Dive into the compelling world of green hydrogen in Episode 8 of the IGTE Hydrogen Series, "Hydrogen Horizons: Decoding the Future of Energy." Host Chris Sass engages with guest Adithya Bhashyam in a thought-provoking discussion about the evolving hydrogen energy sector and its potential to revolutionize our approach to clean energy.
The episode kicks off with an insightful analysis of the current hydrogen energy landscape, highlighting the challenges and opportunities in scaling the clean hydrogen industry. The conversation covers the ambitious goal of transitioning to green hydrogen, with a focus on the existing fossil hydrogen demand and the need to increase clean hydrogen production to 500 million metric tons by 2050 for achieving net-zero compliance.
Aditya Bhashyam brings to light the current state of hydrogen projects, emphasizing the gap between the potential supply and the actual progress made in terms of final investment decisions. The discussion navigates through the complexities of the economics surrounding these projects, underlining the critical role of incentives and subsidies in fostering the adoption of clean hydrogen.
An exciting aspect of the episode is the exploration of ELECTROLYZER sales and technology, including a dive into alkaline and proton exchange membrane technologies, manufacturing trends, and geographic distribution. The conversation also touches upon the cost dynamics of green hydrogen and the pivotal role of government incentives in making green hydrogen a viable alternative.
The episode concludes with a forward-looking perspective on the hydrogen sector's trajectory, its implications for energy security, and the significance of carbon pricing in the energy landscape. This in-depth discussion provides listeners with a comprehensive understanding of the hydrogen energy sector, its challenges, and the bright future that lies ahead in the pursuit of sustainable and clean energy solutions.
### Transcript of IGTE Hydrogen Series Episode 8: Hydrogen Horizons: Decoding the Future of Energy
"This edition of the Insiders Guide to Energy Hydrogen Miniseries is brought to you by Forrs, a leading international strategy and management consultancy, with a focus on the entire trading value chain."
#### Speaker 4: Episode Introduction
"This episode of the Hydrogen Series is brought to you by Distributech International. Distributech International is taking place in Orlando, FL, from February 26th to 29th. Insiders Guide to Energy is a proud media partner of Distributech International. On today's show, we're going to talk about the data that shows how we're doing on hydrogen transformation to green hydrogen."
#### Speaker 4: Topic Introduction
"I think it makes sense for you to start out by sharing with us what you're seeing in the data today."
#### Speaker 3: Hydrogen Market Analysis
"Yeah, absolutely. There's a lot of hope and promise for a scaled-up clean hydrogen sector. There is about 100 million metric tons of fossil hydrate demand already today that needs to be decarbonized. And according to our own analysis, if the world wants to be compliant with a net-zero pathway, clean hydrogen demand needs to reach about 500 million metric tons by 2050. So we need to use clean hydrogen in a lot of new sectors where it's not used today. That's from steel to heavy transport."
#### Speaker 3: Decarbonization Targets
"All of these sectors need to use some level of clean hydrogen and have few alternatives to decarbonizing otherwise. Where we are today compared to that target is there are lots of projects announced. We are tracking over 170 million metric tons of clean hydrant supply that could come online if all projects announced were built. So that's more than existing demand already. But less than 10% of projects of that by count have taken a final investment decision, and probably just a couple of percentage points of the total announced supply have taken a final investment decision. So only a small share of the total pipeline is close to a financing decision or is under construction."
#### Speaker 3: Challenges in Hydrogen Projects
"Today, and why that is not happening, is because the economics, in most cases, for these hydro projects don't work out without further incentives and subsidies for uptake of clean hydrogen."
#### Speaker 3: Positive Developments in Hydrogen Equipment
"Despite that, we see a lot of positive developments as well. If you look at the sales of the core equipment, ELECTROLYZERS, which are needed to produce hydrogen by splitting water into hydrogen and oxygen using renewables. Those sales have been doubling every year since 2020. So we are now in a we we think at DNF sales of ELECTROLYZERS will reach about two, two gigawatts for the first time this year and maybe three to three to five gigawatts next year. So again, I'm doubling next year, and that's not stopping anytime soon, despite incentives not being there yet. So it's an expansion of the exponential growth market at the same time."
