.
The energy industry has the opportunity to be at the epicentre of the 4th industrial age, harnessing new technologies such as artificial intelligence, opportunities created by the ‘Internet of Things’, and increasing adoption of automation innovation.
Exhibit at Gastech 2020 - the Next Generation Gas, LNG and Energy Event
The Gastech Exhibition highlights the very best services, technologies and products from across the global gas, LNG and energy value chains. Spanning 55,000sqm, over 700 exhibiting companies and organisations choose Gastech each year to place their services in front of 35,000 international visitors – enabling them to secure new business, service existing clients and engage in dialogue with the companies, organisations and individuals leading the energy industry into the future.
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