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In recent years there has been increasing interest in hydrogen, both in the Netherlands and Europe and beyond. In the first instance, hydrogen is being used in industry and for mobility. Hydrogen is expected to play only a limited role in the built environment in the next few years.

Hydrogen

We can distinguish three types of hydrogen: grey, blue and green hydrogen. First of all, there is grey hydrogen. This is hydrogen produced from natural gas or coal. During its production, CO2 is released, so we talk about grey hydrogen. Most of the hydrogen produced today is grey hydrogen. Secondly, there is blue hydrogen, in which natural gas or coal is also the raw material. However, the CO2 that is released during production is captured and stored. This makes blue hydrogen CO2 neutral. Finally, we speak of green hydrogen when it is produced from sustainable sources, such as solar or wind energy. Besides being the most sustainable, green hydrogen is also the most expensive form of hydrogen. Currently, green hydrogen production forms approximately 1% of total hydrogen production.

DNV expects that in 2050 hydrogen will contribute approximately 24 Exajoules (EJ) per year as an energy carrier. The main markets are maritime and transport. Other sectors are expected to follow with some delay.

Climate agreement

The climate agreement contains several goals about the use of hydrogen, including:

• In 2025, approximately 75,000 tons of hydrogen can be produced from water in the Netherlands. This would require an electrolysis capacity of 500 MW
• By 2030, the electrolysis capacity will be 3 to 4 GW and 300,000 cars will be running on hydrogen.

The central government is investigating whether the current gas network can be used for the transport of hydrogen in the future.

At the beginning of July 2021, the cross-sectoral working group on hydrogen proposed, among other things, the rapid upscaling of offshore production of renewable electricity from wind, and in the future possibly from solar.

Offshore wind

The offshore wind market is expected to grow strongly in the coming years; from around 29 GW installed capacity in 2019 to more than 200 GW in 2030 and even around 1,000 GW installed capacity in 2050. With this, offshore wind is expected to account for almost 20% of the total installed wind capacity.

Europe is the leader in offshore wind production. Asia is strongly emerging and will in the future produce more offshore wind than Europe, with a possible offshore wind production of >600 GW in Asia against >200 GW in Europe in 2050. In addition, it is foreseen that there will also be a lot of offshore wind capacity in North America. Europe and East Asia are also the regions where most hydrogen projects are planned.

Capacity

As mentioned, proposed hydrogen projects are mainly planned in Europe and East Asia. In addition, there are initiatives in North America and Australia and to a lesser extent South America.
70% of the announced production capacity comes from renewable energy sources. The remaining 30% will come from low-carbon hydrogen generated by fossil fuels in combination with carbon capture & storage (CCS).
Combined solar and wind power will be the main source of electricity for hydrogen production, followed by offshore wind and solar.
The ambition of the European Union is to install 40 GW electrolysis capacity by 2030 in the European Union and another 40 GW in North Africa.

An example of a new project combining offshore wind and hydrogen is NortH2, a consortium of Equinor, Gasunie, Groningen Seaports, RWE and Shell. The project involves the production of large-scale green hydrogen from offshore wind power. NortH2's objective is the production of 4GW by 2030 and 10GW by 2040.

Future of green hydrogen

In the future, green hydrogen is expected to represent a larger share of the total hydrogen produced. The ability to be cost competitive is currently the main challenge for green hydrogen.
Among other things, the location and size of the project will determine the price, as will the price of electricity. In addition, the speed with which governments shape the energy transition is important for the pace of adaptation of green hydrogen. At some point, economies of scale and cost reductions in renewable energy and electrolysis will make green hydrogen more competitive.

JBR

JBR has been an advisor to companies in the energy and maritime & offshore sectors at home and abroad for many years. We can assist you with issues of strategy formation, corporate finance and restructuring. For more information about our sectors and services, please visit www.jbr-consultancy.com.