Siemens Gamesa plans fossil-parity hydrogen from onshore wind by 2030

Renewable energy technology company Siemens Gamesa is targeting renewable hydrogen from onshore wind power at price parity with fossil fuel-derived hydrogen by 2030 in Europe and beyond, and sees production from offshore wind as cost-competitive by 2035, the company said June 9.

A rapid uptake of renewable hydrogen in hard-to-electrify sectors in the short term was possible using existing wind generation co-located with an electrolyzer and batteries to store surplus energy, Siemens Gamesa said in a report.

Such developments would help the EU achieve its target of 40 GW of installed electrolyzer capacity for producing green hydrogen by 2030, it said, but warned that hydrogen production capacity must accelerate urgently.

"When it comes to green hydrogen, we need to act now," Siemens Gamesa CEO Andreas Nauen said in a statement. "It took three decades for wind and solar to reach grid parity with fossil fuels, and we cannot afford to wait that long for green hydrogen to reach price parity with fossil-based hydrogen."

Renewable electricity from wind would play a key role in accelerating green hydrogen production, Nauen said.

"We need a consensus between industry, policymakers and investors to rapidly develop the demand-side market, build the supply chain and roll out the necessary infrastructure," to accelerate green hydrogen production, he said.

Siemens Gamesa said wind farms with expiring feed-in tariffs or those located in markets with volatile demand or pricing could be particularly suitable for incorporating renewable hydrogen production, along with sites close to existing hydrogen demand centers.

These would accelerate the green hydrogen production rollout, as well as add flexibility to the power grid, the report said. Hydrogen produced from such facilities would be cost-competitive with fossil fuel-derived hydrogen by 2030, it added.

Offshore wind

Siemens Gamesa aims to bring a prototype offshore wind-to-hydrogen technology to the market in the next five years, it said, with a first industrial-scale wind plant shortly after.

"If the first 2 GW of offshore wind-to-hydrogen plants are installed by 2030, followed by another 10 GW by 2035, the volumes will provide the scale needed for offshore hydrogen to reach cost parity by 2035," the report said.

RWE Renewables COO for global offshore wind Sven Utermoehlen said that around 2 GW of offshore capacity was the threshold for making a hydrogen pipeline connection from offshore wind production more economical than a power cable. Speaking at an event to launch the Siemens Gamesa report, he noted that a collaborative approach would be key.

"Somebody needs to make that leap of faith and build that pipeline and build it big enough, 2 GW, 4 GW, maybe [up to] 6 GW or 7 GW of capacity, trusting that then the respective wind farms and electrolyzers will come to fill it," Utermoehlen said.

Siemens Gamesa said three factors could drive cost-effective industrial-scale renewable hydrogen production: wind turbines that were independent of grid connections, and so could maximize output; directly integrating electrolyzers into turbine systems to increase hydrogen output per kWh; and standardizing modular design to increase supply chain efficiencies and reduce costs.

Market prices

Low-cost solar and wind resources could start to achieve price parity with fossil fuels for hydrogen production in the next five years in prime global locations such as Chile, Saudi Arabia and Australia, Siemens Gamesa said. Production costs could fall to around Eur1.5/kg for the best-case wind scenario, and around Eur2/kg for solar installations.

"Innovation and expansion of green hydrogen is not dependent on a market in the short-term, but visibility into future pricing will be needed as the scale and ambition of projects increases," it said.

S&P Global Platts assessed the cost of producing hydrogen via alkaline electrolysis in Europe (Netherlands, including capex) at Eur4.40/kg ($5.36/kg) June 8 and at $4.48/kg in Japan on June 9.

Challenges and opportunities

Echoing sentiments expressed across the industry, Utermoehlen said a clear and simple regulatory framework was the main obstacle for developing a renewable hydrogen economy in Europe, and that incentives to stimulate demand were needed.

"We are ready as an industry to build this," he said.

The IEA's head of renewable energy Paolo Frankl said identifying and fostering demand in the right sectors was key, and that the developing renewable hydrogen industry should target the low-hanging fruit, such as decarbonizing existing industrial hydrogen production.

To give a sense of the size of the challenge, but also the opportunity, Frankl said, global electrolyzer capacity needs to rise to 3,000 GW by 2050 and to 850 GW by 2030 from the just 350 MW now to meet net-zero targets.