Hydrogen around the world
Anyone researching global hotspots for the production of green hydrogen would do well to have an atlas to hand – the list includes some exceptionally remote areas. One of them is Inner Mongolia, a region in northern China featuring endless grassy plains, hundreds of rivers and lakes, and stretches of desert. In a recent study by the International Energy Agency (IEA), Inner Mongolia is marked in red on a world map of ideal locations for wind and solar power generation.
In the foreseeable future – by 2030, to be precise – the IEA anticipates that it will be possible to produce clean power for less than USD 0,02 per kilowatt hour (kWh) there. What is more, the region boasts a plentiful supply of water – the raw material for electrolysis, the process whereby it is split into its component parts, oxygen and hydrogen. There is also no shortage of space for wind and solar farms. Finally, Inner Mongolia is very sparsely populated, so there are unlikely to be any issues with minimum distance rules.
China is already among the world’s leading hydrogen producers, but to date the gas has been used mainly by the petrochemical industry, and obtained by recourse to coal gasification. The country does not yet have a comprehensive hydrogen strategy, according to German development agency GIZ, which acts on behalf of several German ministries. However, the National Energy Administration (NEA) is already working on a first draft, while according to trade journal China Market Insider, at this year’s National People’s Congress support for the hydrogen industry and fuel cell production was codified in the current Development Plan for the first time.
Meanwhile, a number of ambitious projects are already under way. For instance, financial news agency Bloomberg recently reported on a USD 3.3-billion dollar project by the state-owned Beijing Jingneng Power Company, combining wind and solar power generation with hydrogen production and storage at a site in Inner Mongolia. The 5-gigawatt (GW) complex, which is scheduled to be ready in 2021, will produce up to 500,000 tonnes of hydrogen each year.
China: Projects on a large scale
No further details have been released, but the project is clearly way ahead of the curve by global standards, in view of the dual energy source – which requires a bigger investment but increases the number of full-load hours, thereby reducing production costs – but also in terms of sheer scope: with the plant, China is putting into practice a concept that in Germany exists only on paper: large-scale industrial production of green hydrogen.
And there is no shortage of other new projects. In early June, Japanese carmaker Toyota announced a research joint venture with leading Chinese manufacturers (FAW, Dongfeng and BAIC), along with fuel cell specialist Beijing Sino Hytec, to develop vehicles using cost-effective fuel cells to convert hydrogen into electrical energy. The initial focus is on buses and trucks according to China Market Insider, which reports that municipalities are already being encouraged to convert their utility vehicles to run on environmentally-friendly hydrogen. The state is offering generous subsidies for H2 fuelling stations, and plans to have built the first 100 by the end of this year.
GIZ expert Yuxia Yin confirms that “China is in the early stages of a crosssector green hydrogen economy.” She cites the broad political support for hydrogen, particularly in the mobility and transport sector, while also observing that integration and storage of renewables and decarbonisation of energy-intensive sectors have an important role to play in this regard. This trend is corroborated by several recent studies concluding that the People’s Republic is poised to become a leading player in the green hydrogen arena in the coming years. In its Hydrogen Outlook, the IEA anticipates that hydrogen produced in Inner Mongolia could become competitive by 2030, even when transport costs are taken into account, given the availability of cheap clean power but also the falling investment costs of electrolysis equipment.
However, the projections vary widely: while the IEA calculates that the hydrogen would cost at least USD 500 per kilowatt (kW) to produce at present (falling to USD 400 in ten years), experts at Bloomberg New Energy Finance (BNEF) believe that Chinese plants are already in a position to deliver hydrogen for just USD 200 per kW, and that by 2030 costs will fall to USD 115, primarily as a result of economies of scale and increased automation in component manufacturing. This in turn would mean that the price of green hydrogen could fall below USD 1.50 per kg – an important threshold, marking the point at which it could undercut its major rival, blue hydrogen (produced from natural gas with carbon capture and storage).
Morocco: Potential to become a big player
Morocco is Africa’s renewable energy showcase. Ouarzazate is already home to the world’s largest solar farm, built with help from Germany. The next major step is green hydrogen. In early June, German development minister Gerd Müller (CSU) signed a declaration of intent to build a production facility in the country as soon as the Federal Government had announced its own National Hydrogen Strategy. Extensive areas of the north African country are marked in red on the IEA’s world map. According to GIZ, the generation costs of solar, onshore and offshore wind electricity could be as low as 1 or 2 eurocents per kilowatt-hour (kWh) by 2030. Assuming favourable conditions such as rapidly falling investment costs, high full-load hours and optimal efficiency factors, this would allow carbon-neutral hydrogen to be produced for around EUR 1 per kg.