#### Speaker 4: Inquiry on Electrolyzer Production
"On the electrolyzers that are being built, is it mostly taking place in China, and is that also to meet just the current demand curve? We're not seeing it in new uses for most of that, are we?"
#### Speaker 3: Electrolyzer Manufacturing Trends
"So in terms of the manufacturing, what we're seeing is that most announced manufacturing, about 70% of it, is located in China just because Chinese companies are expanding manufacturing capacity quite rapidly. At the same time, Chinese companies are not selling overseas yet. So unlike in solar and batteries, for example, local domestic demand in Europe and the U.S. is currently mostly met through European and American electrolyzer manufacturers."
#### Speaker 3: Global Electrolyzer Demand
"As well, so we have to see how that changes in terms of sales until I think this year we were seeing a very dominant sales pipeline in China where most projects, the largest projects were just being built in China. But that is slowly changing as well. Europe and the U.S. are building larger and larger projects. So demand for electrolyzers is rising in these markets as well. So it's balancing out somewhat."
#### Speaker 4: Electrolyzer Technology Shift
"And then you know, one of the things I'd read recently is that the current electrolyzers being built are alkaline based. Is that something that is relevant to this conversation in that number, or is there a technology shift that we're hoping to see to meet this demand going
forward?"
#### Speaker 3: Alkaline vs. PEM Electrolyzers
"Yeah, it really depends on how you look at it. If you look at the global numbers, over 70% of the electrolyzers being made and sold are alkaline. But that's heavily skewed by China. Chinese electrolyzers are 90-95% of them are alkaline, and China has had the largest deployment of electrolyzers so far, which is why that number is skewed. If you just look at the U.S. or Europe separately, it's really 50-50 between alkaline and proton exchange membrane electrolyzers, which are the other technology which has more R&D minded in Europe in particular, and the supply chain isn't as clearly concentrated in China as it is for alkaline electrolyzers."
#### Speaker 4: Discussion on Demand Side
"And then you know, we jumped right into the used and the doubling of production. I guess one of the things that's important if you're producing you need demand side. So you gave some fairly large statistics or numbers of what we need to hit. But the market's not going to take it until it gets to a certain price. So what is the number that we're trying to hit for the cost of green hydrogen or low emission hydrogen?"
#### Speaker 3: Cost Dynamics of Green Hydrogen
"Yeah, green hydrogen today at the production site in most cases costs somewhere between, let's say 6 and $12.00 per kilogram. It can be cheaper than that, but in most cases, it's somewhere between that, and it can be more expensive than that when you incorporate transfer and storage costs. Today, the fossil alternative, Gray hydrogen made from natural gas costs anywhere between one and $3 per kilogram to make, and that's really where you need to go with green hydrogen and costs. If you want to compete with fossil fuels directly, I think the way to look at this though is that the cost of fossil hydrogen and fossil fuels will also increase over time due to carbon tax incentives to use and uptake low carbon hydrogen. So maybe you don't need to be as cheap, but that's roughly the range where you need to get green hydrogen to for large scale uptake without incentives."
#### Speaker 4: Government Role in Hydrogen Sector
"And when you talk about government's role, at least on the supply side, there seems to be a lot of incentive being put there. Maybe talk a little bit about some of the incentives that you see on the supply side that are being in place. So let's say in the U.S. or other places, what's happening, let's say with the IRA?"
#### Speaker 3: Government Incentives for Hydrogen Sector
"Yeah, absolutely. And we had been applying to track available subsidies going towards the hydrogen sector between now and over the next decade or so. And what we found is that there's about $308 billion in capital committed by governments to scaling up the hydrogen sector, mostly through the U.S. Inflation Reduction Act and the projects that that could fund, but also in Europe and a tiny bit in Asia as well."
#### Speaker 4: Conclusion
"Awesome. I really appreciate you coming on and sharing your insight and the numbers that you pulled together. I hope that we can get you back in the future and see how we did so later in 2024. I'd love to come back and just see what the trend is again. Thank you so much for coming on the Insiders Guide to Energy podcast."
#### Speaker 3: Closing Remarks
"Absolutely. It was my pleasure."