Hydrogen from renewable energy is being touted as the “missing link” in the global energy transition – a fuel that can fill in the gaps left by variable renewable energy (VRE) systems and technologies like battery storage. This would ideally allow for deep global decarbonisation within a few decades in order to mitigate the effects of climate change induced by anthropogenic activities. Over 60 million tonnes of hydrogen are produced every year for various industrial applications (ammonia production, hydrocracking and removing sulphur from fossil fuels). A staggering 95% of this is hydrogen is sourced from fossil-fuels through steam methane reforming (SMR) and coal gasification with a mere 4% extracted from water electrolysis.

Electrolysis holds the potential for being a sustainable source of hydrogen production as electrolysers can be powered by renewable energy sources like solar and wind. Interestingly, the concept of renewable energy powered electrolysis has been around for decades – until the 1960s, hydrogen was produced by hydropower-based electrolysis to make ammonia in Norway, but low gas prices and the emergence of SMR led to hydrogen production moving towards fossil fuel based production, and the trend has remained such ever since. Now, however, with rapidly declining renewable energy prices and a global focus on reducing GHG emissions, renewable energy based electrolysis is near feasibility again and can be cost-competitive with fossil-fuel based hydrogen production methods. Having said that, there are a number of challenges still left to overcome if green hydrogen (hydrogen from renewable energy) is to be a significant player in the global transition and these are discussed in the sections that follow:

Building the hydrogen supply chain

The progressive deployment of hydrogen end-use applications will require the joint ramping up of a hydrogen supply chain, including additional capacity for production, purification and pressurising for transport, and transport and distribution capacity. The structure of the supply chain will be influenced by the following 3 factors:

• The availability of existing hydrogen sources or feedstock to produce hydrogen in the vicinity of hydrogen demand compared to the cost of on-site production, as hydrogen production is the most capital intensive part of the whole process
• Beyond a certain level of consumption, on-site production or delivery via dedicated pipelines might be the only viable mainstream mode of supply.
• Investment in new-large scale production will likely be made only if a large part of the production is sold to a single client with a long-term contract to minimise financial risks involved with such an endeavour. Big new investments could also be justified using a sufficient equity buffer to cover initial loses or financial de-risking instruments offered by policy makers.

Initial investment in new hydrogen production should be focused on multi-megawatt capacities for large customers via long-term supply contracts (hydrogen trains, boats, bus fleets, regions covering natural gas grids to a hydrogen grid etc.) These new production centres could then slowly be leveraged to become centralised sources of hydrogen supplying smaller local consumers through investment in Hydrogen conditioning and filling centres, as well as logistics. Finally, as hydrogen applications reach the mass market and renewable power expands, regional disparities in the availability of hydrogen could emerge which would lead to regions with surplus hydrogen exporting to regions with a deficit of the product. This would result in a robust international hydrogen market between countries with large renewable potential and countries with large hydrogen demand and costlier or limited renewable energy potential.

Decoupling production of hydrogen from freshwater

 In a world where finite freshwater reserves are being put under increasing stress from global economic and population expansion, using hydrogen produced from freshwater to power various industries is inconceivable on a large scale. With both developed and developing countries struggling with water securities adding hydrogen to the list of water consuming products would cripple already stressed water utilities and would put global water security under enormous risk.

Producing hydrogen from salt water would go a long way towards tackling this issue and keep hydrogen away from freshwater, which is required for human consumption and other critical industries. Various universities and private organisations across the world are working on making hydrogen from salt-water electrolysis a commercial reality as many trials have already been successful. For example, one of the potential solutions is layering nickel-iron hydroxide on top of nickel sulphide, which covers a nickel foam core within the electrolysis chamber. This is done to repel chloride which is a by-product of salt-water electrolysis and is a reason behind very rapid corrosion of the positive electrode.

Formulating a suitable policy landscape

Regulations are currently limiting the development of a clean hydrogen industry globally. Governments and industries must collaborate to ensure that regulations do not become an unnecessary barrier to rapid uptake of hydrogen from renewable energy and enable new regulations that will accelerate the growth of hydrogen for end-use applications in industries all over the world.

One way to encourage this is to develop certification systems and regulations for carbon-free hydrogen supply. It is essential to ensure that future hydrogen supply is climate-compliant, especially in cases where hydrogen is exported across large distances, its origin would need to be verified. Another major step towards globalised adoption of hydrogen from renewable energy would be to include the hydrogen economy in the next edition of the Paris Climate Accords, due in 2020. Greater cross-border collaboration and information exchange would also go a long way towards greater dissemination and standardization of hydrogen for various end-use applications.

Making a business case for hydrogen from off-grid VRE

When an electrolyser is directly connected to an off-grid VRE plant. The electrolyser will have to follow the variable generation patterns of the VRE plant, which requires flexible operation and is thus more suitable for a PEM electrolyser. Due to this, the CAPEX component of the Levelised cost of hydrogen (LCOH) will be driven by the load factor of the VRE plant. For lower load factors in an off-grid setting, the LCOH will be higher and thus the amortisation needs to be allocated to a lower volume of hydrogen production. Thus in this setting, hydrogen can only be produced at a competitive cost when the cost of VRE and the CAPEX of the electrolyser drops further. In the short-term the load factor of electrolysers in off-grid scenarios can be increased by connecting them to combined solar and wind power plants, the use of concentrated solar power (CSP) with thermal storage or through the use of batteries to optimise electrolyser efficiency.

As the technology matures over the next decade, the case for connecting an electrolyser directly to a VRE plant could yield a better business case. Towards such goals, policies that encourage decarbonisation of the energy system could trigger large scale deployment, and consequently, further cost reductions.

Can green hydrogen fulfil its potential?

In a world striving to mitigate and adapt to global warming, the market for green hydrogen can only see an upward trajectory. The fuel is currently enjoying significant political and business momentum, with the number of projects around the world expanding rapidly and a larger number of hydrogen friendly policies being formulated. Having said that, efforts have to be ramped up even further if green hydrogen has to make a significant contribution to global decarbonisation initiatives. To this extent, it is essential that governments and private institutions alike work together to maximise the potential that green hydrogen has to accelerate the global energy transition.