Farhanja Wahabzada, a GIZ expert and co-chair of the German-Moroccan Energy Partnership (PAREMA) secretariat, explains the plans: “In the short and medium term there are two pillars for the development of a hydrogen economy in Morocco. One is the use of green ammonia in the fertilizer industry to reduce the country’s dependence on imports.” The other consists in exporting power-to-X products – fuels generated from renewable energy sources. In the long term, these products could also be used domestically for energy storage or in the transport sector.
The first step is a 100-megawatt (MW) reference plant to be built with support from German development bank KfW. In a decarbonised world, Morocco has the potential to become a major player in the power-to-X arena. The Fraunhofer Institute for Solar Energy Systems (Ise) estimates that the country could meet four percent of global demand. Ise experts have examined how exports to Germany might work in a projection for 2030 that assumes generation costs of 2.5 eurocents per kWh for both wind and solar. For the electrolysis process, seawater would have to be desalinated and the hydrogen would have to be prepared for transport. The cheapest and most efficient method would be to liquefy it, which would require subterranean intermediate storage facilities and a plant to convert it to liquid form at high pressure, to be pumped into special ships for transport to a terminal in Germany.
The IEA paper recalls that a comparable process – liquefied natural gas (LNG) – has given rise to a well-functioning market with numerous terminals in Europe in recent years, and suggests that hydrogen could follow a similar course. According to the projection, on arrival in Germany the liquefied hydrogen would cost EUR 126 per megawatt hour (MWh), the equivalent of EUR 4.19 per kg assuming large-scale production. Comparable costs (EUR 124 per MWh) would result from converting the green hydrogen to synthetic ammonia using nitrogen. For synthetic methanol, the cost is estimated to be somewhat higher at EUR 146 per MWh, but the exciting thing about this process is that it binds carbon dioxide, e.g. from industrial processes.
Methanol and ammonia are of particular interest to chemical plants, which rely on them as raw materials for countless products. The problem, however, is that the cost of all these processes can be cut by around half or even more in relation to the 2030 figures forecast for green hydrogen by using hydrogen obtained from fossil natural gas. Nevertheless, this disparity can be substantially mitigated by high carbon pricing for fossil alternatives, or a requirement for hydrogen generated from fossil fuels to involve capture and underground storage of the resulting carbon emissions. For both variants, the IEA anticipates prices between USD 1.50 and USD 3 per kg in 2030.
Chile and Patagonia: Wind to spare
Chile and Patagonia are among the secret favourites for a place near the top of the list of hydrogen-producing countries. On the IEA map, the country on South America’s west coast and the continent’s southern tip are also marked in dark red. “Chile is in the process of establishing both a local value chain and an export market for green hydrogen. In view of the country’s huge renewable energy potential, this can be done without causing conflicts,” says Rainer Schröer, an expert on renewables and the Chilean energy sector at GIZ.
The conditions are perfect, he observes: the country is already in a position to produce green hydrogen for between USD 2 and USD 3 per kg under certain circumstances. The gas could be used locally to power vehicles in the mining sector, a mainstay of the economy, Schröer argues, adding that ships, trains, overland buses and heavy goods vehicles could also all be made to run on fuel cells, while green methanol and ammonia could be used in the country’s industrial sector or exported.
When it comes to international trade in the volatile gas, Chile enjoys a number of advantages, Schröer says: it is already well equipped in terms of infrastructure, with gas pipelines and ports where liquefied hydrogen can be pumped into ships. Potential customers include Germany and other EU countries, Japan, South Korea and California. Chile’s greatest trump card, however, are its excellent conditions for clean power generation. According to GIZ, the country’s combined potential for solar and wind power exceeds 1,800 gigawatts (GW). Generation costs could soon drop below three eurocents for wind and two eurocents for PV, the agency predicts.
Of particular interest is the region of Patagonia, shared between Chile and Argentina, at the southern tip of the American continent. The sparsely populated region almost three times the size of Germany, enjoys constant stiff wind. According to Jülich Research Centre, Patagonia is one of the world’s most promising regions for hydrogen production from onshore wind – in terms of both price and volume. In a scenario exploring the region’s potential to supply hydrogen to Japan, experts at the research centre calculate that the Argentinian part alone could produce upwards of eleven million tonnes of hydrogen per year, at a cost of around EUR 4.40 per kg including transport to Yokohama. For exports to Germany, the price would be around 10 percent lower.
This would involve erecting some 33,000 turbines, with a total capacity of 115 GW. The calculations are based on high-performance Enercon machines, and assume 4,750 full-load hours per year. In the scenario, the resulting electricity would power distributed electrolysis facilities, and the resulting hydrogen would be compressed to 100 bar before being fed into a branched pipeline system for transport to the port town of Comodoro Rivadavia, where it could be liquefied and stored in massive tanks to even out fluctuations in production and shipping. In theory at least, the new hydrogen world is ready to go – but getting it up and running in practice is likely to take some time yet.