INTERVIEW: Topsoe CEO sees pathway to low-cost green hydrogen despite headwinds

Topsoe CEO Roeland Baan is sanguine about the energy transition, even amid sector headwinds marked by policy setbacks and investment delays, and is confident the company can deliver meaningful renewable hydrogen cost reductions by the end of the decade.

Topsoe is eyeing 60% hydrogen production cost reductions from its solid oxide electrolyzer technology by 2030, driven by larger stack sizes and higher power density, therefore requiring lower capital expenditure from project developers.

That cost trajectory is critical to achieving scale, Baan told Platts, part of S&P Global Energy, in a Jan. 28 interview in London.

The industry must "face the brutal facts" that premium-priced renewable fuels are no longer attracting sufficient investment, Baan said. Projects must start with viable economics closer to Eur4/kg ($4.75/kg), rather than the Eur12/kg that was previously deemed acceptable, to drive supply chain development and further cost reductions.

Levelized costs of hydrogen production could then fall as low as $3/kg, based on input power costs of $40/MWh, he said.

Green hydrogen production costs have remained stubbornly high despite industry promises of falling prices as the nascent sector progresses along the learning curve.

Solid oxide electrolysis is seen as a lower-cost hydrogen production pathway compared with more established alkaline and proton exchange membrane technology, because of its typically higher efficiency, though requires higher operating temperatures and is less mature.

Platts assessed the cost of EU-compliant green hydrogen production via alkaline electrolysis in Germany, backed by renewable power purchase agreements, at Eur9.45/kg on Feb. 9.

Energy transition pivot

Baan joined the company at the height of the coronavirus pandemic in May 2020 with a mandate to modernize the organization and reorient the business toward the energy transition.

Topsoe has diversified from its core catalyst business into a wide range of low-carbon energy applications, including making equipment for sustainable aviation fuel, low-carbon ammonia and solid oxide electrolyzers.

Baan pointed to exponential growth in clean energy technology investment and leading companies driving their suppliers to decarbonize supply chains, citing major tech and logistics companies.

Topsoe is riding that wave. The company's low-carbon energy now accounts for almost a quarter of Topsoe's revenue, up from zero in 2020, even as the business grows total revenue, Baan said. Though the transition should more properly be called "energy diversification," he said, noting demand for fossil fuels was not falling.

Electrolyzer factory startup

The Danish industrial energy technology company is waiting to start production from its 500 MW/year factory in Herning, Denmark, having inaugurated the plant in October.

Topsoe has agreements with customers, but the start of production is contingent on projects taking final investment decisions, the company said.

It has contracts to supply solid oxide electrolyzers to two projects in development.

Forestal has selected Topsoe to supply 55 MW of electrolyzers for its planned Triskelion eMethanol facility in Spain, with an FID expected in the second quarter of 2026.

And in the US, First Ammonia is developing a planned 100-MW ammonia production plant using Topsoe SOECs, with an FID expected in the coming six months, Baan said.

However, the status of ExxonMobil's Baytown, Texas, plant in the US is uncertain after the company paused further investments in the project. Baan said the project was still awaiting an FID, but had not been canceled.

Customer confidence in SOEC is growing as more reference plants come online, the CEO said.

"For our technology, we need to have a few proven projects running," Baan said. "We always expected that the ramp-up would be slow. But once these references are in the market, the results are just staggering."

The company has a demonstration plant in operation, and Baan pointed to electrolyzer performance of 35 kWh/kg hydrogen for its solid oxide technology, compared with around 55 kWh/kg via alkaline electrolysis.

Pragmatic optimism

While Baan is clearly optimistic about the low-carbon energy market outlook, that vision is rooted in a sober assessment of the state of affairs.

He noted exponential CO2 emissions growth, highlighting that 50% of total global emissions occurred in the last 30 years.

"What we are trying to do is make sure that the planet remains habitable," he said. "I don't care how."

However, he said more pragmatism was needed from policymakers in Europe. "The regulations in Europe are just stifling."

He called for clear and firm mandates on consumption to drive demand, but said that more flexibility was needed in the regulations governing production to get the industry going.

Nevertheless, Baan sees "tremendous upside" to low-carbon hydrogen demand in the refining sector, and growth potential in ammonia from both fertilizer producers and the shipping sector, despite setbacks from the International Maritime Organization's decision to push back green fuel rules.

"What we set out to do when I took over, we have generally put in motion and the traction is there, the platform is there," he said. And I do believe it's good for the next generation to take it beyond here."

Select Topsoe ammonia, electrolyzer projects

Source: Topsoe, S&P Global Energy