Hydrogen energy – a geopolitical shake-up?

Elina Morhunova takes an in-depth look at the steps required to safely upscale future Hydrogen production to meet the global demand.

For quite some time, Hydrogen has been seen as one of the key components in the planet’s shift to renewable energy. It is considered the heavy lift alternative to pure electrical power and has the potential to become the choice component in the replacement of the internal combustion engine in vehicles with its key selling point being zero emissions.

However, not all hydrogen production is obtained though green methods and two types of hydrogen fuel are the points of discussion as we go forward in using this fuel as a key source of energy. Essentially, it’s down to how the hydrogen is processed. It can be blue which is zero-carbon hydrogen produced via fossil fuels with carbon capture or it is green which is produced via electrolysis using renewable energy. There are other colour codes such as yellow (nuclear) and grey/black (natural gas) and all determine the source of the process.

Here we will focus on the green and blue sources which are two sides of the same coin and when it comes to policy, any documents driven to launch a European hydrogen market is aimed not only at the heightened ambitions of achieving climate-neutral Europe, but also at new geopolitical dynamics in the energy puzzle.

Market dimension matters

Any part a country could play in hydrogen market will hinge on its capability to produce and distribute renewable hydrogen at a competitive cost and on a large scale, and geopolitical trends will not only depend on the dynamics of the relative systems and markets, but also on the dominant sources of energy.

If there is ever case of of hydrogen supply disruption, it will depend on how global the market will expand. Provided liquefaction and transportation across thousands of miles were at competitive pricing, supply disruptions in one part of the globe could result in a shift global prices. Despite that, it appears plausible that green hydrogen, similar to natural gas, will primarily bloom in regional markets.

At the same time, regional markets adversely impact on a country’s energy security by removing opportunities for expanding supply and determining alternatives in the event of interruptions. That is particularly relevant if hydrogen were to be transported via pipelines and there was no alternative infrastructure.

Surplus dilemma

By 2035 renewables will account for about 80% of the electricity mix but in  order to meet such a target, the mix will be required to generate a surplus since once those account for greater than 40% of demand. But there is always  room for extra which means that to reach 80% of demand, renewables will be required to generate 120% of demand and deliver 40% of surplus accordingly. The only scalable technology capable capable to soak up such amount of electricity are electrolysers and surplus renewable electricity should the pathway to which the EU follows.

An analysis of a range of EU electricity markets  such as Denmark, Germany and Spain suggests that electrolysers in the right place and with the right size would enjoy capacity factors greater than 40% which greatly reduces capital expenditure impact. With an 80% penetration of renewables into load and a 40% surplus, electrolysers will enjoy good capacity factors.

Green defence strategies

The next decade may see a case of geopolitical plans of action aimed at defending a country’s energy security and that will be applicable to green hydrogen. Building strategic storages, such as natural gas installations could prevent a country from running dry even during longer supply disruptions. Given the second side of that coin being posed by severe safety and environmental concerns, supply diversification will be required to reduce the risk of politically motivated supply interruptions and protect the country’s energy security.

Finally, as key economic sectors and critical infrastructure become dependent on hydrogen, the extent of the amount of dependency needs careful monitoring. A substantial bulk of industrial applications are likely to be directly electrified and a disturbance in the transmission grid could thus pose some devastating effects and disruptions to hydrogen supplies. Nevertheless, in the case hydrogen was also to be used in power generation, supply interruptions would immediately affect the grid and all customers. Hydrogen supply interruption would have a more delayed impact as shorter ones could be buffered with supplies from storages or fuel switching but whatever the outlook, there is no doubt that the use of hydrogen in everyday industrial environments will become as common as oil or gas once was and that must be a positive outcome.

To update a well know quote from an 80s movie, green is good but it needs good safety and security infrastructure too.

Figures quoted from source iea.org.