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How many times have you heard about the energy transition? It is a concept that has been part of our lives for a few years now. At least for those of us who are part of the Renewable Energy sector.
In this forum, I am not going to reveal to anyone the need to change the way we consume energy. And when I talk about “the way”, I want to cover all concepts: how it is generated, technology used, efficiency in transformation and use, it’s distribution and storage. But I do want to tell you that we have to broaden the focus of action until now concentrated on electrical energy.
At ENERTRAG, an independent energy company, we have been dedicated to the generation of renewable energy for more than 25 years and now we are going forward, one step further, one energy ahead... We are already in the era of green hydrogen and have been operating a green hydrogen production plant since 2011 and now developing 50+ green hydrogen projects across the globe.
Why hydrogen?
Electrification with electric motors, heat pumps, batteries etc. is great and where it is possible it is almost always the most efficient and economical solution. However there are also sectors and industries that are hard or impossible to electrify, because of the necessary energy density (not provided by batteries), the need of a feedstock (not electrons), or temperature requirements in existing kilns. These sectors include steel making, shipping, air transport, petrochemicals and fertilizer production, and the cement industry. Green hydrogen, which is produced by electrolysis of water using renewable energy (such as solar or wind), can help decarbonize these sectors. For some of these use case – particularly shipping, air transport, and the substitution of fossil methanol and ammonia in chemicals and fertilizer – what is required is not hydrogen directly but its derivatives e-methanol, e-kerosene, and e-ammonia, the former two of which also require a biogenic source of CO2 apart from green hydrogen for their production.
Additionally, hydrogen can act as seasonal energy storage vector allowing excess wind and solar energy to be absorbed at times of high generation and released when the resources are lower. While the full-cycle efficiency is much lower than for batteries, this can help balance longer-term discrepancies between (renewable) supply and demand.
Of course, hydrogen is not a panacea... For the time being, it provides a technological solution to some of the great challenges of the energy transition. But there is another, even bigger challenge. Profitability.
Producing hydrogen at scale requires a tremendous amount of electricity and it requires costly electrolyzers whose prices have increased rather than come down over the last year. This results in costs of green hydrogen and its derivatives that are 3-8 times their fossil equivalents. I told you that it was a very big challenge!
Of course, as with any technological advance, it must go through a learning curve. This requires significant R&D and investment to improve, simplify, and enhance the efficiency of hydrogen and its derivatives’ production and transport processes. These will, without a doubt, lead to a reduction in generation costs. But it cannot yet be borne fully by producers. Just as renewables needed Feed-in-Tariffs to run down the learning curves, so does green hydrogen need regulatory intervention in the form of both sticks (quotas for green hydrogen as in “RED III”) as well as carrots, i.e. grants and other subsidies. We have already achieved grid parity with wind and solar PV energy in many places, now we will have to achieve the same with green hydrogen.
In Portugal, the necessary conditions are met to develop green hydrogen generation projects in a more efficient way than in most other places in the world and certainly in Europe. It has a good wind, solar and water resources, it has a developed electricity grid, and not least, it has a tremendous amounts of biogenic CO2 available. There is still much work to be done, but the opportunity is huge!
In addition, Portugal is part, together with Spain, France and Germany, of the H2Med green hydrogen corridor project. H2Med corridor consists of connecting the hydrogen transport pipeline of the Iberian Peninsula with northwestern Europe, with the aim of transporting around 10% of the total hydrogen consumption forecast for Europe by 2030, of the 20 million tons expected to be consumed annually.
We, as a society, must work to conserve the planet in livable conditions, and this requires to reach Net Zero by 2050 and to safeguard the natural resources that are essential for our survival and our next generations. ENERTRAG for one is committed to the energy transition, its pipeline of renewables projects as well as green hydrogen projects globally and in Portugal.